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Committee debates insurance savings account bill after large fiscal estimate; no vote taken
Summary
Senate Bill 25 would create insurance savings accounts with tax modifications and allow annual contribution limits; the Department of Revenue estimated large potential revenue losses, prompting senators to raise concerns about distributional effects and possible means-testing.
Amelia summarized Senate Bill 25 as legislation to enact an Insurance Savings Account Act permitting individuals and corporations to establish accounts with tax additions and subtractions under the Kansas income tax. The bill would allow accounts beginning Jan. 1, 2026, and set maximum annual contributions of $6,000 for individuals, $12,000 for married couples filing jointly and $25,000 for corporations, with tax treatment for excess earnings described in the bill.
Committee fiscal staff presented a large projected revenue impact. The Department of Revenue estimated the bill could reduce state revenues by $73.1 million in fiscal 2026 and, at higher utilization assumptions, by up to $249.3 million per year thereafter. Staff noted an illustrative calculation showing that if utilization were 10% with an effective tax rate of 3.5% the annual revenue loss would be lower (an example figure cited was about $29.9 million per year), but the primary fiscal-note numbers prompted concern.
Senator Schallenberger criticized the bill as likely to be used disproportionately by higher-income taxpayers and underutilized by those who would most benefit. "I think this would be utilized by a lot of people who don't particularly need the tax break and underutilized by those that need it the most," he said. Senator Peck asked whether it would be constitutional to means-test the accounts and suggested the committee could consider income limits to focus benefits on lower-income households; the committee agreed to review options after further income-tax hearings.
No committee vote on Senate Bill 25 was taken during this meeting; members said they would revisit the bill after additional income-tax hearings to better understand distributional and fiscal implications.
