Expanding student eligibility under the tax credit for low income students scholarship program, increasing the amount of the tax credit for contributions made pursuant to such program and providing for aggregate tax credit limit increases under certain conditions.

2025-2026 Regular Session

Expands eligibility for the TCLISSP and increases tax credits to 100% for contributions, with a flexible 75%-to-25% annual cap uplift up to $20M.

Died in Committee

#schools #taxation

Summary — HB 2136 (Tax Credit for Low Income Students Scholarship Program)

Status and timing
- Introduced: January 28, 2025. Referred to the House Committee on Education. Fiscal Note issued by the Kansas Division of the Budget dated February 4, 2025.
- Effective date: upon publication in the Kansas Register.
- Fiscal note projects no fiscal effect until tax year 2026 (FY2027).

Purpose and intent
- Expand eligibility for the Tax Credit for Low Income Students Scholarship Program (TCLISSP) and increase the tax credit available to taxpayers who contribute to Scholarship Granting Organizations (SGOs), with a mechanism to raise the statewide aggregate credit cap under specified conditions.

Key substantive provisions
- Eligibility changes
- Revises “eligible student” to a Kansas resident who has not graduated high school and is under age 21.
- Removes the requirement that the student previously be enrolled in public school.
- Adds automatic eligibility categories: students who have ever been in foster care or kinship care prior to graduation/age 21; students whose parent is on active duty or was killed in the line of duty; and students whose parent is an EMS provider, firefighter, or law enforcement officer (as defined in K.S.A. 75-4364).
- Requires the State Board of Education to provide written verification to an SGO of a student’s eligibility within 45 days of a request (except for students under age six, for whom verification rules differ).
- Scholarship amounts and program mechanics
- Educational scholarship limit remains up to $8,000 per eligible student per school year.
- SGOs must issue receipts for contributions in a form prescribed by the Secretary of Revenue.
- Tax credit changes
- For contributions to SGOs, the taxpayer credit rate is increased from 75% to 100% beginning in tax year 2025.
- The maximum tax credit per taxpayer remains $500,000 per tax year.
- Aggregate (statewide) annual credit cap: current law caps at $10 million. HB 2136 provides that if total credits claimed in a tax year would exceed 75% of the available aggregate cap, the cap for the succeeding tax year is increased by 25% — subject to a new absolute cap of $20 million.

Fiscal and administrative impacts (per Fiscal Note)
- Department of Revenue estimates reduced State General Fund revenues: approximately $2.5 million (FY2027), $5.6 million (FY2028), $9.5 million (FY2029), and $10.0 million (FY2030).
- DOR expects increased SGO contributions because the allowable tax deduction increases to 100%.
- Projected aggregate cap escalation example (if $10M claimed in 2025/2026): $12.5M (FY2027), $15.6M (FY2028), $19.5M (FY2029), then reach $20M (FY2030).
- Administrative cost: one-time systems modification estimated at $1,450 (FY2026).
- Department of Education notes it cannot estimate the number of additional students who will apply; verification will require coordination with DCF (foster/kinship) and the U.S. Department of Veterans Affairs.

Who is affected
- Low-income and newly eligible students and their families (including foster/kinship care youth, children of active-duty or fallen service members, and children of first responders).
- Scholarship Granting Organizations (likely increased donations).
- State General Fund (projected revenue reductions).
- Departments of Revenue and Education (administration and eligibility verification).