There are a number of state tax credits that businesses in Kansas may be able to claim that will reduce their state taxes. Some credits are available only to C corporations and others are available to any type of business entity. In some cases, if the credit is more than your tax liability for the year you can carry forward the unused portion of the credit and apply it in future years.
If you own a company that has signed an incentive agreement with the Kansas Department of Commerce you can qualify for a credit under the Promoting Employment Across Kansas (PEAK) act. You must have relocated a business facility or operation to Kansas from another state, and you must materially participate in the operation. The credit is 95% of your tax liability on Kansas source income from the company that is attributable to the business facility you relocated to Kansas.
According to the Kansas Department of Commerce, if you pay above average wages and invest in the training and education of your employees, you may qualify for the Kansas High Performance Incentive Program. This program provides a 10% income tax credit for capital investments in excess of $50,000 (or $1 million in five metropolitan areas), a sales tax exemption on the investment in a qualified facility, and a training credit of up to $50,000.
Credits available to C corporations
If you incur expenditures to plug an abandoned oil or gas well that the Kansas Corporation Commission has the authority to plug because the well is polluting the water supply and the well is on your land, you can claim a tax credit for 50% of the cost. If the credit is more than your tax liability, you can carry forward the unused portion.
If you operate an agritourism business registered with the Kansas Department of Wildlife, Parks and Tourism, you can claim a tax credit for 20% of the cost of liability insurance.
There is a credit for placing an alternative-fueled vehicle into service. The credit is 40% of the incremental cost or the cost of converting a gasoline or diesel powered vehicle to use alternative fuel. The credit is progressive based on the weight of the vehicle. There is also a credit for 40% of the cost of an alternative fuel fueling station.
If your business provides child day care facilities primarily for use by your employees, or you assist with the costs of day care, you can claim a tax credit. If you provide the facilities, the credit is 50% of your net cost for the first year to a maximum credit of $45,000, and 30% of your cost in subsequent years up to a maximum credit of $30,000. If you assist with the costs of day care, the credit is 30% of your cost, up to a maximum credit of $30,000.
If you incur costs in making your business property accessible to the disabled or you modify existing facilities or equipment in order to employ persons with a disability, you can claim a tax credit for 50% of the cost or $10,000, whichever is less. If the credit is more than your income or privilege tax credit, you can carry forward the unused portion of the credit for four years.
If you make improvements to a qualified swine facility certified by the Kansas Secretary of Health and Environment, you can claim a tax credit for 50% of the costs. If the credit exceeds your tax liability you can carry forward the credit for four years.
If you make expenditures in research and development activities in Kansas that are allowable under the federal internal revenue code, you can claim a tax credit in Kansas. The credit is 6.5% of the increase in your actual expenditures for the year over the average of your actual expenditures made during the year and the two previous tax years.
The Tax Credits page of the Kansas Department of Revenue website provides more detailed information on each credit, with links to the applicable form to be filed to claim each credit. These credits may change from year to year.
Sources:
High Performance Incentive Program (HPIP), Kansas Department of Commerce
Kansas Individual Income Tax, Kansas Department of Revenue
Tax Credits, Kansas Department of Revenue
