Disqualifying from the carbon dioxide capture and sequestration property tax exemption and the income tax accelerated depreciation deduction if machinery and equipment are used to inject animal manure into the ground.

2025-2026 Regular Session

HB 2233 ends CO2 capture incentives for equipment that injects animal manure, removing the five-year property tax exemption and accelerated amortization deduction.

Died in Committee

#taxation

Main purpose

HB 2233 would remove certain tax incentives for carbon dioxide (CO2) capture/sequestration projects when the machinery or equipment is used to inject animal manure into the ground. Specifically, it disqualifies such equipment from (1) the five‑year property tax exemption for CO2 capture/sequestration property, and (2) the special accelerated (amortization) income tax deduction available for CO2 capture/sequestration machinery and equipment.

Key provisions

Amends K.S.A. 79‑233 (property tax exemption) and K.S.A. 79‑32,256 (income tax amortization deduction) and repeals the existing sections as replaced by the bill.

Property tax: excludes any carbon dioxide capture, sequestration, or utilization property that injects animal manure into the ground from the current five‑taxable‑year property tax exemption available to CO2 capture/sequestration property.

Income tax/amortization: eliminates eligibility for the accelerated amortization deduction for machinery and equipment that injects animal manure into the ground. (Current amortization schedule: 55% of amortizable cost in the first year, then 5% each year for the next nine years.)

Effective date: the act takes effect upon publication in the statute book.

Who is affected

Owners/operators of CO2 capture/sequestration property and of machinery/equipment used to inject animal manure — these taxpayers would lose the five‑year property tax exemption and the accelerated state income tax amortization deduction for qualifying assets used to inject manure into the ground.

State funds and local governments: removal of the property tax exemption could increase property tax collections, affecting the Educational Building Fund and the State Institutions Building Fund (state building funds funded through property tax receipts), school districts via the uniform mill levy, and any local taxing jurisdictions that levy property tax.

Kansas Department of Revenue: no operational fiscal effect anticipated.

Fiscal impact and timeline

The Division of the Budget fiscal note (Mar. 24, 2025) reports that the bill would likely increase State General Fund revenues beginning in FY2026 by an unknown amount (primarily from eliminating accelerated depreciation/amortization deductions). It also has the potential to increase property tax revenues for state building funds, school districts (through the uniform mill levy), and local governments by narrowing the exemption base.

Precise revenue impacts are undetermined because the Department of Revenue lacks data on how many future projects would be affected.

The bill’s fiscal effects were not reflected in the FY2026 Governor’s Budget Report.

Additional notes

The bill text focuses narrowly on disqualifying equipment used to inject animal manure into the ground; it does not change the broader definitions or incentives for CO2 capture/sequestration beyond that exclusion.

Interested readers should monitor the House Committee on Taxation for hearings, testimony, and any amendments that could change scope or fiscal effects.

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