Financing & Incentives
State of Kansas Incentives
Kansas offers a diverse economy perfect for your business. Building from an agribusiness base, the state today is thriving and competitive in manufacturing, professional services and wholesale and retail trades. But don’t just take our word for it. Ask the folks at CNBC, Forbes, Site Selection and Area Development magazines, all of which have named Kansas a premiere state for business.
International companies like Perceptive Software, Hostess, Bayer, Staples, Zurich, Exide,Mars, Teva and Starwood all have a Kansas address because they saw the advantages:
- Competitive financial incentives
- Low operating costs and low cost of living
- Business-friendly policies
- Leaders who know business
- Highly skilled and educated workforce
- Excellent transportation corridors
Strengthened efforts to grow business in Kansas are paying off, and we’re seeing a surge in key industries, such as Alternative Energy, Distribution, Bioscience, Advanced Manufacturing and Food Processing. Our state’s leadership is innovative and forward thinking, continuing to approve new programs to help promote our state for existing as well as targeted new industries.
Take a look at Kansas. You’ll like what you see.
Business and Community Finance and Incentives
The Kansas Department of Commerce offers a diverse portfolio of financial incentives for rural communities and businesses that are looking to locate or expand in Kansas.
Programs include retention of withholding taxes, investment tax credits, sales tax project exemptions and revolving loan funds for local infrastructure projects, as well as loans and/or grants to assist rural communities in improving infrastructure, housing and urgent needs to maintain and grow.
Below is a list of our most widely utilized financial incentives. To apply for incentives below please reveiw the following documents. All forms should be emailed to Craig VanWey at the KS Department of Commerce.
The Kansas Department of Commerce provides aid to businesses and governmental entities applying for economic development and/or industrial revenue bond tax abatements.
The High Performance Incentive Program provides tax incentives to employers that pay above-average wages and have a strong commitment to skills development for their workers.
- Potential for up to a 10% tax credit on qualified, new capital investment beyond the first $50,000 of investment (i.e. $2,000,000 investment could potentially result in a $195,000 investment tax credit -- 10% of $1,950,000).
- Potential for up to a $50,000 per year (workforce) training tax credit on training expenditures exceeding two percent of company payroll.
- Exemption from sales tax for eligible capital investment/expenditures. Submit Form PR-70b (Request for Project Exemption Certificate)
- Eligibility based upon two criteria: (1) pay an above average wage for NAICS category for region of the state; and (2) invest at least two percent of payroll in training or participate in one of Commerce’s workforce training programs such as KIT or KIR (depends on timing of contract)
- Actual investment must occur while the company’s worksite is HPIP certified.
- Investment must be documented to Commerce prior to the company’s written or contractual committal to the investment; using HPIP Form – Project Description.
- Maximum of 16-year carry forward on unused credits. Company must become HPIP “re-certified” in any year in which unused credits are applied.
- No job creation required to participate.
- Cannot be used if taxpayer chooses Machinery & Equipment Expense Deduction.
HPIP Applications will require a non-refundable $750 fee to complete the application. The fee may be paid by either 1) mailing a check to the Kansas Department of Commerce; or 2) paid online using ACH/debit/credit card.
PEAK is intended to encourage economic development in Kansas by incenting companies to relocate, locate or expand business operations and jobs in Kansas.
The Promoting Employment Across Kansas (PEAK) incentive program allows qualified for-profit and regional/ national non-for-profit headquarter companies that are locating new jobs or expanding existing Kansas operation, to retain 95 percent (95%) of the payroll withholding tax of the PEAK jobs over a period of up to 10 years. Per K.S.A. 74-50,210 through 74-50,216 (also known as the PEAK Act), the Secretary of Commerce has sole discretion to approve qualified companies and determine length of benefit.
The company’s wages for PEAK jobs must meet or exceed the county median wage or regional North American Industry Classification System (NAICS) industry average wage.
- Must be creating new jobs in Kansas resulting from relocating, locating or expanding a business.
- For-profit companies shall not have the NAICS assignment of:
- Industry group 7132 (Gambling Industries) or 8131 (Religious Organizations);
- Sectors 44 & 45 (Retail Trade), 61 (Educational Services), 92 (Public Administration) or 221 (Utilities including water & sewer services);
- Subsector 722 (Food Services and Drinking Places);unless applying as an international or national headquarters or an administrative/back office facility
- Not-for-profit regional/national headquarters may apply.
- Shall not be a bioscience company (as defined in KSA 2008 Supp. 74-99b33 and amendments thereto).
- Shall not be delinquent in the payment of taxes to any federal, state and/or local taxing entities.
- Shall not be under the protection of the federal bankruptcy code.
- Must make available to full-time employees adequate health insurance coverage and pay at least 50 percent (50%) of the premium.
- Must have a median wage for PEAK jobs of at least 100 percent (100%) of the county median wage (CMW) or industry NAICS as published by the Kansas Department of Labor (KDOL) at the time of application for the county in which the jobs will be located. (Note: If the median wage for PEAK jobs does not qualify the project for PEAK, the annual average wage for the jobs can be used. Qualifying through the use of average wage limits the benefits received)
- Must create a minimum of 10 PEAK jobs in a designated metropolitan (metro) county within two years of application to receive basic program benefits. Businesses located all other counties must create 5 PEAK jobs within two years.
- Must create a minimum of 100 jobs within two years of application regardless of location to receive high impact program benefits.
- Must be approved by the Secretary of Commerce (Secretary) to participate in program.
Applications are accepted throughout the year and must be received prior to hiring PEAK jobs/ employees in Kansas.
PEAK Applications require a non-refundable $750 fee to complete the application. The fee may be paid by either 1) mailing a check to the Kansas Department of Commerce; or 2) paid online using ACH/debit/credit card.
Machinery & Equipment 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. 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.
Eligible investment is in 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, racking. Qualifying property excludes residential rental property, nonresidential real property, any railroad grading or tunnel bore or any other property with an applicable recovery period in excess of 25 years as defined under section 168(c) or (g) under the internal revenue code.
If taxpayer elects to claim expensing deduction, they cannot claim tax credits or other incentives under the following: high performance incentive program credit; research and development credit; alternative fuel vehicle credit; swine facility improvement credit; historic preservation credit; refinery credit or accelerated depreciation; oil or gas pipeline or accelerated depreciation; integrated coal or coke gasification nitrogen fertilizer plant credit or accelerated depreciation; biomass-to-energy plant credit or accelerated depreciation; integrated coal gasification power plant credit; renewable electric cogeneration facility credit or accelerated depreciation; biofuel storage and blending equipment credit or accelerated depreciation; carbon dioxide capture equipment credit; or film production credit.
The expensing deduction program and HPIP cannot both be utilized for the same item/asset. However, expensing & HPIP can be used for the same project. For instance, if a project involves both construction (real property) and M&E purchases (personal property), the M&E purchases could benefit from expensing while the building construction/expansion/renovation investment could benefit from HPIP. (Use Form K-120 EX to claim expense deduction allowance)
Contact: Jim Weisgerber, Dept. of Revenue, 785-296-2479
Rural Opportunity Zones are 77 counties that have been authorized to offer financial incentives to new full-time residents.
Income Tax Incentive
Beginning with this tax year, individuals who return from five years or more out-of-state to establish residency in one of the 77 ROZ counties can receive a tax credit against their Kansas income tax for up to five consecutive years. Individuals must move to a ROZ county, establish residency there, and live in the county for a full taxable year. Individuals must not have earned more than $10,000 in Kansas-source income per year for five years before establishing their home in the ROZ County.
Student Loan Repayment Incentive
The second incentive allows for repayment of a portion of a student loan up to a maximum of $15,000 to be paid by the county and the state of Kansas to a person who establishes residency in a ROZ county in 20 percent increments for up to five years. The county commission for each county must choose to participate and officially notify the Kansas Department of Commerce. The individual must relocate to the ROZ County. To earn the full repayment, they must remain living there for at least five years. Employers are also able to sponsor student loan recipients (employees) and therefore choose the beneficiary. The program is scheduled to end Jan. 1, 2022.
Contact: Brett Sayre, Commerce, 785-296-5418.
The Kansas Industrial Retraining program is a job retention tool that helps employees of restructuring companies who are likely to be displaced because of obsolete or inadequate job skills and knowledge.
- Provides workforce training funds to companies to help offset costs of training existing employees.
- Avg. award (per trainee), wage requirement, health care requirement and eligible costs same as KIT.
- Maximum funding for a training project is 50% of total costs – requires dollar-for-dollar match from company.
- Companies must submit a KIR application prior to or concurrent with the beginning of their training program.
Companies must show that they are restructuring their business or retraining their current workforce due to one or more of the following: Incorporation of existing technology; Development & incorporation of new technology; Diversification of production; Development & implementation of new production.
The KIT program may be used to assist firms involved in job creation. Training can include pre-employment, classroom and on-the-training by in-house instructors or vendors.
- Provides workforce training funds to companies to help offset costs of training net new employees.
- Maximum award per trainee is $2,000; however, the average award is typically $200 to $400 per trainee.
- Average annual wage for trainees must meet or exceed the county median wage for business/project location.
- Company must make health care available to its employees and the Plan must include the following: hospital care; physician care; mental health care; substance abuse treatment; pre-natal & post-natal care; and prescription drug coverage.
- Wide range of eligible costs are allowed (i.e. instructors’ salaries/fees, training curriculum/manuals).
- Companies must submit a KIT application prior to or concurrent with the beginning of their hiring phase.
The Kansas Capital Multiplier Loan and Venture Funds are programs that provide matching funds through a partner network to eligible businesses in communities across Kansas. Funding is provided through the United States Treasury via the State Small Business Credit Initiative (SSBCI).
The Work Opportunity Tax Credit helps people move from welfare to work and gain on-the-job experience by encouraging private employers to hire within one of several targeted groups of job candidates who traditionally face significant barriers to employment
The Department of Commerce offers a diverse portfolio of financial incentives to Kansas businesses and producers engaged in conventional and renewable energy production.
Kansas income tax credits are available to qualified individuals who provide seed-capital financing for emerging Kansas businesses engaged in development, implementation and commercialization of innovative technologies, products and services.
Kansas Certified Development Companies (CDC) help businesses access the numerous loan programs available from a variety of sources.
The Small Cities Community Development Block Grant (CDBG) Program allows the Department of Commerce to distribute federal funds to Kansas cities and counties looking to improve their community.
The Kansas Community Service Program (CSP) has given nonprofit organizations a way to improve their ability to undertake major capital fund-raising drives for various projects.
The KANSASWORKS Employer Partner Incentive connects job seekers with disabilities to employers.
Category: State Incentives, Recruitment
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