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McPherson Industry Development Incentives

Industrial Revenue Bonds (IRB's) are among the most popular and cost-efficient methods of financing a new or expanding company's land, building, and equipment. In 1960 the Kansas Legislature approved, by statute, the use of IRB financing, including a restricted eligibility for property tax exemption on capital investment. McPherson and McPherson County governments were among the first to capitalize on the use of these instruments to originate and grow a strong, diversified industrial base. In 1986 the people of Kansas voted to amend the Kansas Constitution to provide the incentive of a restricted property tax exemption without the requirement of an industrial revenue bond financing. Again McPherson/McPherson County recognized and implemented policies regarding this incentive to further strengthen the area's economic base. Over sixty businesses in the McPherson area have benefitted from these programs.

SITE LOCATION ASSISTANCE

The Business Recruitment Team for the Kansas Department of Commerce can assist you 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.

FINANCE PROGRAMS

Promoting Employment Across Kansas (PEAK) – This 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.

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.

Industrial Revenue Bonds (IRBs) – Industrial Revenue Bonds 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 (CDBG) – Eligible small city and county governments may apply for Community Development Block Grant economic development 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. Under this program, 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 – 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 (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 workforce training 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. 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; 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.

INCOME TAX INCENTIVES

High Performance Incentive Program (HPIP)
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 ten 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 million for urban counties of Douglas, Johnson, Sedgwick, Shawnee and Wyandotte. For all other counties, the minimum investment threshold is $50,000.

A key component of the 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.

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

Sales Tax Exemptions 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)

OTHER TAX INCENTIVES AND BUSINESS INITIATIVES

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. 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.

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.

No Kansas Franchise Tax – Kansas phased out its franchise tax in 2011.

Workers’ Compensation – The Kansas workers’ compensation program has undergone major changes over the past few years which has resulted in our premium rates being ranked 9th lowest in the U.S. 

Rural Opportunity Zones Program
Rural Opportunity Zones (ROZs) are 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 will take effect July 1, 2011.

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.

KANSAS QUICK FACTS

Kansas Education

  • Kansas has one of the most educated and skilled labor pools in the nation as evidenced by the state’s commitment to education spending which is 12th best in the nation.
  • Kansas ranks 15th in the nation for percent of adults, 25 and over, with a high school education and 16th for percent of adults with a college degree.
  • Our educated labor force works at a very competitive rate, which makes our state’s cost of doing business nearly 25 percent below the most expensive state. Kansas has several major universities educating our future workforce: University of Kansas, Kansas State University, Wichita State University, Fort Hays State University, Pittsburg State University, Emporia State University, Washburn University and 26 community & technical colleges statewide.

Kansas Transportation

  • Kansas ranks third nationally with 140,609 total road and street miles and 10,607 highway miles. Interstates 70 and 35 cross Kansas and connect with I-29, part of the North American Free Trade Agreement (NAFTA) corridor. Our strategic location allows next-day freight delivery to nearly 70 percent of the U.S.
  • Kansas ranks in the top 10 in the U.S. in railroad mileage with 4,776 miles of track. Four Class I and 13 Class III secondary rail carriers ensure freight service to virtually anywhere in Kansas, since the countless tons of grain grown here have for decades mandated a comprehensive rail system.
  • The largest airports are Kansas City International and Wichita Mid-Continent, with multiple national and regional carriers. Eight regional airports also offer commercial air service.

Kansas Electricity, Natural Gas and Telecommunications

  • Electricity costs in Kansas are below the national average supplemented by the excess electric generating reserve and transmission capacity through the three largest investor-owned companies in the state.
  • Kansas is also below the national average for natural gas prices for industrial consumers. The 4,800 square-mile Hugoton Gas Field makes the state a leading natural gas exporter.
  • Thanks to Kansas' central location, businesses have access to east-west and north-south major trunk lines, connecting to a nationwide fiber optic network..

Click here for a printable version of the Kansas Business Incentives.

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Kansas Business Development Incentives


MACHINERY & EQUIPMENT EXPENSE 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.

PROMOTING EMPLOYMENT ACROSS 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 five or more 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.

Eligibility:

a) Must be creating new jobs in Kansas resulting from relocating, locating or expanding a business.

b) For-profit companies shall not have the NAICS assignment of:

o Industry group 7132 (Gambling Industries) or 8131 (Religious Organizations);
o Sectors 44 & 45 (Retail Trade), 61 (Educational Services), 92 (Public Administration) or 221 (Utilities including water & sewer services);
o Subsector 722 (Food Services and Drinking Places);unless applying as an international or national headquarters or an administrative/back office facility

c) Not-for-profit regional/national headquarters may apply.

d) Shall not be a bioscience company (as defined in KSA 2008 Supp. 74-99b33 and amendments thereto).

e) Shall not be delinquent in the payment of taxes to any federal, state and/or local taxing entities.

f) Shall not be under the protection of the federal bankruptcy code.

g) Must make available to full-time employees adequate health insurance coverage and pay at least 50 percent (50%) of the premium.

h) Must have a median or average 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.

i) 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.

j) Must create a minimum of 100 jobs within two years of application regardless of location to receive high impact program benefits.

k) 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. For more information, see our web site at www.kansascommerce.com.

HIGH PERFORMANCE INCENTIVE PROGRAM (HPIP):

The HPIP provides an investment tax credit and other incentives to companies that pay above average wages and have a strong commitment to skills development for their workers. Eligible companies may receive substantial investment tax credits and other incentives if they satisfy wage and training criteria.

Eligible NAICS include all NAICS that begin with 3 and other NAICS categories which include 2211 – 2213;
4231 – 4251; 4811- 5191; 5211 – 7213; and 8111 – 9281. A worksite with any NAICS code may qualify if they are designated, by the secretary, as a headquarters or back-office operation of a national or multi-national firm.

Eligibility:

(1) Must pay above average industry wage.
(2) Invest an amount equal to 2 percent of payroll in employee training or participate in a State training program.
(3) Business activities fall within NAICS codes other than those for agriculture, mining,
construction, and retailing. For companies that are otherwise eligible but are not manufacturers at least 51 percent of revenues must be generated from sales to Kansas manufacturers; and/or out-of-state commercial; and/or governmental customers.

Benefits:

a) A tax credit for capital investment, with a 16-year carry-forward, equal to up to 10 percent of the eligible investment that exceeds $ 1 million in Douglas, Johnson, Sedgwick, Shawnee and Wyandotte counties and exceeds $50,000 in all other counties.
b) Exemption from sales tax for eligible capital investments/services.
c) A potential workforce training tax credit up to $50,000 per year on training Expenditures above two percent of the company payroll.
d) Priority consideration for other assistance programs offered through Commerce, KTEC, and MAMTC.

NOTE: Cannot be used if taxpayer elects Expensing Deduction.

UTILITIES SALES TAX EXEMPTION:

Electricity, gas, and water consumed to run machinery and equipment to produce, manufacture, process, mine, drill or refine tangible personal property is exempt from state and local sales tax. Form BT/st-28B

MACHINERY SALES TAX EXEMPTION:

The sale of machinery and equipment (including repair and replacement parts and accessories) which is used in Kansas as an integral or essential part of an integrated production operation by a manufacturing or processing plant or facility is exempt from sales tax. The installation, repair and maintenance services performed on this equipment shall also be exempt from sales tax. (K.S.A. 79-3606). Form ST-201

INVENTORY PROPERTY TAX EXEMPTION:

A property tax exemption exists for merchants’ and manufacturers’ inventory.

Eligibility: Inventory includes those items that:

a) are primarily held for sale in the ordinary course of business (finished goods):
b) are in process of production for sale (work in progress); or
c) are to be consumed either directly or indirectly in the production of finished goods (raw materials and supplies).

Benefits:

Items of inventory are exempt from property tax.

COMMERCIAL & INDUSTRIAL PROPERTY TAX EXEMPTION:

All commercial and industrial, telecommunications and railroad machinery and equipment acquired by qualified purchase or lease

  • made or entered into after June 30, 2006
  • as a result of a bona fide transaction
  • not consummated for the purpose of avoiding taxation
  • transported into Kansas after June 30, 2006 for the purpose of expanding an existing business or the creation of a new business shall be exempt from personal property tax.

RESEARCH TAX CREDIT:

In order to encourage research and development activities within the state, taxpayers who invest in research and development are entitled to tax credits against Kansas income tax liability (K.S.A. 79-32182).

Eligibility:

Qualified research expenditures are defined in federal internal revenue code of
1986, amended.

Benefits:

Tax credit equals 6.5% of the amount by which a company’s investment in R&D
that exceeds the average expenditure of the previous three year period. 25% of
the allowable annual credit may be claimed in any one year. Unused credits may
be carried forward indefinitely.

NOTE: Cannot be used if taxpayer elects Expensing Deduction.

DAY CARE FACILITIES TAX CREDIT:

Tax credits are offered against Kansas Income tax liability for businesses providing child day care services to employees. These credits apply to taxpayers who pay for or provide child day care services for their employees or that provide facilities and necessary equipment for child day care services. (K.S.A. 79-32,190.)

Eligibility:

Day care facilities must be licensed or registered pursuant to Kansas law.

Benefits:

The amount of credit is based on the amount spent by the taxpayer less any
contribution from its employees or any other source(s). Not to exceed $45,000
for the first year a facility is established or $30,000 for subsequent years. Any
approved credit that exceeds the taxpayer’s tax liability for the tax year will be
refunded.

WORK OPPORTUNITY TAX CREDITS:

The Work Opportunity Tax Credit (WOTC) and Welfare-to-Work tax credit are federal income tax credits that encourage employers to hire job seekers who face the greatest barriers to employment.

Eligibility:

Private-for-profit employers. Hires not eligible for certification: relatives, non-related
dependents, self-employed individuals, non-qualifying re-hires, majority stockholders, members of partnerships and Sub-Chapter S shareholders. Contact program manager for listing eligible target groups.

Benefits:

Federal tax credit up to $2400 per qualified hire.

WORK FORCE TRAINING:

The KIT and KIR programs can pay for the costs of training new employees or retraining existing workers. Instructors may come from your supervisory staff, community colleges, area technical schools, consultants, vendors, or other sources. Training may take place at your business, a local school or temporary rental facility. Eligible costs include: instructors salaries, curriculum planning and development, travel expenses, materials and supplies, training aids, minor equipment, and certain training facilities.

Programs focus on firms involved in manufacturing, distribution, regional or national service, agriculture, mining, research and development, interstate transportation, and tourism activities primarily aimed at attracting out-of-state tourists.

Kansas Industrial Retraining (KIR): For restructuring companies whose employees are likely to be displaced to obsolete or inadequate job skills or knowledge. The program will provide assistance for retraining existing employees.

Eligibility:

Companies restructuring their operations through incorporation of existing
technology, development and incorporation of new technology, diversification of
production or the development and implementation of new production activities.

Positions being retrained must be paid a minimum average wage of at least $11.00
per hour in the metro-counties and $9.50 per hour elsewhere.

Benefits:

Company must provide dollar-for-dollar match.
Typical award is $300 to $600 per trainee.

Kansas Industrial Training (KIT): The KIT program is designed to help new and expanding companies offset the costs of training workers for new jobs. Training funds can be used to reimburse negotiated costs for pre-employment, on-the-job and classroom training.

Eligibility:

Creation of one new job that pays an average wage of at least $11.00 per hour in the metro-counties and $9.50 per hour elsewhere.

Benefits:

Up to 100 percent training costs. Typical award is $300 to $600 per trainee.

INTERNATIONAL TRADE INCENTIVES

Market Research
Free market research assistance is available for your product in international markets. The professional, multilingual staff in our Kansas state offices offer direct and immediate assistance, information, introductions and qualified agent/distributor searches around the globe.

Kansas International Trade Show Assistance Program
KITSAP offers financial support to Kansas companies exhibiting in foreign and domestic trade shows attracting substantial international buyers.

Eligibility:

Any Kansas company with products or services originating within the state. To qualify for assistance, the company must be exhibiting for the first time and submit an application
prior to attending the trade show.

Benefits:

Reimbursement of one-half of a company’s eligible direct exhibition-related expenses:

a) Up to $3,500 per foreign show;
b) $7,000 annual maximum in total combined assistance;
c) Reimbursable expenses include: booth space rental; design and construction; booth space assembly and disassembly; booth furniture and/or equipment rental; booth utilities; interpreter fees at show and translation of materials/literature; freight of equipment/materials (for shows outside U.S.); custom broker fees, foreign value added tax and visas.

OTHER PROGRAMS

Mid/America Manufacturing Technology Center (MAMTC): MAMTC is a non-profit organization, whose mission is to improve the competitiveness of small and mid-sized manufacturers. MAMTC identifies and aids in solving technical problems in the manufacturing process by making the manufacturer aware of currently available technology and management techniques. MAMTC engineers are located in several Kansas cities and provide four main types of services, including one-on-one consultations, training, equipment demonstration, and industry networks. The key service is hands-on consultation, with a focus on identifying problems or areas of improvement, implementing steps to address future challenges.

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