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Session of 2026
HOUSE BILL No. 2469
By Committee on Taxation
Requested by Riley Scott on behalf of Watco and Cimarron Valley Railroad
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AN ACT concerning taxation; relating to credits; expanding the income
tax credit for qualified railroad track maintenance expenditures to
include credits against certain premium taxes, privilege fees and
privilege taxes; allowing the transfer of unused credits to any individual
or entity subject to such taxes; amending K.S.A. 2025 Supp. 79-32,297
and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 2025 Supp. 79-32,297 is hereby amended to read as
follows: 79-32,297. (a) For taxable years 2022 through 2031, there shall be
allowed a credit against the tax liability imposed under the Kansas income
tax act, the premium tax or privilege fees imposed pursuant to K.S.A. 40-
252, and amendments thereto, or the privilege tax as measured by the net
income of financial institutions imposed pursuant to article 11 of chapter
79 of the Kansas Statutes Annotated, and amendments thereto, in an
amount equal to 50% of an eligible taxpayer's qualified railroad track
maintenance expenditures paid or incurred during the taxable year.
(b) The amount of the credit allowed each taxable year under this
section shall not exceed the product of $5,000 and the number of miles of
railroad track owned or leased within the state of Kansas by the eligible
taxpayer as of the close of the taxable year. For rail siding located on or
adjacent to a class II or class III railroad in the state of Kansas, the amount
of the credit allowed for each taxable year under this section shall not
exceed $5,000 per rail siding owned or leased within the state of Kansas
by the eligible taxpayer as of the close of the taxable year. A mile of
railroad track may be taken into account only once in each taxable year.
The total amount of credits allowed under this section for each taxable
year shall not exceed $8,720,000.
(c) The credits allowed pursuant to this section that are not used by
the eligible taxpayer are transferable by written agreement from the
eligible taxpayer to any eligible customer or eligible vendor individual or
entity subject to the Kansas income tax act, the premium tax or privilege
fees imposed pursuant to K.S.A. 40-252, and amendments thereto, or the
privilege tax as measured by the net income of financial institutions
imposed pursuant to article 11 of chapter 79 of the Kansas Statutes
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Annotated, and amendments thereto, at any time during the five years
immediately following the taxable year for which the credits were allowed.
The eligible taxpayer originally allowed the credit and the subsequent
transferee must shall jointly file a copy of the written transfer agreement
with the Kansas department of revenue within 30 days of the transfer. The
written agreement must shall contain the name, address and taxpayer
identification number of the parties to the transfer, the amount of unused
credit being transferred, the taxable year for which the credit was
originally allowed to the eligible taxpayer and the taxable year or years for
which the credit may be claimed. The eligible taxpayer and subsequent
transferee shall also provide any information pertaining to the transfer as
may be required by the secretary of revenue to administer and carry out the
provisions of this section.
(d) Any unused credit amounts may be carried forward for up to five
taxable years immediately following the taxable year for which the credits
were allowed. The credit shall not be refundable.
(e) As used in this section:
(1) (A) "Eligible customer" means a business that:
(i) Uses class II or class III short line railroads or railroad-related
property, facilities or structures located wholly or partly within the state of
Kansas to directly or indirectly transport property, commodities or goods;
(ii) is served by a class II or class III short line railroad; or
(iii) stores railcars on the class II or class III short line railroad.
(B) "Eligible customer" does not include a class I railroad, as defined
in 49 C.F.R. § 1201.1-1(a), as in effect on January 1, 2022.
(2) "Eligible taxpayer" means:
(A) Any railroad subject to the Kansas income tax act that is
classified by the United States surface transportation board as a class II or
class III railroad, as defined in 49 C.F.R. § 1201.1-1(a), as in effect on
January 1, 2022; or
(B) any owner or lessee of rail siding located on or adjacent to a class
II or class III railroad in the state of Kansas.
(3) (A) "Eligible vendor" means a person who provides railroad-
related services directly to an eligible taxpayer. "Railroad-related services"
includes, but is not limited to: Transport of freight by rail; loading and
unloading of freight transported by rail; railroad bridge services; railroad
track construction; provision of railroad track material or equipment;
locomotive or freight train car leasing or rental; maintenance of a railroad's
right-of-way, including vegetation control; and freight train car repair,
rehabilitation or remanufacturing repair services.
(B) "Eligible vendor" does not include a class I railroad, as defined in
49 C.F.R. § 1201.1-1(a), as in effect on January 1, 2022.
(4)(2) (A) "Qualified railroad track maintenance expenditures" means
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gross expenditures for maintenance, reconstruction or replacement of
railroad track, including roadbed, bridges, industrial leads and side track,
and related track structures to the extent the expenditures are on track
located in the state of Kansas and the track was owned or leased by an
eligible taxpayer as of January 1, 2022.
(B) "Qualified railroad track maintenance expenditures" does not
include expenditures used to generate a federal tax credit or expenditures
funded by a state or federal grant.
(f) The secretary of revenue shall annually certify the tax credit
amount allowed for each eligible taxpayer. The secretary of revenue may
adopt rules and regulations necessary to administer the provisions of this
section.
(g) The secretary of transportation may adopt rules and regulations to
permit verification of the eligibility of an eligible taxpayer's expenditures
for purposes of the credit.
Sec. 2. K.S.A. 2025 Supp. 79-32,297 is hereby repealed.
Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.
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