Tax Credits for Expanding/Renovating an Existing Business

Certain facility expansions and renovations that meet the requirements of a "qualified business investment" are also eligible for tax credits under these programs. The facility must be owned and operated by the taxpayer before improvements are made. A qualified business investment is defined as the difference between the final value of the facility after the expansion and the average value of the facility in the year prior to the investment. If the property is newly acquired, its value (for the purpose of calculating the credit) is the original cost or eight times the first full year's lease payments if leased by the taxpayer. The business may opt to transfer or retain the credits if the facility is acquired by or leased to a related entity.

Enterprise Zone Incentives

One-time credits may be taken against 100 percent (100%) of income and premium tax liability; unused credits may be carried forward until exhausted. Firms may amend their income tax returns for up to three years to take advantage of the E-Zone credits if they failed to take advantage of allowable credits.

Conditions	Basic Incentives All Counties	Enhanced Incentives Non-Metro Counties
Manufacturing Firms Must create at least two net new jobs	Sales Tax Exemption Job Creation Tax Credit: $1,500 per net new job Investment Tax Credit: $1,000 per $100,000 of qualified business investment	Sales Tax Exemption Job Creation Tax Credit: $2,500 per net new job Investment Tax Credit: $1,000 per $100,000 of qualified business investment
Non-Manufacturing Firms Must create at least five net new jobs	Sales Tax Exemption Job Creation Tax Credit: $1,500 per net new job Investment Tax Credit: $1,000 per $100,000 of qualified business investment	Sales Tax Exemption Job Creation Tax Credit: $2,500 per net new job Investment Tax Credit: $1,000 per $100,000 of qualified business investment

Job Expansion and Investment Tax Credits

Credits may be taken against 50 percent (50%) of annual income tax liability. Credits may be deferred for up to three years.

Conditions	Basic Incentives All Communities	Communities Less Than 2,500 Pop. or Unincorporated Areas in Counties less than 10,000 Pop.
Retail Firms Must create at least two net new jobs	Sales Tax Exemption Job Creation Tax Credit: $100/year per net new job Investment Tax Credit: $100 per $100,000 of qualified business investment	Sales Tax Exemption Job Creation Tax Credit: $2,500 per net new job Investment Tax Credit: $1,000 per $100,000 of qualified business investment

Definitions

Ancillary Support Facility

Includes a facility operated by a business that provides services in support of the business but is not directly engaged in the business' primary function, regardless of the firm's classifications as a retail business.

Headquarters

A facility where principal officers of the business are housed and from which direction, management, or administrative support for transactions is provided for a business, division of a business, or regional division of a business.

Enhanced Incentives

Available only to designated non-metropolitan counties or regions as approved by the Secretary of the Kansas Department of Commerce & Housing.

Manufacturing Firm

Includes all commercial enterprises identified under standard industrial classification codes 20 through 39.

Net New Job

For new companies, any job that is new to Kansas is a "net new job." For an expanding industry or one building a replacement facility, a "net new job" refers to any job created over and above the employee base, which is determined by averaging the preceding year's annual employment.

Non-Manufacturing Firm

Includes any commercial enterprise other than a manufacturing or retail business.
Qualified Business Investment: Includes the value of all real and tangible personal business property except inventory or property intended for sale to customers. The value of such property is its original cost if owned by the company, or eight times the first year's rental rate if leased by the company. Equipment transferred to Kansas from out-of-state to a new or expanding facility is considered qualified investment. Such equipment is valued at its original purchase cost.

Retail

Includes the following:

1. Any business providing goods or services taxable under the Kansas Retailers' Sales Tax Act
2. Any professional service provider set forth in K.S.A. 17-2707 and amendments thereto
3. Any bank, S&L, or other lending institution
4. Any commercial enterprise whose primary business activity includes the sale of insurance
5. Any commercial enterprise deriving its revenues directly from non-commercial customers in exchange for personal
6. services such as, but not limited to, barber shops, photographic studios, and funeral services

Sales Tax Exemption

Eligible purchases include the purchase and installation of machinery and equipment; materials used in the construction, reconstruction, enlarging, or remodeling of a qualified business facility. The exemption includes any quality control 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.