Economic Development Incentives

Tax Incentives
Property Tax Rebate – Neighborhood Revitalization

The Neighborhood Revitalization Plan is intended to promote the revitalization and development of the city of Lansing by stimulating new construction and by rehabilitating, conserving, or redeveloping the area in order to protect the public health, safety, or welfare of the City by offering certain incentives, which include tax rebates. Please refer to the Neighborhood Revitalization section for more information.

State of Kansas Incentives – Department of Commerce

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

Potential Kansas sales tax exemption and Kansas income/privilege tax credits to businesses creating net new jobs in Kansas through major capital investment projects.

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.

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.

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

Additional Information
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.

Sales & Use Tax Exemptions
There are many exemptions to sales and use taxes in Kansas the following represent a few of the major exemptions:
  • Manufacturing machinery and equipment used to create, store, or distribute goods intended for sale
  • Tangible personal property, including electricity, gas, and water, if immediately consumed or dissipated during manufacturing
  • Tangible personal property which becomes an ingredient or component part of goods or services produced for sale
  • Labor charges incurred in connection with the original construction of a building or facility
  • The cost of building materials and items of equipment permanently installed by businesses using Industrial Revenue Bonds (IRBs)
  • Tangible personal property or services purchased to construct, reconstruct, or remodel a business that qualifies for sales tax exemptions.
  • Machinery, equipment, and certain other tangible property purchased by businesses qualifying for Job and Investment Tax Credits or the High Performance Business Incentive Program
  • Materials, equipment, and services purchased when building, expanding, or renovating a business which qualifies for the job expansion and investment credits of the Kansas Enterprise Zone Act