New Kansas Tax Incentivizes Hiring Apprentices

May 24, 2024

If you’re in the construction business, no one needs to remind you about the biggest challenges facing the industry today – labor shortages and workforce retention. To say it’s hard to find good help is an understatement. But it can be even harder to find trained workers, and nearly impossible to find workers who are trained to do the job the way you want it done.

Thanks to a new bill passed in the Kansas House of Representatives in 2023, certain trades may be able to solve staffing shortages with a workforce of apprentices. Scott Bruce, construction tax manager at MarksNelson, shares his insight on this new law and how area employers could benefit.

Introducing the Kansas Apprenticeship Act Tax Credit

If you’ve ever thought of using apprentices, a newer tax credit might be a strong incentive to try it. In 2023, Kansas House Bill 2292 created the Kansas Apprenticeship Act. The Kansas Apprenticeship Act Tax Credit provides grants and tax credits for businesses offering apprenticeships and/or scholarships. It’s effective for tax years beginning on or after January 1, 2023.

Here’s what you need to know about the Kansas Apprenticeship Act Tax Credit:

  • For tax years 2023 through 2025, employers receive up to $2,500 in income tax credit per qualified apprentice
  • Each employer can claim a maximum of 20 credits per year
  • For tax years 2026 and after, the credit increases to $2,750 per apprentice
  • Credit is non-refundable
  • Employer must have an established Kansas address and be subject to Kansas income taxes
  • Registered apprentice must be a Kansas resident


Benefits of apprenticeships in construction

Apprenticeships take some extra planning on your part, but the benefits can potentially outweigh the risks. Apprenticeships set up paths to long-term employment through on-the-job learning, technical instruction and mentorship. And the good news for employers is that apprentices are typically paid at a lower rate than seasoned workers. Here are some benefits to think about if you’re considering an apprenticeship program:

  • No bad habits to unlearn: employees receive hands-on training to build skills that match your company’s preferred   way of doing things
  • Tax credits can be used to incentivize current employees to serve as mentors
  • Apprenticeships help recruit for hard-to-fill positions, giving you an edge over the competition
  • Construction companies who use apprentices build a pipeline of skilled employees and develop future managers
  • Apprenticeships lead to improved employee engagement, greater problem-solving ability, flexibility to perform multiple tasks, and a reduced need for supervision


Administrative requirements for apprenticeship tax credits

As with any governmental tax benefit program, there are administrative forms that must be submitted correctly. Businesses must complete and file a Registered Apprenticeship Agreement (ETA-671) and complete and file the Tax Credit Application. Once approved, the state will send a confirmation certificate which must be used to claim the income tax credit. Read more information at the Kansas Department of Revenue website.

MarksNelson helps our clients make this process as simple as possible. Our contacts at the Kansas Department of Commerce have worked with us closely for decades. At MarksNelson, we’re always ready to help our construction partners take advantage of programs that save money and build a pipeline for success. Whether it’s helping you with a custom software solution or analyzing estimates for long-term contracts, we’re ready to take on your most important projects. Contact us with any questions today.


Scott began his accounting career at MarksNelson in 2014 and through hard work and client dedication, quickly exceled into a management role within the tax department. He serves as a key member of the construction industry niche and clients appreciate his accessibility and responsiveness. He develops a unique understanding... >>> READ MORE

Woman rejoices at cliff


Subscribe to receive email updates intended to support your business operations, mitigate risk, and help you grow.