Kansas Senate Bill SB25

Kansas 2025-2026 Regular Session

• Introduced: 1/16/25
• Refer: 1/17/25

Caption

Enacting the insurance savings account act, allowing individuals and corporations to establish insurance savings accounts with certain financial institutions, providing eligible expenses, requirements and restrictions for such accounts and establishing addition and subtraction modifications under the Kansas income tax act.

Summary

SB 25 creates the “insurance savings account act,” authorizing individuals and corporations, beginning January 1, 2026, to open designated insurance savings accounts at eligible financial institutions. These accounts may be used to pay or reimburse qualifying insurance premiums and deductibles for certain property and casualty insurance policies. The bill sets annual contribution limits, allows multiple accounts, permits joint ownership for married filers, provides rules for death of an account holder, and requires account holders to keep documentation and file annual reporting forms with their state income tax return. The bill also amends Kansas income tax law to create new tax modifications tied to insurance savings accounts. For individuals, contributions up to $6,000 per year for a single filer or $12,000 for a married couple filing jointly, and earnings on those contributions, would be subtracted from Kansas adjusted gross income beginning in tax year 2026. For corporations, contributions up to $25,000 and related earnings would be subtracted from Kansas taxable income. Withdrawals used for nonqualified purposes, or amounts tied to the absence of a surviving payable-on-death beneficiary, are subject to recapture and added back to income. The bill also directs the secretary of revenue to adopt rules and forms and gives the insurance commissioner nonexclusive authority to market the program. In terms of state law impact, SB 25 would add a new savings-account-based tax preference to the Kansas income tax act and amend the individual and corporate income tax modification statutes, K.S.A. 79-32,117 and 79-32,138. It would create new compliance, reporting, and recapture rules for account holders while expressly limiting the duties and liability of banks, credit unions, and other financial institutions. The bill would also require administrative rulemaking by the Department of Revenue and would repeal the current versions of the amended statutes to replace them with the new language. The available context shows no committee transcript and no recorded votes, so there is no documented floor or committee sentiment to assess. Based on the bill text alone, the measure appears to be a tax-incentive and consumer-savings proposal intended to encourage pre-funding of insurance costs. Because there is no recorded debate, the general sentiment cannot be measured from the provided materials. Potential points of contention are likely to center on the creation of a new tax preference, the revenue impact of allowing deductions for contributions and earnings, and the administrative complexity of recapture and documentation rules. Another possible issue is whether the program meaningfully benefits consumers versus higher-income households or corporations that can afford to set aside funds. The bill attempts to address some concerns by limiting financial institution responsibilities and by requiring account holders to substantiate eligible expenses.

Impact

SB 25 would amend Kansas income tax statutes to add a new subtraction modification for insurance savings account contributions and earnings, and a corresponding add-back for nonqualified withdrawals. It would also create a new statutory program governing account eligibility, contribution limits, permitted uses, reporting requirements, recapture, and beneficiary treatment, while limiting the obligations of financial institutions and authorizing the insurance commissioner and secretary of revenue to administer and promote the program.

Sentiment

No committee transcript or vote history was provided, so there is no direct evidence of support or opposition from legislative discussion. The bill’s structure suggests it is intended as a pro-savings, pro-insurance affordability measure, but the record supplied does not show whether lawmakers viewed it favorably or raised objections.

Contention

The main likely points of contention are the fiscal cost of the new tax deductions, whether the program is an appropriate use of the tax code to subsidize insurance expenses, and the administrative burden of tracking qualified uses and recapture. Another possible concern is equity: critics may question whether the contribution limits and tax benefits disproportionately favor individuals and corporations with more disposable income, while supporters may emphasize consumer preparedness and insurance affordability. The bill reduces one area of friction by stating that financial institutions are not responsible for policing eligible expenses or tax compliance.