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Session of 2025
HOUSE BILL No. 2208
By Committee on Taxation
Requested by Kimberly Gencur Svaty on behalf of the Kansas Association of
Community Foundations
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AN ACT concerning taxation; relating to income and privilege tax credits;
enacting the endow Kansas tax credit act; establishing a tax credit for
endowment gifts to certain endowment funds held by qualified
community foundations.
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) This section shall be known and may be cited as the
endow Kansas tax credit act.
(b) (1) For all taxable years commencing after December 31, 2025, a
credit shall be allowed against the income or privilege tax liability
imposed upon a taxpayer pursuant to the Kansas income tax act or the
privilege tax imposed upon any national banking association, state bank,
trust company or savings and loan association pursuant to article 11 of
chapter 79 of the Kansas Statutes Annotated, and amendments thereto, in
an amount equal to 70% of the amount of an endowment gift by a taxpayer
during the taxable year to an unrestricted permanent endowment fund or
field of interest permanent endowment fund held by a qualified
community foundation.
(2) A minimum endowment gift of $500 by a taxpayer shall be
required for such taxpayer to qualify for an award of a credit pursuant to
this section.
(c) (1) The total aggregate amount of credits allowed pursuant to this
section for each taxable year shall not exceed $3,000,000 for tax year
2026, $4,000,000 for tax year 2027 and $5,000,000 for tax year 2028, and
each tax year thereafter.
(2) In no event shall the total amount of credits allowed under this
section for endowment gifts to a single qualified community foundation,
excluding affiliates, or to a single affiliate of a qualified community
foundation exceed 10% of the total aggregate amount of credits per tax
year.
(3) The amount of such credit awarded to a taxpayer for a taxable
year pursuant to this section shall not exceed:
(A) $100,000 for an individual or fiduciary taxpayer subject to the
income tax imposed pursuant to K.S.A. 79-32,110(a), (b) or (d), and
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amendments thereto;
(B) $200,000 for married taxpayers filing a joint return subject to the
income tax on individuals imposed pursuant to K.S.A. 79-32,110(a) or (b),
and amendments thereto; or
(C) $200,000 for any taxpayer subject to the income tax on
corporations imposed pursuant to K.S.A. 79-32,110(c), and amendments
thereto, or the privilege tax on financial institutions pursuant to article 11
of chapter 79 of the Kansas Statutes Annotated, and amendments thereto.
(4) If the amount of the credit exceeds the taxpayer's tax liability, the
excess portion of the credit may be carried forward in the succeeding
taxable years until the total amount of the credit is used, except that no
credit may be claimed after five taxable years next succeeding the taxable
year that such credit was issued, and any remaining credit shall be
forfeited. The credit shall not be transferable.
(d) (1) (A) In order to participate under this section, a qualified
community foundation shall apply to the department of revenue for a
certification that the qualified community foundation satisfies all the
criteria to be considered a qualified community foundation under this
section. Applications shall be submitted upon forms furnished by the
department accompanied by any additional documentation required by the
department. If the department determines that an applicant foundation
satisfies the requirements of this section, the department shall issue a
written certificate to the qualified community foundation. The department
shall compile and make available to the public a list of certified qualified
community foundations.
(B) A qualified community foundation with a certificate shall notify
the department of any changes that may affect eligibility under this
section. The department may periodically review eligibility or request
recertification through new applications from such foundations. A
qualified community foundation must be in good standing with the
department having complied with the requirements of this section and all
reporting and data privacy requirements of the department in order to
continue to participate.
(2) (A) Prior to claiming any credit on a return, a taxpayer shall apply
for credits with the department on forms furnished by the department. In
the application, the taxpayer shall certify the dollar amount of the
endowment gift made or to be made during the taxable year, the name of
the certified qualified community foundation and any other information
that may be required by the department to determine whether the taxpayer
qualifies for such credit.
(B) Within 30 days after the receipt of an application from a taxpayer
that the department determines may qualify for a credit under this section,
the department shall allocate credits in accordance with this section. If the
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department cannot allocate the full amount of credits to an applicant due to
the limit on the total aggregate amount of credits that may be awarded
under this section per tax year or the limit on the total amount of credits
allowed for endowment gifts to a single qualified community foundation
or a single affiliate per tax year, the department shall notify the applicant
within 30 days with the amount of credits, if any, that may be allocated to
the applicant or that credits are no longer available for such tax year. Once
the department has allocated credits to a taxpayer, if the endowment gift
for which a credit is allocated has not been made as of the date of the
allocation, then the endowment gift must be made not later than 30 days
from the date of the allocation and also not later than the end of the tax
year for which the credits are allocated. If the endowment gift is not made
within such time period, the allocation shall be cancelled and returned to
the department for reallocation. All endowment gifts shall be made by the
end of the tax year for which the credits are allocated. A valid written
notice of the amount of credits allocated to a taxpayer from the department
is required in order for a taxpayer to claim the credit on a return.
(e) The secretary of revenue may adopt rules and regulations as
necessary to implement and administer the provisions of this act.
(f) As used in this section:
(1) "Department" means department of revenue.
(2) "Endowment gift" means an irrevocable contribution to an
endowed fund held by a qualified community foundation.
(3) "Field of interest endowment fund" means an endowed fund held
by a community foundation that is used for a specific charitable purpose,
such as education, health or other areas of community need or geographic
location such as a city or county.
(4) "Permanent endowment fund" means a fund held by a qualified
community foundation, the principal of which is permanently restricted
and the growth is used to provide charitable assistance exclusively to
support nonprofit organizations and programs that benefit residents of the
state of Kansas and is intended to exist in perpetuity.
(5) "Qualified community foundation" means a nonprofit
organization that is:
(A) Organized under the laws of this state to serve the state of
Kansas, or one or more Kansas counties or municipalities, or a
combination thereof;
(B) exempt from federal income taxation under section 501(c)(3) of
the federal internal revenue code;
(C) an organization that supports broad-based charitable interests that
benefit the residents of a defined geographic area not larger than the state
of Kansas; and
(D) (i) Accredited with community foundations national standards
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administered by the community foundations national standards board, or is
affiliated with such an accredited community foundation; or
(ii) recognized by the department as satisfying all of the following
requirements:
(a) The organization is comprised of permanent, component funds
established by multiple separate donors;
(b) the organization is directed by a board of directors comprised of
community representatives and such board is independent in that it is not
subject to the control of another entity;
(c) the organization actively engages in charitable activities,
including, but not limited to, supporting two or more unaffiliated tax
exempt organizations through grants or other professionally accepted
means of charitable support and serving in leadership roles on important
community issues;
(d) the organization has an annual audit, or a financial review when
its assets total less than $5,000,000, performed by an independent public
accountant; and
(e) the organization complies with the guidelines of the Kansas
association of community foundations, or its successor entity, for
membership by a community foundation.
A qualified community foundation includes its affiliate funds
benefitting a defined geographic area not larger than the state of Kansas
that are legally a part of, and subject to, the policies and operations of the
qualified community foundation.
(6) "Unrestricted endowment fund" means an endowed fund held by a
community foundation that allows the community foundation to determine
how grant dollars will be used.
Sec. 2. This act shall take effect and be in force from and after its
publication in the statute book.
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