R&D Tax Credits in Kansas
Kansas offers a research and development tax credit to companies that are performing qualified research within Kansas. Kansas adopts the federal definition of qualified research activities and expenses. The Internal Revenue Code defines qualified research as those expenses for activities intended to discover information that eliminates uncertainty concerning the development or improvement of a product. A product is defined as a process, technique, formula or invention.
As of 2013, the credit is only be available to C- corporations. Individuals, partnerships, S-corporations, LLC’s and other flow-through entities are no longer eligible.
R&D Tax Credit Rate
Kansas allows a 6.5% credit rate of the difference between the qualified research and development expenses for the year and the average of the actual expenditures made during the previous two tax years.
The amount of the credit allowed in any one year is capped at 25% of the total amount of the credit plus any carry forward. Unused credits may be carried forward in 25% increments until fully expended.
Case Study
A large corporation in Kansas designs and manufactures farming equipment. The corporation began claiming both the federal and state R&D tax credit in 2012. In 2015, their 4th year of claiming credits, they were eligible for the 14% federal credit.
Summary of credits:
| FEDERAL | KANSAS | ||||
| Year | Total QREs | Credit | Total QREs | Credit | |
| 2015 | $995,000 | $139,300 | $995,000 | $18,905 | |
| 2014 | $925,000 | $55,500 | $925,000 | $16,188 | |
| 2013 | $890,000 | $53,400 | $890,000 | $13,350 | |
| 2012 | $750,000 | $45,000 | $750,000 | $5,625 | |
| Total | $3,560,000 | $293,200 | $3,560,000 | $54,068 | |
Kansas R&D Tax Credit Form
To claim the credit, the taxpayer may download Schedule K-53 online.
