How to Raise Domain Functional Level in Server 2012 R2

You can raise then Domain Functional Level using “Active Directory Users and Computers” tool.

Note that

You can also use “Active Directory Domains and Trusts” tool to raise the functional level.
User account should belong to “Domain Admins” or “Enterprise Administrators” group.
Raising Domain Functional Level is one time thing and cannot be reversed. Will have to restore the forest from a backup