Over the past year and a half, the state of Kansas has passed legislation to improve their incentive offerings for new and expanding businesses. The most notable parts of this legislation are the inclusion of remote workforce in incentive program projects, an increase from 6.5% to 10% in the state Research & Development (R&D) credit amount, the removal of training program participation for High Performance Incentive Program (HPIP) participants, and the introduction of a significant benefits package through the Attracting Powerful Economic Expansion (APEX) program.
Remote Workforce Inclusion
With the onset of COVID-19 and migration to remote work, Kansas now provides flexibility for incentive program projects to include their remote workforce. Remote employees can be included in a taxpayer’s project if they pay withholding to the state, appear on the Kansas Department of Labor report, appear on a Kansas facility’s payroll, and fulfill all other program related requirements.
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Research and Development Tax Credit
For tax years beginning after December 31st, 2022, HB 2239 increased the state’s existing R&D Tax Credit from 6.5% to 10% of a company’s research and development investments above an average of the actual expenditure in R&D made in the taxable year and the two immediately preceding taxable years. In addition, the bill opens the credit to all income taxpayers rather than just corporate income taxpayers. The bill also allows for a one-time, non-refundable transfer of the entire credit from a taxpayer without current tax liability to any person who can use the credit against their tax liability in the year of transfer.
High Performance Incentive Program (HPIP)
SB 65 removed the qualification requirement of participating in a state training program, Kansas Industrial Training or Retraining (KIT/KIR) for the High Performance Incentive Program (HPIP).
The bill also allows taxpayers with projects started after January 1, 2021 to sell or transfer up to 50% of their earned HPIP credits. The taxpayer may request to sell or transfer HPIP credits up to two times within a tax year.
Attracting Powerful Economic Expansion
Effective February 10th, 2022, SB 347 established APEX or Attracting Powerful Economic Expansion, which offers companies and five of their suppliers in target industries a significant benefits package for investments over $1 billion in the location, relocation, or expansion of operations in Kansas. The benefits package includes a refundable investment tax credit, partial payroll rebate, training reimbursement, relocation reimbursement, and sales tax exemption for materials used in the construction of a new or expanding facility. See the table below for specific values of the benefits for the qualifying firm and five of their qualifying suppliers.
|
Qualifying Firm |
Qualifying Supplier |
|
|
Refundable Investment Tax Credit |
Up to 15% of qualifying capital investment |
Up to 10% of first $100M qualifying capital investment |
|
Partial Rebate of Payroll |
Up to 10% per year for up to 10 years |
Up to 65% per year for up to 10 years |
|
Training Reimbursement |
Up to 50% of qualifying expenses not to exceed $5M annually and $25M total |
Up to 50% of qualifying expenses not to exceed $250K annually and $1.25M total |
|
Relocation Reimbursement |
Up to 50% for non-Kansas residents limited to $1M annually and $10M total |
Not applicable |
|
Sales Tax Exemption |
100% exemption up front for materials to construct facility |
100% exemption up front for materials to construct facility |
For additional information or questions regarding these changes in Kansas, our team of tax specialists can assist. Contact us today.
