Kansas Economic Development Directory

Kansas State Incentives

The PROMOTING EMPLOYMENT ACROSS KANSAS (PEAK) program offers qualified companies the ability to retain 95 percent of their payroll withholding tax for up to five to seven years. PEAK is available to new operations in Kansas as well as relocated operations to the state. In 2013, it will be available for qualifying business retention projects as well. Companies need to create at least 10 new jobs within two years in metropolitan areas or five new jobs within two years in all other counties of the state. High-impact projects that create 100 new jobs within two years can retain 95 percent of payroll withholding tax for up to seven to 10 years. The number of years that the withholding tax can be retained depends on how much the annual median or average wage of the jobs at the Kansas worksite will exceed the current county median wage and the discretion of the Secretary of the Kansas Department of Commerce.

The HIGH PERFORMANCE INCENTIVE PROGRAM (HPIP) provides a 10 percent corporate income tax credit on the qualified capital investment of an eligible company. Qualified capital investment can include such items as the purchase or lease of a facility or equipment, remodeling or build-out costs, fixtures, furniture and computers. Equipment transferred to Kansas from out-of-state is also credited at the original acquisition cost. The 10 percent tax credit is awarded to companies that operate an eligible business, pay above-average wages and invest in employee training. The credits can be used to significantly reduce a company’s corporate income tax liability in a given year. Credits must be used within a consecutive 16 year period. The minimum investment threshold to qualify for HPIP is $1.0M for urban counties of Douglas, Johnson, Sedgwick, Shawnee and Wyandotte. For all other counties, the minimum investment threshold is $50,000.

MACHINERY & EQUIPMENT EXPENSING DEDUCTION: Effective January 1, 2012, Kansas taxpayers will be allowed to claim an expense deduction for business machinery and equipment, placed in service in Kansas during the tax year. The one-time deduction is allowed for each qualified purchase of machinery and equipment in the year that it is placed in service. The expensing deduction is representative of the difference between the cost of the item and the present value of the stream of depreciation deductions allowed under normal federal depreciation rules. Any unused expense deduction may be carried forward until fully claimed in future years. If the property is relocated outside Kansas or disposed of before the end of its federal depreciable life, the amount of the tax liability relieved by the deduction may be subject to repayment.

MACHINERY & EQUIPMENT PROPERTY TAX EXEMPTION: Commercial and industrial machinery and equipment acquired by qualified purchase or lease or transferred into the state is exempt from state and local property tax. The exemption pertains to machinery and equipment used in the expansion of an existing facility or the establishment of a new facility. The exemption covers machinery and equipment used in manufacturing or warehousing/distribution, commercial equipment, computers, desks and chairs, copiers and fax machines.

PROPERTY TAX ABATEMENT: Cities or counties may exempt real property from ad valorem taxation. The tax abatement can include all or any portion of the appraised buildings, land and improvements. A total or partial tax abatement may be in effect for up to 10 years after the calendar year in which the business commences its operations. Any property tax abatement is the decision of the city or county.

The RURAL OPPORTUNITY ZONES PROGRAM (ROZ) is designed to reverse dramatic population declines over the past decade in rural areas of Kansas. The program is to spur economic development in and expand job growth in 50 counties around the state. The program has two main incentives:

• A state income tax exemption for up to five years to individuals who move to a ROZs county from outside the state. Individuals must not have lived in Kansas for the past five years, nor have Kansas source income of more than $10,000 per year over the past five years.
• Student loan forgiveness of up to $3,000 per year ($15,000 maximum benefit) for individuals who graduate from an accredited post-secondary institution and move to a ROZs county. The student loan forgiveness portion of the program is a county-state partnership, and counties must opt in to participate.

WIND AND SOLAR BOND FINANCING: This allows for up to $5 million in bond financing per project for eligible wind and solar energy manufacturers. The bonds are paid off from the payroll withholding tax of the new jobs. To qualify, a project must create at least 200 new jobs within five years, pay at least a $32,500 average salary and generate a minimum capital investment of $30 million.

KANSAS ECONOMIC OPPORTUNITY INITIATIVES FUND: The Department of Commerce can provide a zero-percent interest forgivable loan to qualified companies. This loan can offset costs associated with the establishment of a new facility or the expansion of an existing facility. Eligible costs include site improvements, construction, build-out and purchases and relocation of machinery and equipment. The loan is forgiven in 20 percent annual increments over a five-year period based on meeting the job and payroll targets. Approval of funding for this program is based on the number of new jobs created, the level of wages paid to the new employees and the economic impact of the project.

INDUSTRIAL REVENUE BONDS (IRBs): A method of financing up to 100 percent of a growing business’ land, building and equipment. They are securities issued by cities and counties to provide funds for creditworthy companies to acquire land, construct and equip new facilities or remodel and expand existing facilities. IRBs allow fixed-rate financing for the life of the bond for the project.

COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG): Eligible small city and county governments may apply for funds to make water, sewer, rail spur, roadway or other infrastructure improvements designed to assist companies in creating jobs. These funds may also be used by a business to acquire land or buildings, construct or renovate facilities, purchase machinery and equipment or for working capital. Companies can apply for up to $35,000 per job created with a maximum limit of $750,000. At least 51 percent of the jobs created with CDBG funding must be held by individuals who, at the time of hire, meet the low to moderate income guidelines for the county location. Infrastructure funding requires that half of the funding be paid back over a 10-year period at a rate of 2 percent. Financing for working capital, equipment and real property carries a fixed rate equal to four percent or 3 percent below prime, whichever is greater, set on the award date. The term of the loan depends on the type of assets being financed: working capital up to five years, equipment up to 10 years and real property up to 15 years.

PARTNERSHIP FUND: Low-interest state funds are provided to cities and counties for infrastructure improvements that support Kansas’ basic enterprises such as manufacturing and distribution. Eligible projects may include construction, rehabilitation or expansion of public facilities, including roads, streets, highways, water supply and treatment facilities, water distribution lines, wastewater collection lines and related improvements.

KANSAS BIOSCIENCE AUTHORITY (KBA): Commerce works in partnership with the Kansas Bioscience Authority to assist in the expansion and recruitment of bioscience companies. The KBA has direct financing programs and other resources that can be used to recruit new bioscience companies and world-class scholars, fund equipment and lab space for research and facilitate the commercialization of bioscience discoveries.

WORKFORCE DEVELOPMENT PROGRAMS: The Department of Commerce has two programs to offset a company’s training costs. Companies creating new jobs may qualify for KANSAS INDUSTRIAL TRAINING (KIT) assistance. Eligibility for either program depends on the number of jobs created and the corresponding wages. There is also the KANSAS INDUSTRIAL RETRAINING (KIR) PROGRAM to retrain a Kansas company’s existing workforce on new technology or production activities. Projects involving a Kansas Basic Industry—which includes manufacturing, distribution or regional/national service facilities—may qualify for these programs. Both programs offer direct financial assistance to pay a negotiated portion of the costs to train a company’s employees. Companies may apply the assistance toward items such as instructors’ salaries; meals, travel and lodging (including out-of-state or international travel); video development; textbooks and training manuals; supplies and materials; temporary training facilities and curriculum planning and development.

SALES TAX EXEMPTIONS: Those available include:

• Labor services related to original construction
• Remodeling costs, furnishings, furniture, machinery and equipment for qualified projects
• New machinery and equipment for manufacturing and distribution. This also includes pre- and post-production machinery and equipment, including raw material handling, waste storage, water purification and oil cleaning, as well as ancillary property such as gas pipes, electrical wiring and pollution control equipment
• Tangible personal property that becomes an ingredient or component part of a finished product
• Tangible personal property that is immediately consumed in the production process, including electric power, natural gas and water
• Incoming and outgoing interstate telephone or transmission services (WATTS)
• Real and personal property financed with an Industrial Revenue Bond (IRB)

INVENTORY TAX EXEMPTION: All merchant and manufacturers’ inventories are exempt from property taxes.

RESEARCH TAX CREDIT: An income tax credit equal to 6.5 percent of a company’s investment in research and development above an expenditure of the previous three-year period. 25 percent of the allowable annual credit may be claimed in any one year.

KANSAS RETAIL DEALERS INCENTIVE FUND: Created for the payment of incentives to Kansas retail dealers who sell and dispense renewable fuels or biodiesel through a motor fuel pump. This incentive is currently not funded for fiscal years 2011 and 2012, pursuant to the 2010 Senate Bill 527. The provisions of the Kansas Retail Dealers Incentive Fund shall expire on January 1, 2026.

EFFICIENCY KANSAS: A low-cost loan program that helps make energy-efficiency improvements to small businesses. It connects businesses to qualified energy auditors who will pinpoint the uses (and loses) of energy and give a custom plan to make it more energy efficient. It also provides access to low-cost financing through participating lenders or utilities.