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State and Local Tax

Kansas Enacts Apprenticeship Tax Credit

· 5 minute read

· 5 minute read

by Chad E. Voss

On April 24, 2023, Kansas Governor Laura Kelly signed the Kansas Apprenticeship Act, which creates an income tax credit and establishes grant programs for qualifying businesses and organizations that employ apprentices in Kansas. (L. 2023, H2292, effective 07/01/2023.)

Tax years 2023, 2024, and 2025.

For tax years commencing after December 31, 2022, and ending before January 1, 2026, an eligible employer that employs an apprentice pursuant to a registered apprenticeship agreement and in accordance with a registered apprenticeship plan for at least all or a portion of the probationary period, and so employs the apprentice at the time the probationary period is completed, may claim a Kansas income tax credit up to $2,500 for each such apprentice employed, for up to 20 apprentices. The size of the credit is determined under scale established by the Kansas Secretary of Revenue and Kansas Secretary of Commerce based on the wages and other expenditures the eligible employer invested in the apprentice.

The credit must be claimed for the taxable year in which the apprentice completed the probationary period or the taxable year next succeeding the calendar year in which the apprentice completed the probationary period. Subsequent credits may be claimed for up to three successive calendar years by any eligible employer who subsequently employs the apprentice, but the credit may not be awarded for employment of the same apprentice more than four times.

Tax years after December 31, 2025.

For tax years commencing after December 31, 2025, an eligible employer that employs an apprentice pursuant to a registered apprenticeship agreement and in accordance with a registered apprenticeship plan for a continuous period of time constituting at least 25% of the apprenticeship time period required by the registered apprenticeship program may claim a Kansas income tax credit up to $2,750 for each apprentice employed, not to exceed 20 such credits for apprenticeships in any taxable year.

The credit must be claimed in the tax year next succeeding the calendar year in which the employment requirement is met, and may subsequently be taken in successive tax years based on a cumulative total of up to four successive calendar years of employment for an individual apprentice.

Additional $500 credit: For tax years commencing after December 31, 2025, if the apprentice is enrolled in a secondary or post-secondary career and technical education program, is under 18 years of age at the time the credit is claimed, has been employed by the eligible employer for at least 90 days, and is participating in qualifying program, the eligible employer may claim an additional Kansas income tax credit not to exceed $500. An employer may not claim more than 10 of the credits in a tax year.

Restrictions.

To be eligible for any tax credit created under the Kansas Apprenticeship Act, an employer must enter into an agreement with the Secretary of Commerce regarding the employment of apprentices.  If an agreement is approved, the eligible employer must submit such information required by the Secretary of Commerce and Secretary of Revenue to demonstrate eligibility for the credit for each tax year a credit is claimed.

The tax credits created under the Kansas Apprenticeship Act are nonrefundable and nontransferable. They may be claimed on a pro-rata basis by the owners of eligible employers that are entities taxed under subchapter S or K of the Internal Revenue Code, limited liability companies, or professional corporations authorized to do business in Kansas. The aggregate amount of all tax credits issued for all eligible employers may not exceed $7.5 million each taxable year.

 

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