Enterprise Zone Tax Credits

E-Zone incentives are available to qualifying businesses throughout the state based on the location of the facility, the type of business operation, the capital investment, and the number of net new jobs created.

The Kansas Enterprise Zone program covers the entire state, unlike similar programs in other states that have limited geographic areas of eligibility. Basic E-Zone incentives are available to eligible businesses throughout the state. All counties, with the exception of Douglas, Johnson, Leavenworth, Sedgwick, Shawnee, and Wyandotte are eligible for approval as designated non-metropolitan regions. Businesses in designated non-metropolitan regions may be eligible for enhanced incentives. Under the Enterprise Zone program, earned credits may be used to offset up to 100 percent of the business' annual state income tax liability, starting in the year the jobs are created and the investment is made. Unused credits may be carried forward indefinitely and applied in subsequent tax years until the credits are exhausted. E-Zone incentives include a sales tax exemption for expenditures made on the materials, equipment, and services purchased when building, expanding, or renovating a business facility. The sales tax exemption is also available for facilities constructed and leased to a qualified firm. The amount of the exemption is dependent on the portion of the building leased and the costs of renovating or developing the facility. Partial exemptions, for leases where only a portion of the building is leased, are also available. Such exemptions may be calculated using a percent-of-total-square-feet-leased method or a cost-per-square-foot method for the leased space. Eligible purchases include the purchase and installation of machinery, equipment, labor, and materials used in the construction, reconstruction, enlarging, or remodeling of a qualified business facility. The exemption includes any telecommunications systems, quality control equipment, or pollution control equipment installed as a part of the aforementioned activities. Any person engaged in the building, remodeling, or enlargement of a facility that will be leased to a business for at least five years may receive the exemption as well. A business must file a Request for Project Exemption Certificate (form PR-70b) with the Department of Revenue before starting the project. Manufacturing and non-manufacturing businesses are eligible for all Enterprise Zone incentives. The sole Enterprise Zone incentive for retail businesses is the sales tax exemption and is only available in communities with a population of less than 2,500 or in unincorporated areas of counties with a population of less than 10,000.