HB311 would create a new nonrefundable Kentucky income and insurance premium tax credit for employers that provide paid leave to an employee who is a Kentucky resident and is absent from work solely to donate an organ or bone marrow. The bill defines a “leave of absence period” as up to the hourly equivalent of 40 hours per donor, excludes use of the employee’s annual or sick leave from that period, and defines covered organs to include parts of the intestine, kidney, liver, lung, pancreas, or uterus. The credit would be available for taxable years beginning on or after January 1, 2026, and before January 1, 2030.
The amount of the credit would equal the employee compensation paid during the leave period plus the cost of temporary replacement help, if any. Employers could apply the credit against certain state income taxes or insurance company taxes, but not against employee withholding taxes. Unused credits could be carried forward for up to three years, and the Department of Revenue would be directed to adopt regulations and require documentation showing the leave, the donation purpose, and the related compensation and replacement costs. The bill also requires annual reporting to the Legislative Research Commission on the number and amount of credits claimed, with income-based breakdowns for individuals and corporations.
HB311 would amend Kentucky’s tax credit ordering statute to place the new employer organ and bone marrow donation credit into the existing hierarchy of nonrefundable business credits, and it would also update the state tax confidentiality statute to allow the Department of Revenue to share information with the Legislative Research Commission for administration and evaluation of the new credit. In practical terms, the bill affects employers, donors, and the Department of Revenue, while creating a new incentive structure within the state tax code rather than changing direct health or employment law protections.
The overall sentiment reflected in the bill text is strongly supportive of organ and bone marrow donation. The findings section emphasizes the need for living donors, the importance of protecting them from income loss, and the public health value of encouraging donation. No committee transcript or vote record was provided, so there is no recorded opposition or amendment debate in the supplied materials.
The main points of potential contention are administrative and fiscal rather than policy-based: the bill creates a new tax expenditure, requires employers to document compensation and replacement costs, and allows the Department of Revenue to verify the leave’s purpose. Questions could arise about the cost to the state, the burden on employers, the scope of eligible organs and donors, and whether the 40-hour cap is sufficient. The bill’s temporary effective window through 2029 may also be a point of discussion in evaluating whether the incentive should be extended or made permanent.
HB311 would add a new section to KRS Chapter 141 establishing a nonrefundable employer tax credit for paid leave provided to living organ and bone marrow donors, and it would amend KRS 141.0205 to integrate that credit into Kentucky’s credit-priority rules. It would also amend KRS 131.190 to permit confidential tax information to be shared with the Legislative Research Commission for oversight and evaluation of the credit. The bill would affect employers, pass-through entities, insurance companies, the Department of Revenue, and Kentucky resident employees who donate organs or bone marrow.
The bill is framed in strongly supportive terms, with legislative findings stating that living donation serves a public purpose and should not expose donors to lost income or employment. The structure of the bill suggests a pro-donation incentive approach rather than a regulatory mandate. Because no committee discussion or vote history was provided, there is no documented recorded opposition or bipartisan debate in the supplied materials.
The likely areas of contention are the fiscal cost of the tax credit, the administrative burden of verifying donor leave and replacement labor costs, and whether the credit is broad enough or too limited in duration and scope. Employers may be concerned about documentation requirements and the temporary nature of the credit, while policymakers may question whether the incentive meaningfully increases donation rates. The bill also raises privacy and tax-administration issues by authorizing limited disclosure of return information for legislative reporting and program evaluation.