Income Tax Incentives
Enterprise Zone Program
This program offers corporate income tax credits for net, new job creation and qualified capital investment in Kansas. Eligibility for this program depends on the type of business and the number of jobs created. Manufacturers need to create at least two net new jobs, non-manufacturers five net new jobs, and ancillary support and headquarters at least 20 net new jobs.
The Enterprise Zone job creation and investment tax credits are available throughout Kansas except for the metropolitan counties of Johnson, Wyandotte, Douglas, Shawnee, Sedgwick, and Leavenworth. All other areas of Kansas are considered in an Enterprise Zone and can offer the benefits of this program to eligible companies. The benefits include corporate income tax credits of $1,500 per net new job created and a 1 percent tax credit on qualified net, new capital investment. Designated non-metropolitan counties in Kansas can offer an enhanced tax credit of $2,500 per net, new job created. The credits can be used to significantly reduce a firm's corporate income tax liability in a given year, and unused credits may be carried forward to future tax years.
Companies qualified for Enterprise Zone program can receive a 100 percent sales tax exemption on taxable purchases related to construction, build-out, furnishings and equipment.
High Performance Incentive Program
This program 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 10 year period.
A key component of the High Performance Incentive Program 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.
Property Tax Incentives
Machinery and 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.
Sales Tax Exemptions
Other Sales Tax Exemptions include:
• Labor related to original construction;
• 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); and
• Real and personal property financed with an Industrial Revenue Bond (IRB).
Other Tax Incentives and Business Initiatives
Right-to-Work State - Union membership is well below the national average.
Inventory Tax Exemption - All merchant and manufacturers' inventories are exempt from property taxes.
Research Tax Credit - Kansas offers 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. Twenty-five percent of the allowable annual credit may be claimed in any one year.
No Local Income Taxes - Kansas cities and counties do not impose income or earnings taxes on personal or corporate income.
Phase Out of Kansas Franchise Tax - Kansas is phasing out its franchise tax and it will be repealed altogether by tax year 2011.
Renewable Energy - Kansas has a variety of incentive programs available for renewable energy, including the wind and solar bond financing program, as well as income tax credits for biodiesel, ethanol, cellulosic alcohol, and biomass-to-energy facilities and other renewable energy operations.
Kansas State Contact:
Kansas Department of Commerce
1000 S.W. Jackson Street, Suite 150
Topeka, KS 66612
Fax: (913) 345-8548
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.