Business Incentives

BUSINESSES THRIVE IN A PLACE WHERE PEOPLE CAN THINK BIG. They grow in an environment that fosters new ideas and offers wide-open opportunities. They prosper in cities with educated and motivated workers. Businesses find success in Kansas.

SITE LOCATION ASSISTANCE

The Kansas Department of Commerce's Business Recruitment Team can assist you with your location needs. Whether you're seeking buildings or sites, our team has the resources to provide current and accurate information. To preview available sites and properties, as well as incentive programs in Kansas, visit our recruitment Web site at www.thinkbigks.com.

CUSTOMIZED INCENTIVE PROPOSALS

Our Business Recruitment Team creates customized incentive proposals for clients. Proposals are 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. Although every project is unique, it's not unusual for a financially strong company with considerable job-creation potential to realize a significant state and local incentive package.

All types of assistance offered for new company locations are also available for subsequent expansions.

WORKFORCE TRAINING

The Department of Commerce routinely works with Kansas educational institutions to develop business-relevant training. These programs can be customized to meet an employer's specific needs. Kansas' universities, community colleges and technical colleges can help businesses analyze jobs; design, develop and evaluate training; screen potential employees; assess incumbent and potential employee skills; and recruit qualified employees.

The Department also continues to offer its traditional workforce training programs. Companies may design training programs to meet specific skill requirements and can apply to receive financial assistance to offset training costs. Companies creating new jobs may qualify for Investments in Major Projects and Comprehensive Training (IMPACT) or Kansas Industrial Training (KIT) assistance. Jobs created within a Kansas Basic Industry – which includes manufacturing, distribution, regional or national service facilities – may qualify for these programs. Eligibility for either program depends on the number of jobs created and the corresponding wages.

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); videotape development; textbooks and training manuals; supplies and materials; temporary training facilities; and curriculum planning and development.

WORKFORCE DEVELOPMENT ASSISTANCE

A variety of services are available through our Workforce Centers, which are located across the state. Services include: statewide and national job listings; applicant pre-screening; space to conduct interviews and job fairs, as well as staff to assist in scheduling; applicant assessment services and testing; and current labor market information. These services are available to all Kansas employers at no cost.

INCOME TAX INCENTIVES

Kansas has two corporate income tax credit programs available to eligible companies: the Enterprise Zone Program and the High Performance Incentive Program. These programs can substantially reduce a company's income tax liability depending on their job creation and capital investment.

Enterprise Zone Program

This program offers corporate income tax credits for new job creation and qualified capital investment in Kansas. The entire state of Kansas is designated as an Enterprise Zone.

Eligibility for this program depends on the type of business and the number of jobs created. For example, a firm classified as a manufacturer would need to create at least two net new jobs, while a non-manufacturer would need to create five net new jobs. The job creation tax credit in the metropolitan areas of Kansas City, Topeka, Wichita and Lawrence is $1,500 per new job created. Designated non-metropolitan areas can provide a credit of $2,500 per new job created. The investment tax credit is 1 percent of qualified investment. Up to 100 percent of corporate income tax liability can be eliminated in a given year and unused credits may be carried forward indefinitely.

High Performance Incentive Program

This program provides a 10 percent corporate income tax credit on the qualified capital investment of an eligible company. The 10 percent tax credit is awarded to companies that operate an eligible business, pay above-average wages and invest in training their employees. The credits can be used to reduce 100 percent of corporate income tax liability in a given year. In addition, the credits must be used within a consecutive 10-year period.

Please note that for both the Enterprise Zone Program and the High Performance Incentive Program, 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.

A key component of the High Performance Incentive Program is the completion of the Capital Investment Project Description form. This form needs to be submitted to the Department of Commerce prior to the company signing any document, such as a lease or purchase agreement, that 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 after June 30, 2006 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.

Business Machinery and Equipment Credit

Kansas offers an annual tax credit against Kansas income tax equal to 25 percent of the personal property tax paid on commercial and industrial machinery and equipment that was in Kansas prior to June 30, 2006. The amount of the credit that exceeds the tax liability will be refunded for companies paying income tax.

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 local community or county.

SALES TAX EXEMPTIONS

Sales Tax Exemption

For qualifying companies, both the Enterprise Zone Program and High Performance Incentive Program offer a 100 percent sales tax exemption on the purchase of labor and materials to construct or remodel a facility, as well as on the machinery and equipment used in the facility. This exemption includes computers, furniture and fixtures.

Other Sales Tax Exemptions include:

1. Labor related to original construction
2. New machinery and equipment for manufacturing and distribution
3. 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
4. Tangible personal property that becomes an ingredient or component part of a finished product
5. Tangible personal property that is immediately consumed in the production process, including electric power, natural gas and water
6. Incoming and outgoing interstate telephone or transmission services (WATTS)
7. Real and personal property financed with an Industrial Revenue Bond (IRB)

OTHER TAX INCENTIVE PROGRAMS & BUSINESS INITIATIVES

Inventory Tax Exemption

All merchants' and manufacturers' inventories are exempt from property taxes by state constitutional amendment.

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. Only 25 percent of the allowable annual credit may be claimed in any one year. Unused credits may be carried forward in 25 percent increments until exhausted.

No Local Income Taxes

Kansas cities and counties do not impose income or earnings taxes on either personal or corporate income.

Phase Out of Kansas Franchise Tax

The 2007 Kansas Legislature passed legislation to phase out the franchise tax in Kansas over the next five years. The tax will be repealed altogether effective in tax year 2011.

Reduction of Unemployment Insurance Rates

In 2007, Kansas made significant reductions to unemployment insurance rates for existing and new employers in Kansas. Existing employers who are current on their account will see a reduction of 40 to 100 percent of their tax rate, depending on their rate category. New Kansas employers will also enjoy a drop in their tax rate, as the new rate for all non-construction industry employers is now 4 percent. Construction industry employers will pay 6 percent.

New Incentives for Ethanol and Biodiesel Fuel Production

Kansas promotes renewable fuels by offering direct financial incentives for production of ethanol and biodiesel fuels. Qualified companies may receive an incentive of $.075 per gallon for ethanol fuel and $.30 per gallon for biodiesel fuel.

FINANCE PROGRAMS

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 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

Industrial Revenue Bonds (IRBs) are a popular method of financing up to 100 percent 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.

Community Development Block Grant

Eligible small city and county governments may apply for Community

Development Block Grant (CDBG) economic development funds to make water, sewer 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. Under this program, companies can apply for up to $35,000 per job created with a maximum limit of $750,000.

CDBG funds can also be used for infrastructure improvements. Infrastructure funding takes the form of a half-grant and halfloan, with the loan portion having a 10-year term at 2 percent. Financing for working capital, equipment and real property carries a fixed rate set at 3 percent below prime as of the application date. The term of the loan depends on the type of asset being financed: working capital up to five years, equipment up to 10 years and real property up to 15 years.

At least 51 percent of the jobs created by the company in connection with this CDBG funding must be held by individuals, who at the time-of-hire, meet the low- to-moderate-income guidelines for their county location. The low- to-moderate-income status is based on family income and the number of members in the family.

Partnership Fund

The Department provides low-interest state funds 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

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

To learn more about the benefits of doing business in Kansas, please contact us at (785) 296-5298.

Download Business Incentives Brochure

1000 S.W. Jackson St., Suite 100
Topeka, KS 66612-1354
Phone: (785) 296-5298
Fax: (785) 296-3490
TTY: (785) 296-3487
E-mail: busdev@kansascommerce.com
thinkbigks.com

Photo courtesy of Overland Park Chamber of Commerce