Are R&D Tax Credits
Available in Kansas?
Yes. The state of Kansas provides an R&D Tax Credit for taxpayers who incur qualified research and development (R&D) expenses in the state.
Kansas R&D Tax Credit
Eligibility expansion
For tax years beginning after December 31, 2022, the credit is available to all taxpayers, including personal income taxpayers.
Transferability:
Starting in 2023, taxpayers without a Kansas tax liability may transfer the credit to another taxpayer. Credits may only be transferred once and must be transferred in full.
Qualified research expenses (QREs):
Defined under IRC §41, but only expenditures incurred in Kansas qualify.
Annual usage limit:
Only 25% of the credit may be claimed in a single tax year, with unused amounts carried forward in 25% increments until fully used.
Claiming the credit:
File Schedule K-53 with the Kansas income tax return.
Eligibility:
Credits are not refundable, even when transferred.
Credit Calculation
For tax years prior to 2023: 6.5% of the difference between current-year QREs and the average of the prior two years’ QREs.
For tax years beginning in 2023: 10% of current-year Kansas QREs.
Kansas R&D Tax Credit Case Study
A Kansas City robotics manufacturer consistently engaged in research and development activities. This multi-year study covered tax years 2021–2024.
The company qualified for federal R&D Tax Credits of $314,000 and an additional $61,000 in Kansas state R&D Tax Credits.
FEDERAL | KANSAS | |||
Year | Total QREs | Credit | Total QREs | Credit |
2024 | $1,300,000 | $135,333 | $1,300,000 | $35,000 |
2023 | $900,000 | $90,417 | $900,000 | $15,167 |
2022 | $650,000 | $61,250 | $650,000 | $9,208 |
2021 | $450,000 | $27,000 | $450,000 | $1,625 |
Total | $3,300,000 | $314,000 | $3,300,000 | $61,000 |
Federal R&D Tax Credit Summary
| Year | Total QREs | Federal Credit |
|---|---|---|
| 2024 | $1,300,000 | $135,333 |
| 2023 | $900,000 | $90,417 |
| 2022 | $650,000 | $61,250 |
| 2021 | $450,000 | $27,000 |
| Total | $3,300,000 | $314,000 |
Kansas R&D Tax Credit Summary
| Year | Kansas Credit |
|---|---|
| 2024 | $35,000 |
| 2023 | $15,167 |
| 2022 | $9,208 |
| 2021 | $1,625 |
| Total | $61,000 |
Criteria for Qualifying Research Activities
The four-part test below defines what counts as qualified research activities
Purpose of the Research
The activity should develop or improve a business component, such as a product, process, software, formula, technique, or invention, by enhancing functionality, performance, reliability, or quality.
Resolving Uncertainty
The work must address technical uncertainties, such as determining the optimal design, method, or approach to achieve the desired outcome. The results should not be known in advance.
Systematic Experimentation
Eligible research must follow a structured experimentation process, including trial and error, modeling, simulation, or testing alternatives to reach the intended improvement.
Technological Basis
The activity must rely on hard sciences such as engineering, physical or biological sciences, or computer science. Artistic, social science, or routine data collection work does not qualify.
Why the R&D Tax Credit Matters ?
Since 1981, the R&D Tax Credit has helped businesses save billions in federal and state taxes. The credit enables companies to hire more staff, expand R&D, invest in facilities, and drive innovation. Thousands of businesses across multiple industries take advantage of this benefit each year.