KS Incentives | Finance, Loans, IRB, Workforce Development

A comprehensive list of Kansas financial aid, loans, grants, abatements, workforce development, exemptions, funds & capital investment opportunities.


https://businessfacilities.com/2015/03/ks-incentives-and-workforce-development-guide/
A comprehensive list of Kansas financial aid, loans, grants, abatements, workforce development, exemptions, funds & capital investment opportunities.
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Kansas Incentives and Workforce Development Guide

KS Incentives | Finance, Loans, IRB, Workforce Development

For a list of Kansas economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.

 

KANSAS RANKINGS

  • Kansas consistently ranks in the Top 10 in the U.S. for a low cost of living at 8.7% below the national average.
  • Kansas worker compensation rates rank at 9th lowest in the U.S.
  • Kansas is a Right-to-Work state.  Our union membership is 7.8%, well below the national average.
  • Over 90% of Kansas adults have a high school diploma and over 30% have a college degree.
  • Kansas was named “The Comeback State of 2019” by CNBC. Fiscal stability, workforce development, infrastructure, cost of doing business, business friendliness and access to capital all added up to a 16-point jump in their “Top States for Business” rankings—making us the most improved state in the country.
  • CNBC ranks Kansas 3rd for Infrastructure and the Reasons Foundation ranks us 2nd in their Annual State Highway Report based on 11factors such as pavement conditions, maintenance, bridge infrastructure, and commute times.

 

SITE LOCATION ASSISTANCE

The Business Recruitment Team for the Kansas Department of Commerce can assist with various site location needs. Whether you’re seeking buildings or sites, our team has the resources and information to help you make an informed decision. Our Business Recruitment Team creates customized incentive proposals for clients based on capital investment, job creation, employee salaries and each company’s unique needs. We also coordinate with community economic development professionals for local incentives such as discounted building and land purchases, reduced property taxes, build-to-suit agreements and finance packages. All types of assistance offered for new company locations are also available for subsequent expansions.

FINANCING

Community Development Block Grant (CDBG): The Small Cities Community Development Block Grant Economic Development (CDBG-ED) program is a source of financing for companies that are expanding an existing facility or starting a new operation in the non-metropolitan areas of Kansas. The maximum amount of funds available is $750,000 per project.

There are two parts to the program: business finance and infrastructure. Under the business finance component, funds are available for working capital, machinery and equipment and real property. The interest rate is currently set at 4%. The term of the loan is based on the class of the asset being financed. The working capital loan has a term of five years, machinery and equipment 10 years and real property 15 years. If the project finishes by the end of the 24 month contract period without any issues, delays, etc., a 25% discount will be applied to the principal portion of the loan at the time of project closure. Under the infrastructure component, funding is available for water lines, sewer lines, roads, rail spurs and pre-treatment facilities. Infrastructure funding requires that 25% of the funds be paid back over a 10-year period at a rate of zero percent. This is accomplished through a special assessment placed on the real property.

In order to obtain the funds, the city or county governing body applies on behalf of the private business. Applications are accepted from January 1 through December 6. Funding requires the creation or retention of one full-time job for up to $35,000. The maximum amount of CDBG assistance can be up to $750,000. At least 51% of the jobs created or retained must meet HUD’s low- and moderate-income (LMI) test, which is based on median family income in the county in which the project is located.

Industrial Revenue Bonds (IRBs): Industrial Revenue Bonds are a popular method of financing up to 100% of a growing business’ land, building and equipment. IRBs 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.

Promoting Employment Across Kansas (PEAK): This program offers qualified companies the ability to retain 95% of their payroll withholding tax for up to five to seven years. It is available for new operations in Kansas as well as relocated operations to the state. 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% of payroll withholding tax for a period of up to 10 years. The number of years that the withholding tax can be retained depends on how much the annual median 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.

If the aggregate median wage of the new jobs does not qualify the project for PEAK, the annual average wage of the new jobs can be used. Qualifying through the use of the average wage limits the benefits received.. A PEAK application must be submitted before locating or creating PEAK-eligible jobs in Kansas.

TAX INCENTIVES

The corporate income tax rate in Kansas is 4% of net income. Net income in excess of $50,000 is subject to a surtax of 3%.

For corporations having facilities both inside and outside the state, the net income attributed to the Kansas operation is based upon the percentage of the corporation’s business located in Kansas. A business’ tax obligation is determined by a three-factor formula using the proportion of sales, property and payroll attributable to the Kansas facility.  Corporations may opt to use a two-factor (sales and property) apportionment formula to calculate tax liability if the payroll factor for a taxable year exceeds 200% of the average of the property and sales factors.  State law allows net operating losses to be carried forward to each of the ten years following the taxable year of the net operating loss.

However, Kansas offers income tax credit programs to significantly reduce a company’s tax liability.  The tax credits earned by a legal entity can be used to offset the Kansas income tax liability of that same entity.

High Performance Incentive Program (HPIP): This program provides a 10% 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% 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 million for the urban counties of Douglas, Johnson, Sedgwick, Shawnee and Wyandotte. For all other counties, the minimum investment threshold is $50,000. A key component of HPIP is the completion of the Project Description form, which must be submitted to the Department of Commerce prior to the company signing any document, such as a lease or purchase agreement, which commits the company to locating or expanding in Kansas.

Sales Tax Exemptions: The Kansas state sales and use tax rate is 6.5%. However, there are several sales tax exemptions available which 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
  • 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
  • Real and personal property financed with an Industrial Revenue Bond

Inventory Tax Exemption: All merchant and manufacturers’ inventories are exempt from property taxes by state law.

Machinery & Equipment Expensing Deduction: Eligible Kansas taxpayers are allowed to claim an expense deduction for business machinery and equipment, placed into service in Kansas. This is a one-time deduction for each qualified purchase of machinery and equipment in the year that it is placed in service. Unused expense deduction is treated as a Kansas net operating loss that may be carried forward for 10 years. Eligible investment is machinery and equipment depreciable under the Modified Accelerated Cost Recovery System (MACRS) in section 168 of the Internal Revenue Code, or canned software as defined in section 197 of the Internal Revenue Code. Examples of eligible equipment include manufacturing equipment, office furniture, computers, software and racking.

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.

No Local Income Taxes: Kansas cities and counties do not impose an earnings tax on personal or corporate income.

No Kansas Franchise Tax: Kansas eliminated its franchise tax in 2011.

Real 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.

Research Tax Credit: Kansas offers an income tax credit equal to 6.5% of a company’s investment in research and development above the average expenditure of the previous three-year period. Twenty-five percent (25%) of the allowable annual credit may be claimed in any one year.

Rural Opportunity Zones (ROZ): Designed to spur economic development in and expand job growth in almost 80 key 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 ROZ 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 repayment assistance of up to $3,000 per year for five years ($15,000 maximum benefit) for individuals who graduate from an accredited post-secondary institution and move to a ROZ county after their degree is earned. The student loan repayment assistance portion of the program is a county-state partnership, counties must opt in to participate and the participant much have a sponsor to participate.

 

WORKFORCE DEVELOPMENT

Workforce Training Programs:  The Department of Commerce has two workforce training programs to offset a company’s training costs. Companies creating new jobs may qualify for Kansas Industrial Training (KIT) assistance. Eligibility for the program depends on the number of jobs created and the corresponding wages. We also have 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 of these 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; video development; textbooks and training manuals; supplies and materials; curriculum planning and development and minor training equipment.

Workforce Development Assistance: A wide variety of services are available through the Kansas Workforce Centers located throughout the state. Services can include: statewide and national job listings; applicant pre-screening and application acceptance; space to conduct interviews as well as staff to assist in scheduling; space for job fairs; applicant assessment services and testing; Veteran services; and current labor market information. These services are available to all Kansas employers at no cost and may be accessed through KANSASWORKS.com or by contacting the local Kansas Workforce Center.

To learn more about the benefits of doing business in Kansas, please contact our Business Development Office at (785) 296-5298 or KansasCommerce.Gov

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