In order to stimulate increased research and development activity by Kansas businesses, the State offers an income tax credit equal to 6.5 percent of a company’s investment in research and development above an average of the actual expenditures in research and development activities made in the taxable year and the two immediate preceding taxable years. Only 25 percent of the allowable annual credit may be claimed in any one year. Any remaining credit may be carried forward in 25 percent increments until exhausted.
Expenditures in research and development activities are defined by Kansas law as those expenses that are allowable as deductions under the federal Internal Revenue Code. Beginning in tax year 2013, this credit is only available to corporations subject to the Kansas corporate income tax, i.e. C Corporations. Beginning in tax year 2013, this credit shall not be available to individuals, partnerships, S Corporations, limited liability companies or other pass through entities (Schedule K-53, K.S.A. 79-32,182b).