Kansas tax credit for apprenticeship programs

ALERT: New Kansas tax credit encourages apprenticeships

May 11, 2023

Kansas recently signed into law a tax credit that offsets employers’ costs associated with apprenticeships. The credit applies to businesses and non-profits.

The Kansas Legislature recently passed House Bill No. 2292, including an Apprenticeship Tax Credit (ATC) to help businesses offset the costs of training new employees.

The ATC is designed to encourage businesses to invest in workforce development by offering a tax credit for the costs associated with establishing and maintaining apprenticeship programs. The credit is available to businesses that hire and train employees in Kansas.

How to qualify

Businesses must first establish an apprenticeship program that meets specific criteria. The program must be registered with the Kansas Department of Commerce and follow the guidelines set forth by the U.S. Department of Labor. Additionally, the apprentices must be Kansas residents at least 16 years old.

Claiming the credit

Once a business has established a qualifying apprenticeship program, it may be eligible for a tax credit of up to $2,500 each for up to 20 apprentices for tax years beginning after December 31, 2022.

The employer may claim a credit for each apprentice for up to four tax years after the apprentice completes the program’s probationary period. The amount of the credit is determined under a scale established by the Kansas Secretary of Revenue in consultation with the Kansas Secretary of Commerce based on the wages and other expenditures the eligible employer invested in the apprentice. The nonrefundable, nontransferable credits will be applied against the state income tax liability of the corporation or the owners of pass-through entities.

For tax years beginning after December 31, 2025, the maximum credit for each apprentice increases to $2,750. During those years, the employer may be eligible for an additional $500 for up to 10 apprentices that meet specific requirements.

Non-profits also benefit

The Bill also established a Kansas non-profit apprenticeship grant program. The guidelines are similar to the ATC, except eligible organizations would receive grants of up to $2,750 per apprentice rather than tax credits.

In summary

The ATC can significantly benefit employers that invest in workforce development. By offering a tax credit for the costs of establishing and maintaining apprenticeship programs, Kansas is encouraging businesses to hire and train new employees, which it hopes will help strengthen the state's economy.

If you are interested in learning more about the Apprenticeship Tax Credit and how it may benefit your business, please contact John Trowbridge using the information below.

John Trowbridge

Senior Vice President
Business Development

With more than 30 years’ experience in public accounting and an intensive tax background in tax planning and return preparation, John manages client relationships and focuses on the firm's prospective clients, assists industry teams in developing new prospects, and meets with clients. John’s expertise includes federal and international tax strategies, growth incentives, wealth transfer and estate planning. He has worked closely with manufacturers and mid-size companies and their owners/leadership providing a variety of profit-building tax strategies.

John earned a bachelor of business administration from Wichita State University and is involved in numerous professional organizations including: Kansas Society of Certified Public Accountants (KSCPA), American Institute of Certified Public Accountants (AICPA), Wichita State Auditing and Accounting Conference planning committee, Kansas Family Business Forum, Wichita Manufacturers Association Executive Board, Risk Management Association Board of Directors and the Kansas Global Trade Service steering committee for the Brookings Institute Global Cities Initiative.

NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.

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