Venture Capital Tax Credit

This tax credit was created by the 2002 Kansas Legislature to encourage investments in Kansas-based "capital formation companies," which provide venture capital to new Kansas businesses. Investors receive a 50 percent credit on their investments between $25,000 and $2 million. Investors may receive no more than ten percent of the credit in any tax year, beginning in 2005. Businesses receiving venture capital financing provided by capital formation companies must:

• have been in existence for fewer than five years
• have gross sales that have not exceeded $1 million in any year
• establish their primary place of business in Kansas within six months of the initial venture capital investment
• have at least 50 percent of their employees live in Kansas
• be unable to obtain conventional financing
• must be engaged in the business of manufacturing, assembling, or distributing products, conducting research and development, or providing services in interstate commerce