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Tax & AccountingSeptember 08, 2022

Illinois and Kansas provide credits for agritourism liability insurance

By: CCH AnswerConnect Editorial

Illinois established an agritourism liability insurance credit for corporate and personal income taxpayers that:

  • carry out agricultural activities on agricultural property in the state; and
  • allow the general public to view or enjoy those activities for recreational, entertainment, and educational purposes.

Eligible taxpayers can claim the credit for tax years beginning on or after January 1, 2022.
Kansas has a similar credit for corporate income taxpayers. Unlike the Illinois credit, the Kansas credit does not apply to individuals or partnerships, S corporations, limited liability companies, and other pass-through entities.

Many other states provide liability protection for agritourism operators. 

How do taxpayers qualify for the Illinois and Kansas credits?

Eligible agricultural property in Illinois is any property a taxpayer uses for:

  • growing and harvesting crops;
  • feeding, breeding, keeping, and managing livestock or poultry;
  • dairying; and
  • any other agricultural or horticultural activity.

Agritourism activities that qualify for the Illinois credit include:

  • historic, cultural, and on-site educational programs;
  • guided and self-guided tours, including school tours;
  • animal exhibitions or petting zoos;
  • agricultural crop mazes, like corn or flower mazes;
  • harvest-your-own or you-pick operations;
  • horse or pony rides; and
  • harvest or sleigh rides.

The eligibility criteria for the Kansas credit are less comprehensive. The credit covers any recreational, entertainment, or educational activity that allows the general public to view or enjoy rural activities, including:

  • farming activities;
  • ranching activities; or
  • historic, cultural or natural attractions.

Kansas agritourism operators must also register with the state. 

How much are the credits?

The Illinois credit equals the smaller of:

  • 100% of the liability insurance premiums paid by the taxpayer; or
  • $1,000.

The state caps total credits at $1 million each calendar year.

The Kansas credit is 20% of the cost of liability insurance up to $2,000 each tax year. There is no statewide cap on total annual credits.

What happens to unused credits?

Taxpayers can carryforward unused Illinois credits for up to 5 years after the excess credit year. The carryforward period for unused Kansas credits is 3 years.

When do the credits sunset or expire?

 The Illinois agritourism liability insurance credit is set to sunset or expire for tax years ending on or before December 31, 2023. There is no sunset date for the Kansas credit. But taxpayers can claim the credit only for the first five tax years after the agritourism business is open.

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