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Kansas Senate adopts cuts and three-year sunset for low-income housing tax credit
Summary
The Senate approved a conference committee report that reduces Kansas' low-income housing tax credit program, caps credits for 2025 and future years, adds a sunset through the 2028 plan year and preserves the 9% credit while eliminating the 4% program.
The Kansas Senate on April 11 adopted a conference committee report that cuts the state's low-income housing tax credit program, caps awards for the current plan year and establishes a multi-year sunset, lawmakers said.
Senator Rick Owens (Harvey), who presented the conference committee report on House Bill 22-89, told colleagues that "this bill came to us from the house as a complete elimination of the low income housing tax credit program," and that the Senate instead reduced the program by roughly 70% to preserve an ongoing pipeline of projects.
The conference compromise, as explained on the Senate floor, limits credits beginning with the 2026 plan year to a maximum of $8,800,000, eliminates the 4% credit program and retains the 9% credit. The report also caps the 2025 plan year at $25,000,000 and adds a sunset so no new credits will be issued after the 2028 plan year. The conference report also incorporates language from House Bill 2096 to allow transferability of Kansas housing investor tax credits in the current year rather than delaying use until the following year.
Lawmakers and staff circulated spreadsheets to describe the distribution of credits. Owens said the files show projects in both urban counties (including Douglas, Johnson, Riley, Sedgwick and Wyandotte) and a range of smaller and rural counties, and he said the cap and sunset were intended to give the Legislature an endpoint to reassess the program.
Senator David Douglas (Douglas) asked whether the sunset was intended as a review opportunity or a firm end; Owens replied the Senate had sought a five-year sunset while the House opposed a sunset and that the three-year sunset in the conference compromise gives the Legislature a defined point to reassess the program going forward.
Senator Brad Corson asked whether imposing a $25,000,000 cap in the middle of an existing plan year risked legal challenge. Senator Stephen Morphy responded that the committee confirmed credits for the 2025 plan year had not yet been issued and that the Kansas Housing Resources Commission would be directed not to award more than $25,000,000 for that year.
The Senate adopted the conference committee report on House Bill 22-89 on a roll call of 33 yeas and 7 nays. The bill will be sent on for the next steps required under law.
Why it matters: The low-income housing tax credit is a major tool for financing affordable rental projects. The conference changes reduce the program's size and set a clear expiration date, which could affect projects in development and investor demand. The reported transferability fix for the Kansas housing investor tax credit may preserve near-term financing flexibility for some projects.
