Public health and safety; Oklahoma Public Health and Safety Reform Act of 2025; effective date.

2025 Regular Session Introduced by Nicole Miller

HB 2277 would exempt prepared food from the state sales tax and increase the share of tax receipts going to the State Highway Fund, reducing General Fund revenue.

Second Reading referred to Rules

Purpose

HB 2277 would (1) exclude prepared food from the state sales and compensating use tax by treating prepared food as part of the 0.0% state rate that currently applies to "food and food ingredients," and (2) increase the share of statewide sales and use tax receipts transferred to the State Highway Fund from 18.0% to 19.736%.

Key provisions

Add "prepared food" to items taxed at a 0.0% state sales tax rate for food and food ingredients (i.e., exempt the state portion of sales/use tax on prepared food).

Amend state law governing the allocation of sales/use tax receipts so that 19.736% (up from 18.0%) of the statewide sales and compensating use tax is credited to the State Highway Fund (language in K.S.A. chapter 79 is amended).

Conforming edits to related K.S.A. sections cited in the bill (79-3603, 79-3603d, 79-3620, 79-3703 and 79-3710).

Fiscal impact (per Division of the Budget / Department of Revenue)

FY 2026 (first fiscal year of effect as estimated): net reduction in state revenues of $285.1 million.

State General Fund: decrease of $302.3 million.
State Highway Fund: increase of $17.2 million.
FY 2026 estimate assumes a one-month collections lag.

Projected impacts in later years (State General Fund / State Highway Fund / net):

FY 2027: ($326.8M) / $12.7M → net ($314.1M)
FY 2028: ($330.5M) / $13.3M → net ($317.2M)
FY 2029: ($334.3M) / $13.9M → net ($320.4M)
FY 2030: ($338.2M) / $14.6M → net ($323.6M)

Assumptions: Department assumes prepared food accounts for ~10% of sales tax collections.

Minimal implementation/expenditure cost reported (~$2,680).

Who is affected

Consumers: lower state portion of sales tax on meals/other prepared foods (state tax removed).

Businesses selling prepared food (restaurants, caterers, foodservice establishments): compliance with new state rate; potential point-of-sale changes.

State finances: significant reduction in State General Fund receipts; modest increase in State Highway Fund receipts.

Local governments: Kansas Association of Counties reported no fiscal effect; League of Kansas Municipalities flagged potential effects on revenues pledged to STAR bond projects (impact unknown).

Procedure / timeline

Introduced: January 30, 2025.

Status: Referred to House Committee on Taxation.

Fiscal note projects impacts beginning in FY2026 (reflecting a one‑month collections lag if enacted around mid‑2025; bill text references allocations taking effect July 1, 2025).

Notes: This summary reflects the Kansas HB 2277 materials and the official fiscal note prepared by the Division of the Budget / Department of Revenue.

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