Kansas Research and Development Tax Credit Glossary
Author: Swanson Reed | Published: April 6, 2026
Answer Capsule: What are the key terms for the Kansas R&D Tax Credit?
This extensive glossary outlines the fundamental terms for the Kansas Research and Development Tax Credit (K.S.A. 79-32,182b). Following recent legislative updates like House Bill 2239, eligibility now spans pass-through entities and allows credit transfers. Understanding these definitions—ranging from Qualified Research Expenses (QREs) under IRC Section 41 to specific KDOR compliance forms—is crucial for maximizing tax savings in Kansas.
| Glossary Term | Definition |
|---|---|
| K.S.A. 79-32,182b | The Kansas statute defining and governing the state's research and development income tax credit provisions. |
| Research and Development Credit | A lucrative tax incentive designed to encourage commercial businesses to invest in qualified Kansas research. |
| Kansas Department of Revenue (KDOR) | The primary state agency responsible for administering tax laws and processing R&D credit claims locally. |
| Expenditures in Research and Development Activities | Direct costs incurred by a business while conducting technical research and development activities in Kansas. |
| Qualified Research Expenses (QREs) | Specific costs eligible for the credit, primarily including internal wages, technical supplies, and contract research. |
| Research Conducted Within This State (Kansas) | The geographic requirement stating that eligible research activities must physically occur within Kansas state lines. |
| Internal Revenue Code (IRC) Section 41 | The overarching federal tax code section detailing the foundational rules for research and development credits. |
| IRC Section 41(c) (Base Amount) | Federal statute determining the baseline historical research expenditures needed to calculate incremental R&D credit eligibility. |
| IRC Section 174 (Allowable Expenses) | Federal provision outlining the proper treatment and amortization of research and experimental expenditures for taxes. |
| Credit Percentage (10% for Post-2022) | The updated Kansas R&D credit calculation rate applied to eligible expenditures exceeding the baseline amount. |
| Prior Credit Percentage (6.5% Pre-2023) | The historical Kansas R&D tax credit rate utilized for eligible research expenses incurred before 2023. |
| Base Amount (Three-Year Average) | The calculation of average qualified research expenses from preceding years to establish the credit baseline. |
| Taxable Year | The defined annual accounting period during which a taxpayer's income and R&D credits are reported. |
| Tax Imposed by the Kansas Income Tax Act | The assessed state income tax liability against which the Kansas R&D tax credit is applied. |
| Kansas Taxable Income | The specific portion of a taxpayer's total income subject to Kansas state income taxation rules. |
| Credit Limitation (25% of Total Credit) | A restriction preventing taxpayers from claiming more than one-quarter of their total earned credit annually. |
| Carry Forward (Unused Credit) | The statutory provision allowing taxpayers to roll unused R&D tax credits into future liability years. |
| Carry Forward Increment (25% of Credit) | The allowable percentage portion of remaining unused R&D credits applicable in subsequent Kansas tax years. |
| C Corporation (Prior Eligibility Limitation) | Historical state restriction where solely C corporations could claim the Kansas R&D credit pre-2023. |
| Individual (Post-2022 Eligibility) | Legislative update granting individual taxpayers the ability to claim the Kansas R&D credit starting 2023. |
| Partnership (Post-2022 Eligibility) | Expanded eligibility rules empowering partnerships to calculate and claim the Kansas R&D credit post-2022. |
| S Corporation (Post-2022 Eligibility) | Corporate pass-through entities legally authorized to claim and distribute Kansas R&D credits to shareholders. |
| Limited Liability Company (LLC) (Post-2022 Eligibility) | Business structure newly eligible to claim the Kansas research and development tax credit beginning 2023. |
| Pass-Through Entities (PTEs) | Business entities, like LLCs and S-Corps, that pass tax credit benefits directly to their owners. |
| House Bill 2239 (Legislation Increasing Credit) | The pivotal Kansas legislation that increased R&D credit rates and broadened pass-through entity eligibility. |
| Nonrefundable Credit | A tax credit designed to reduce tax liability to zero without issuing direct cash refunds. |
| Transferable Credit (Post-2022) | A mechanism enabling taxpayers lacking state tax liability to sell or transfer their earned credits. |
| Taxpayer Without a Current Tax Liability | An innovative entity generating research credits but lacking immediate state tax obligations to offset them. |
| Transferee (Recipient of Credit) | The designated individual or corporate entity purchasing or receiving a transferred Kansas R&D tax credit. |
| Full Credit Transfer (Requirement for Transfer) | The strict regulatory rule mandating that R&D tax credits be transferred entirely, not partitioned. |
| One-Time Transfer Limitation | The state restriction ensuring a Kansas R&D tax credit can only be transferred to others once. |
| Schedule K-53 (Credit Computation Form) | The official KDOR tax form utilized by taxpayers to calculate their state R&D credit amount. |
| Form K-204 (Research and Development Credit Application) | The mandatory application form required by the state to officially claim the R&D tax credit. |
| Form K-260 (Tax Credit Transfer Notification Form) | The essential notification document used to report and authorize the transfer of R&D tax credits. |
| Documentation of Credit Acquired by Transfer | The necessary legal paperwork a transferee must maintain to substantiate ownership of acquired tax credits. |
| Itemized Schedule of Expenditures (Required Documentation) | A highly detailed ledger of claimed research expenses critical for state audit and compliance purposes. |
| Qualified Research (Four-Part Test) | The rigorous IRS evaluation requiring research to be permitted, technological, uncertain, and heavily experimental. |
| Technological in Nature | The standard requiring research to fundamentally rely on hard sciences like engineering, physics, or chemistry. |
| Elimination of Uncertainty | The fundamental research goal aiming to discover novel information that resolves difficult technical design challenges. |
| Process of Experimentation | A highly systematic approach employing trial and error to evaluate alternatives and overcome technical hurdles. |
| Business Component | The specific product, commercial process, software, or technique being innovated through qualified research and development. |
| Product, Process, Technique, Formula, or Invention | The diverse categories of functional business components explicitly eligible for the R&D tax credit benefits. |
| Wages for Qualified Services | Taxable W-2 compensation paid to staff directly performing, supervising, or supporting qualified Kansas research activities. |
| Supplies for Qualified Research | Tangible, non-depreciable property consumed or utilized during the process of conducting qualified experimental research operations. |
| Contract Research Expenses | Financial costs paid to external third-party contractors executing qualified research on the taxpayer's direct behalf. |
| Government-Funded Research Exclusion | The federal rule strictly prohibiting research funded by grants or government entities from claiming credits. |
| New or Improved (Business Component) | The necessary requirement that research attempts to generate new functionality or enhance existing performance metrics. |
| Prior Two Income Tax Years (for Base Average) | The specific historical period utilized alongside the current year to calculate the baseline research expenditure. |
| Tax Credit Database (Department of Commerce Reporting) | A centralized Kansas state registry actively tracking the issuance, application, and transfer of R&D credits. |
