How did 2025 changes limit the Kansas Affordable Housing and Housing Investor tax credits?
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This page answers the general question as of 2025. Ezel answers yours, under current Kansas tax law, with citations.
Plain-English summary
2025 House Bill 2289 changed two Kansas housing tax credits.
Kansas Affordable Housing Tax Credit (K.S.A. 79-32,306). This credit (the state analog to the federal Low-Income Housing Tax Credit, first enacted in 2022 and explained in Notice 23-08) is capped and wound down:
- New aggregate caps per qualified allocation plan year: $25,000,000 for plan year 2025, and $8,800,000 for plan years 2026, 2027, and 2028 (new subsection (i)(1)).
- 4% federal credit developments: on and after November 15, 2025, the Kansas Housing Resources Corporation (KHRC) cannot accept applications for or award new credit to a development receiving a 4% federal credit (tax-exempt-bond-financed under IRC § 42(h)(4)). Developments awarded a 4% allocation on or before November 14, 2025 keep it through their credit and carry-forward periods.
- 9% federal credit developments: KHRC continues awarding for the 2026–2028 plans, but no credit may be allocated after the 2028 qualified allocation plan or after December 31, 2028 (new subsection (i)(2)). Developments awarded under the 2028 or earlier plan keep the credit through their credit and carry-forward periods.
Kansas Housing Investor Tax Credit (K.S.A. 79-32,313). This credit (enacted in 2022 to draw housing investment to under-served communities, explained in Notice 23-07) gets a timing clarification: a transferred credit may be claimed by the transferee beginning in the year the qualified investor originally made the cash investment. New subsection (g) makes this retroactive to credits issued for tax year 2022 and after.
The Department issued this notice July 3, 2025.
What this means for you
Affordable-housing developers / KHRC applicants
- Plan around hard deadlines: November 15, 2025 (no new 4% federal-credit awards) and the 2028 plan / December 31, 2028 end of all new allocations.
- Annual credit is now capped — $25M for 2025 and $8.8M for 2026–2028 — so the pool is much smaller; competition for allocations tightens.
- If you already hold an award, you keep it through your authorized credit period and any carry-forward period.
Housing investors and transferees
- If you received a transferred Kansas Housing Investor Tax Credit, you can claim it starting in the year the original cash investment was made — and this rule reaches back to tax year 2022, so earlier transfers are covered.
Tax preparers
- For the Affordable Housing credit, confirm the development's federal credit type (4% vs 9%) and its allocation date to know whether new credit is still available.
- For the Housing Investor credit, use the original investment year as the claim-year anchor for transferred credits.
Common questions
Q: What law made these changes?
A: 2025 House Bill 2289 — Section 1 amends the Affordable Housing credit (K.S.A. 79-32,306); Section 2 amends the Housing Investor credit (K.S.A. 79-32,313).
Q: What are the new Affordable Housing credit caps?
A: $25 million for qualified allocation plan year 2025 and $8.8 million each for plan years 2026, 2027, and 2028.
Q: When do new Affordable Housing credit awards stop?
A: No new awards to 4% federal-credit developments on/after November 15, 2025, and no allocations at all after the 2028 plan or December 31, 2028. Existing awards continue through their credit and carry-forward periods.
Q: When can a transferred Housing Investor credit be claimed?
A: Beginning in the year the qualified investor originally made the cash investment — retroactive to credits issued for tax year 2022 and after.
Citations and references
- House Bill 2289 (2025) — the enacting law; notice issued July 3, 2025.
- K.S.A. 79-32,306, new subsection (i)(1) (Section 1) — aggregate caps ($25M for 2025; $8.8M for 2026–2028); no new KHRC awards to 4% federal-credit developments on/after November 15, 2025.
- K.S.A. 79-32,306, new subsection (i)(2) — no credit allocated after the 2028 qualified allocation plan or after December 31, 2028; awarded developments continue through their credit and carry-forward periods.
- K.S.A. 79-32,313, subsection (d) and new subsection (g) (Section 2) — a transferred Housing Investor credit is claimable by the transferee beginning in the year of the original cash investment; retroactive to credits issued for tax year 2022 and after.
- Background: Notice 23-08 (Kansas Affordable Housing Tax Credit Act) and Notice 23-07 (Kansas Housing Investor Tax Credit Act); both credits enacted in 2022.
Source
- Landing page: Kansas Department of Revenue Policy Information Library
- Original document: Notice 25-02
Original ruling text
Policy and Research
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor
NOTICE 25-02
KANSAS AFFORDABLE HOUSING TAX CREDIT
AND
KANSAS HOUSING INVESTOR TAX CREDIT
(JULY 3, 2025)
During the 2025 Legislative Session, House Bill 2289 was passed and signed into law.
Section 1 of the Bill amended K.S.A. 79-32,306, to make changes to the Kansas Affordable
Housing Tax Credit. Section 2 of the Bill amended K.S.A. 79-32,313 to make changes to the
Kansas Housing Investor Tax Credit.
Kansas Affordable Housing Tax Credit Act
The Kansas Affordable Housing Tax Credit Act, which provides a tax credit for a qualified
low-income housing project, was enacted in 2022 and is found in K.S.A. 79-32,306. The various
provisions of the Act are explained in Notice 23-08, Kansas Affordable Housing Tax Credit Act.
Section 1 of 2025 Legislative Session House Bill 2289 amends the statute to limit the aggregate
amount of the credit, discontinue awards of new Kansas credits for qualified developments that
are receiving a 4% federal tax credit after November 15, 2025, and discontinue awards of new
Kansas credits for qualified developments that are receiving a 9% federal tax credit after qualified
allocation plan year 2028. Qualified developments receiving credits prior to those dates will
continue to receive previously awarded credits.
New subsection (i)(1) establishes new limits on the aggregate amount of credit that can be
awarded for a particular qualified allocation plan year. It sets these limits at $25,000,000 for
qualified allocation plan year 2025, and at $8,800,000 for qualified allocation plans adopted for
years 2026, 2027, and 2028.
New subsection (i)(1) also limits the award of new credits by the Kansas Housing Resources
Corporation (KHRC). In this regard, new subsection (i)(1) provides, in part:
On and after November 15, 2025, the KHRC shall not accept any application for, or
award any additional allocation of, credit under this act to a qualified development
receiving a 4% federal tax credit, which is defined as a qualified development financed
by tax-exempt bonds as provided under section 42(h)(4) of the federal internal revenue
code. The KHRC shall continue to award credit under this act to qualified
developments receiving 9% federal tax credits in accordance with the provisions of this
act for the 2026, 2027 and 2028 qualified allocation plans. A qualified development
receiving a 4% federal tax credit awarded a credit allocation under this act by the
KHRC on or before November 14, 2025, pursuant to the 2025 qualified allocation plan
or any previous qualified allocation plan, shall continue to receive the awarded credit
throughout the authorized credit period and any applicable carry forward period.
New subsection (i)(2) also addresses, and limits, the awarding of new credits. It also provides
for the continuation of receipt of an awarded credit throughout the authorized credit period and
any applicable carry forward period. Specifically, new subsection (i)(2) provides:
(2) Subsequent to awards for the 2028 qualified allocation plan, the KHRC shall
not accept any application for, or award any additional allocation of, credit under this
act in any amount to a qualified development. No credits under this act shall be
allocated or awarded after the 2028 qualified allocation plan or after December 31,
2028. A qualified development receiving a 9% federal tax credit awarded a credit
allocation under this act by the KHRC pursuant to the 2028 qualified allocation plan or
any previous qualified allocation plan shall continue to receive the awarded credit
throughout the authorized credit period and any applicable carry forward period.
Kansas Housing Investor Tax Credit
The Kansas Housing Investor Tax Credit Act, which was enacted to bring housing
investment dollars to certain communities that lack adequate housing, was enacted in 2022 and is
found in K.S.A. 79-32,313. The various provisions of the Act are explained in Notice 23-07,
Kansas Housing Investor Tax Credit Act. Section 2 of 2025 Legislative Session House Bill 2289
amends the statute to provide when transferred credits may be claimed.
Section 2 of the Bill amends subsection (d) of the statute to clarify the credit that has been
transferred can be claimed by the transferee beginning in the year the cash investment was
originally made by the qualified investor. It also adds new subsection (g) which provides the
provisions of subsection (d) shall apply retroactively to any credits issued for tax year 2022 and
all tax years thereafter.
TAXPAYER ASSISTANCE
Additional copies of this notice, forms or publications are available from our web site,
www.ksrevenue.gov. If you have questions about this Notice, please contact:
Taxpayer Assistance Center
Kansas Department of Revenue
Scott Office Building, 1st Floor
120 SE 10th Ave
P. O. Box 3506
Topeka, KS 66601-3506
Phone: 785-368-8222
Fax: 785-291-3614
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