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Minutes for HB2427 - Committee on Taxation
Short Title
Providing for a Kansas income tax subtraction modification for national service education awards.
Minutes Content for Thu, Feb 6, 2020
Adam Siebers provided an overview on HB2427 stating the bill will provide a subtraction modification for the determination of Kansas adjusted gross income. HB2427 would allow the amount of any National Service Education Award for service in an approved AmeriCorps National Service Program to be subtracted from income for Kansas income tax. The subtraction modification will start in tax year 2020. He noted the actual provision of the bill is found on page 9 starting on line 29.
Kathleen Smith, Department of Revenue reviewed the fiscal note for HB2427 stating the bill would decrease the State General Fund revenues by approximately $50,000 in FY2021 and in each future fiscal year. To formulate the estimates, the Department of Revenue reviewed data on Kansans receiving National Service Education Awards.
Representative Murnan testified as a proponent for HB2427 noting the $5,000 National Service Education Award that volunteers receive following a year of service with AmeriCorps should be tax exempt for Kansas income tax (Attachment 1).
Amy Pinger, Kansas Volunteer Commission testified as a proponent for HB2427 noting AmeriCorp members in the national service program are paid a modest living allowance. After completing their service year, they receive a small education award that can be used for tuition or to pay back a student loan. After completing a year of service, AmeriCorp members do not have disposable income to pay taxes for the education award due to not being paid wages during their service term (Attachment 2).
Olivia Vest, Kansas Volunteer Commission testified as a proponent for HB2427 noting since 1994 more than 8,600 Kansas AmeriCorp members served approximately 11 million hours and earned education awards totaling more than $25.1 million. In 2019, the Kansas Volunteer Commission (KVC) awarded $1.4 million to support 195 AmeriCorp members serving with six AmeriCorp Kansas programs. After completing a year of service, the volunteer receives a small educational award which can be used for tuition or pay back student loans. In Kansas, this award is treated as taxable income creating a burden who have served in the communities and a disincentive who are considering the program in Kansas. She noted due to strict federal regulations that dictate how this education award can be used, AmeriCorp members never receive the funds directly instead the award is transferred to the Institute of Higher Education or to the Federal Student Loan Services. The educational award is treated as regular income and taxed as additional income (Attachment 3).
Opponent:
Michael Austin, Kansas Policy Institute submitted written only testimony as an opponent to HB2427 (Attachment 4).
In response to questions, Jessica Noble, Executive Director of the Kansas Volunteer Commission stated after the time of completing service, the member has seven years to use the education award. At the point of using the award, whatever institution where the member lives and files taxes would be where payment is made. AmeriCorp members are allowed to serve up to four terms and two of those terms the member could earn two educational awards. When the educational award is used to payback a student loan and two terms completed, the member would have $10,000 of taxable income. Other states have successfully been able to remove the taxation of the Education Award.
Hearing closed for HB2427.
