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HB 2189

Providing an income tax subtraction modification for sales or taking of property subject to eminent domain.

2025-2026 Regular Session

Kansas would allow a retroactive income tax subtraction for eminent-domain awards or sale proceeds to residents within 10 miles of the affected property.

Died in Committee
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Bill Summary · HB 2189

HB 2189 — Summary (Kansas): Income tax subtraction for eminent domain payments and sales

Status: Introduced January 29, 2025; referred to House Committee on Taxation.
Primary statutory target: amendment to K.S.A. 2024 Supp. 79-32,117 (Kansas adjusted gross income).

Purpose / Intent

To create a state income tax subtraction that exempts from Kansas taxable income certain amounts received by nearby residents as compensation for property taken (or effectively taken via sale) under eminent domain by the Kansas Department of Transportation (KDOT) or by a public utility. The subtraction is made retroactive to tax year 2021.

Key provisions

  • Adds a subtraction modification to Kansas adjusted gross income for qualifying taxpayers who meet the residency and proximity criteria.
  • Eligible amounts (only to the extent included in the taxpayer’s federal adjusted gross income):
    1. An appraiser’s award or a final judgment for property taken under the Eminent Domain Procedure Act by KDOT or a public utility.
    2. Proceeds from the sale of property to KDOT or a public utility if the sale would otherwise have been subject to a taking under the Eminent Domain Procedure Act.
  • Residency/proximity requirement: taxpayer must reside within ten miles of property used as a farm or ranch that was transferred (i.e., the affected property).
  • Effective retroactively for tax year 2021 (so taxpayers could claim the subtraction on returns for 2021 onward).

Who is affected

  • Primary beneficiaries: Kansas individual taxpayers who live within 10 miles of a farm or ranch property taken or sold to KDOT or a public utility, and who included the relevant awards or sale proceeds in their federal adjusted gross income.
  • State agencies: Department of Revenue (administration and IT changes); KDOT and public utilities (still required to compensate landowners; KDOT reports no operational fiscal effect).
  • State General Fund: potential revenue loss (see fiscal note).

Fiscal impact and administrative effects (from Kansas Division of the Budget / Dept. of Revenue fiscal note)

  • Net State General Fund revenue decrease: unknown (Dept. of Revenue could not estimate without data on qualifying transactions).
  • Illustration: a $500,000 award included in federal AGI, at an assumed average Kansas tax rate of 5.0%, would reduce state tax liability by about $25,000 for that taxpayer.
  • Implementation/IT cost: Department of Revenue estimates $38,830 from the State General Fund in FY2026 to modify automated tax systems and implement the subtraction. The Dept. expects to use existing staff for programming but warns additional contract programming costs could be needed if multiple changes strain resources.
  • KDOT: indicates no fiscal effect on its operations.

Procedural / timeline notes

  • Introduced Jan. 29, 2025; referred to House Committee on Taxation.
  • Retroactive application to tax year 2021 means taxpayers may seek amended returns or claim the subtraction on past-year filings consistent with Kansas filing rules if the bill is enacted.

Other notes

  • The fiscal note emphasizes uncertainty in revenue effects due to lack of data on how many taxpayers and what amounts would qualify.
  • The legislative packet contains unrelated text from other jurisdictions; this summary focuses on the Kansas HB 2189 eminent-domain income tax subtraction.

Compiled from official sources — confirm details with the bill’s official record.

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