Business and Job Development Credit

The purpose of the business and job development credit is to provide tax incentives throughout the state which encourage businesses to create new jobs through capital investment projects involving the building of new facilities or the expansion or renovation of existing facilities. There are two different acts within the Kansas statutes which provide an income tax credit for those businesses which make an investment and create jobs as a result of that investment. The acts are the Job Expansion and Investment Credit Act of 1976 and the Kansas Enterprise Zone Act.

Effective for all taxable years beginning after Dec. 31, 2010, no business and job development credit computed under the Job Expansion and Investment Act of 1976 or the Kansas Enterprise Zone Act shall be allowed for those taxpayers that have made an investment and placed that investment into service after Dec. 31, 2010 in a facility which is located in a metropolitan county.

Effective for all taxable years beginning after Dec. 31, 2011, no business and job development credit computed under the Job Expansion and Investment Act of 1976 or the Kansas Enterprise Zone Act shall be allowed for those taxpayers that have made an investment and placed that investment into service after Dec. 31, 2011 in a facility which is located in an area other than a metropolitan county.

Remaining credits that have been earned under K.S.A. 79-32,160a may be carried forward to succeeding tax years as long as all requirements are met under K.S.A 79-32,160(a).

Credits that have been earned under K.S.A. 79-32,153 may be re-computed for the remaining applicable number of years as long as all requirements continue to be met under K.S.A.79-32,153.

JOB EXPANSION AND INVESTMENT CREDIT ACT OF 1976 (INCOME TAXPAYER)

Effective for all taxable years beginning after Dec. 31, 1975.

Qualifications

The business and job development credit is allowed as a direct tax credit against the income tax of any Kansas taxpayer if:

There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.

Credit Amount

For an investment that began operations after Dec. 31, 1992, the credit amounts are as follows:
Employee - $100 for each qualified employee
Investment - $100 for each $100,000 of qualified investment

For an investment that began operations prior to Dec. 31, 1992, the credit amounts are as follows:

Investment is located in an enterprise zone:
Employee
Kansas resident - $350 for each qualified employee
$500 for each qualified targeted employee as defined in the Internal Revenue Code

Kansas nonresident - $100 for each qualified employee

Investment - $350 for each $100,000 of qualified investment

Investment is not located in an enterprise zone:
Employee - $100 for each qualified employee
Investment - $100 for each $100,000 of qualified investment

Limitation of Credit

The credit is limited to 50 percent of the tax on the qualified business facility income for the tax year, but in no case can the credit from all qualified investment and employees be more than 50 percent of the Kansas income tax in any one tax year.

The credit is recomputed each year for a 10 year period and no carryover of unused credit is allowed.

Procedures to Claim the Credit

You may download Schedule K-34 and the Instructions for Investments that Began Operations in Tax Years Commencing on or after Jan. 1, 1993 to claim the business and job development credit under the Job Expansion and Investment Credit Act of 1976. There is also a Property Payroll Worksheet for S-Corps and Shareholders you may wish to download. Schedule K-34 must be completed and submitted with the individual or corporate income tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-34 and the appropriate instructions. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.

JOB EXPANSION AND INVESTMENT CREDIT ACT OF 1976 (PRIVILEGE TAXPAYER)

Effective for all taxable years beginning after Dec. 31, 1995.

QUALIFICATIONS

The business and job development credit is allowed as a direct tax credit against the privilege tax of banks and savings and loan institutions if:

There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.

The business and job credit development credit is available for investments which began operations after Dec. 31, 1995.

There is no tax credit available under the Job Expansion and Investment Credit Act of 1976 for any investments that began operations prior to Jan. 1, 1996.

Credit Amount

For an investment that began operations after Dec. 31, 1995, the credit amounts are as follows:
Employee - $100 for each qualified employee
Investment - $100 for each $100,000 of qualified investment

Limitation of Credit

The credit is limited to 50 percent of the tax on the qualified business facility income for the tax year, but in no case can the credit from all qualified investment and employees be more than 50 percent of the Kansas privilege tax in any one tax year.

The credit is recomputed each year for a 10 year period and no carryover of unused credit is allowed.

Procedures to Claim Credit

You may download Schedule K-34 and the Instructions for Investments that Began Operations in Tax Years Commencing on or after Jan. 1, 1993 to claim the business and job development credit under the Job Expansion and Investment Credit Act of 1976. There is also a Property Payroll Worksheet for S-Corps and Shareholders you may wish to download. Schedule K-34 must be completed and submitted with the privilege tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-34 and the appropriate instructions. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.

KANSAS ENTERPRISE ZONE ACT (INCOME TAXPAYER)

Effective for all taxable years beginning after Dec. 31, 1992.

QUALIFICATIONS

An enhanced business and job development credit is allowed as a direct tax credit against the income tax of any Kansas taxpayer when:

There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.

The enhanced business and job development credit is available for investments which began operations after Dec. 31, 1992.

There is no enhanced income tax credit available under the Kansas Enterprise Zone Act for any investments that began operations prior to Jan. 1, 1993.

Manufacturing

A manufacturing business must hire at least two qualified business facility employees as a direct result of the investment to qualify for the credit.

Credit Amount

Located in a Kansas metropolitan county or any other area not designated as a nonmetropolitan region

Employee - $1,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Located in a Kansas nonmetropolitan region

Employee - $2,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Limitation of Credit

The credit from all qualified investment and employees is limited to 50 percent of the Kansas income tax in any one tax year. For investments which began operations after Jan. 1, 1996, the limitation is 100 percent of the Kansas income tax for the tax year in which the credit is claimed.

The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.

Nonmanufacturing

A nonmanufacturing business must hire at least five qualified business facility employees as a direct result of the investment to qualify for the credit.

Credit Amount

Located in a Kansas metropolitan county or any other region not designated as a nonmetropolitan region
Employee - $1,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Located in a Kansas nonmetropolitan region
Employee - $2,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Limitation of Credit

The credit from all qualified investment and employees is limited to 50 percent of the Kansas income tax in any one tax year. For investments which began operations after Jan. 1, 1996, the limitation is 100 percent of the Kansas income tax for the tax year in which the credit is claimed.

The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.

Retail

A retail business may qualify for the enhanced tax credit under the Kansas Enterprise Zone Act if the business is considered as:

To qualify for the enhanced income tax credit, a business headquarters must hire at least 20 qualified business facility employees as a direct result of the investment and must have begun operations after Dec. 31, 1992.

Effective for all taxable years commencing after Dec. 31, 1995, an ancillary support operation of a retail business or those establishments designated with a NAICS code of 45411 or 511210 shall also qualify for the enhanced income tax credit if at least 20 qualified business facility employees are hired as a direct result of investment made.

If the retail business is not considered as the business headquarters, ancillary support, or is not identified under the NAICS code of 45411 or 511210, the retail business may claim the business and job development credit under the Job Expansion and Investment Credit Act of 1976. The retail business must hire two qualified business facility employees as a direct result of the investment to qualify for the credit.

Credit Amount

Located in a Kansas metropolitan county or any other area not designated as a nonmetropolitan region
Employee - $1,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Located in a Kansas nonmetropolitan region
Employee - $2,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Limitation of Credit

The credit is limited to 50 percent of the Kansas income tax. For those investments which began operations commencing on or after Jan. 1, 1996, the limitation is 100 percent of the Kansas income tax for the tax year in which the credit is claimed.

The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.

Procedures to Claim the Credit

You may download Schedule K-34 and the Instructions for Investments that Began Operations in Tax Years Commencing on or after Jan. 1, 1993 to claim the business and job development credit under the Kansas Enterprise Zone Act. There is also a Property Payroll Worksheet for S-Corps and Shareholders you may wish to download. Schedule K-34 must be completed and submitted with the individual or corporate income tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-34 and the appropriate instructions. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.

KANSAS ENTERPRISE ZONE ACT (PRIVILEGE TAXPAYER)

Effective for all taxable years beginning after Dec. 31, 1992.

Qualifications

An enhanced business and job development credit is allowed as a direct tax credit against the privilege tax of banks and savings and loan institutions if:

There is no minimum amount of investment necessary to qualify for the credit, however, some investment must have been made. The taxpayer must qualify for the credit during the first taxable year that operations occur at the qualified business facility investment.

The enhanced business and job development credit is available for investments which began operations after Dec. 31, 1995.

There is no enhanced privilege tax credit available under the Kansas Enterprise Zone Act for any investments that began operations prior to Jan. 1, 1996.

If the investment location is not considered as the place from which the trade or business is directed or managed, the taxpayer may claim the business and job development credit under the Job Expansion and Investment Credit Act of 1976 for Privilege taxpayers. The bank must hire at least two qualified business facility employees as a direct result of the investment to qualify for the credit.

Credit Amount

Located in a Kansas metropolitan county or any other area not designated as a nonmetropolitan region

Employee - $1,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Located in a Kansas nonmetropolitan region

Employee - $2,500 for each qualified employee
Investment - $1,000 for each $100,000 of qualified investment

Limitation of Credit

The credit is limited to 100 percent of the Kansas privilege tax for the tax year in which the credit is claimed.

The credit is computed once and the remainder of the credit is carried forward until used as long as the taxpayer maintains the minimum number of qualified employees.

Procedures to Claim the Credit

You may download Schedule K-34 and the Instructions for Investments that Began Operations in Tax Years Commencing on or after Jan. 1, 1993 to claim the business and job development credit under the Kansas Enterprise Zone Act. There is also a Property Payroll Worksheet for S-Corps and Shareholders you may wish to download. Schedule K-34 must be completed and submitted with the privilege tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-34 and the appropriate instructions. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.

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Facility

A facility is any factory, mill, plant , refinery, warehouse, feedlot, building or complex of buildings located within the state of Kansas, including the land on which the facility is located and all machinery, equipment and other real and tangible personal property located at or within the facility used in connection with the operation of the facility.

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Building

A building is a structure where individuals are employed or which is used to house machinery, equipment or other property.

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Same or Substantially Identical Revenue Producing Enterprise

The same or substantially identical revenue producing enterprise is a revenue producing enterprise in which the products produced or sold, services performed or activities conducted are the same in character and use, are produced, sold, performed or conducted in the same manner and to or for the same type of customers as the products, services or activities produced, sold, performed or conducted in another revenue producing enterprise.

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Revenue Producing Enterprise

A revenue producing enterprise is:

  • the assembly, fabrication, manufacture or processing of any agricultural, mineral or manufactured product;
  • the storage, warehousing, distribution or sale of any products of agriculture, aquaculture, mining or manufacturing;
  • the feeding of livestock at a feedlot;
  • the operation of laboratories or other facilities for scientific, agricultural, aquacultural, animal husbandry or industrial research, development or testing;
  • the performance of services of any type;
  • the feeding of aquatic plants and animals at an aquaculture operation;
  • the administrative management of any of the foregoing activities; or
  • any combination of any of the foregoing activities.

Revenue producing enterprise does not include a swine production facility.
K.S.A. 17-5903(s) provides, ""Swine production facility" means the land, structures and related equipment owned or leased by a corporation or limited liability company and used for housing, breeding, farrowing or feeding of swine. The term includes within its meaning only such agricultural land as is necessary for proper disposal of liquid and solid wastes in environmentally sound amounts for crop production and to avoid nitrate buildup and for isolation of the facility to reasonably protect the confined animals from exposure to disease".

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Qualified Business Facility

A qualified business facility is a facility which is employed in the operation of a revenue producing enterprise. The facility is not considered as a qualified business facility if the taxpayer's only activity is to lease that facility to another person. If the taxpayer uses a portion of the facility in the operation a revenue producing enterprise, and leases another portion of the facility to another person or does not use the other portion in the operation of the revenue producing enterprise, only the portion which is employed by the taxpayer in the operation of the revenue producing enterprise shall be considered as a qualified business facility.

If the facility was acquired by the taxpayer from another person, the facility must not have been employed immediately prior to the transfer of title to the facility to the taxpayer, or to the beginning of the term of the lease of the facility to the taxpayer in the same or substantially identical revenue producing enterprise.

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Qualified Business Facility Employees

A qualified business facility employee is a person employed by the taxpayer in the operation of a qualified business facility during the taxable year for which a credit is allowed and claimed. A person is engaged in employment if the person performs duties in connection with the operation of the qualified business facility on a:

  • regular, full-time basis;
  • part-time basis, provided the person is customarily performing duties
    • at least 20 hours per week throughout the taxable year; or
  • seasonal basis, provided the person performs the duties for substantially all of the season customary for the position in which the person is employed.

The number of qualified business facility employees during the taxable year is the sum of the qualified business facility employees on the last business day of each month of the taxable year divided by 12.

If the qualified business facility is in operation for less than the entire taxable year, the number of qualified business facility employees is determined by dividing the sum of qualified business facility employees on the last business day of each full calendar month during the portion of the taxable year in which the qualified business facility was in operation by the number of full calendar months during the period.

If the facility existed and was operated by the taxpayer prior to the investment, the number of qualified business facility employees employed in the operation of the facility shall be reduced by the average number of individuals employed in the operation of the facility during the taxable year before the taxable year in which the qualified business facility investment was made at the facility.

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Qualified Business Facility Investment

Qualified business facility investment is the value of real and tangible personal property which constitutes the qualified business facility, or which is used by the taxpayer in the operation of the qualified business facility during the taxable year in which the credit is allowed and claimed. Qualified business facility investment does not include the inventory or property held for sale to customers in the ordinary course of the taxpayer's business.

The value of the property during the taxable year is:

  • its original cost if owned by the taxpayer; or
  • eight times the net annual rental rate, if leased by the taxpayer. The net annual rental rate is the annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from subrentals.

The qualified business facility investment is the sum of the total value of the property on the last business day of each calendar month of the taxable year divided by 12.

If the qualified business facility is in operation for less than an entire taxable year, the qualified business facility investment is determined by dividing the sum of the total value of the property on the last business day of each full calendar month during the portion of the taxable year in which the qualified business facility was in operation by the number of full calendar months during that period.

If the facility existed and was operated by the taxpayer prior to the investment, the amount of the taxpayer's qualified business facility investment in the facility shall be reduced by the average amount of the investment of the taxpayer in the facility for the taxable year before the taxable year in which the qualified business facility investment was made at the facility.

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Enterprise Zone

An economically distressed area located within a city designated by the governing body of a city as an enterprise zone and approved by the Secretary of Economic Development. Local city officials, county commissioners or the Kansas Department of Commerce can be contacted to determine if the business is located in an enterprise zone.

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Qualified Targeted Employee

An individual is a targeted employee if they are:

  • an economically disadvantaged cooperative education student;
  • an economically disadvantaged ex-convict;
  • an economically disadvantaged Vietnam veteran;
  • an economically disadvantaged youth;
  • eligible work incentive employee;
  • general assistance recipients;
  • supplemental security income recipients; or
  • vocational rehabilitation individuals.

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Qualified Business Facility Income

Qualified business facility income is the Kansas taxable income derived by the taxpayer from the operation of the qualified business facility.

If a taxpayer has income from the operation of a qualified business facility as well as from other activities within the state, the Kansas taxable income derived from the qualified business facility is determined by multiplying the Kansas taxable income by a fraction. The numerator is the property factor plus the payroll factor and the denominator is two.

The property factor is the average value of real and tangible personal property owned or rented and used in connection with the operation of the qualified business facility divided by the average value of all the taxpayer's real and tangible personal property owned or rented and used in the state.

The payroll factor is the amount paid during the tax period for compensation to qualified business facility employees at the qualified business facility divided by the total amount paid for compensation.

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Manufacturing Business

A manufacturing business is all commercial enterprises identified under the manufacturing NAICS subsectors 311 to 339.

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Nonmanufacturing Business

A nonmanufacturing business is any commercial enterprise other than a manufacturing business or a retail business. Nonmanufacturing business also includes the business headquarters of an enterprise, ancillary support of an enterprise, and an enterprise designated under NAICS codes 45411, Electronic Shopping and Mail-Order Houses or 511210, Software Publishers , regardless of the firm's classification as a retail business if that facility creates at least 20 new full-time positions.

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Retail Business

A retail business is:

    Any commercial enterprise primarily engaged in the sale at retail of goods or services taxable under the Kansas retailers' sales tax act;
  • any service provider set forth in K.S.A. 17-2707;
  • any bank, savings and loan or other lending institution;
  • any commercial enterprise whose primary business activity includes the sale of insurance;
  • any commercial enterprise deriving its revenues directly from noncommercial customers in exchange for personal services such as barber shops, beauty shops, photographic studios and funeral services.

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Metropolitan Counties

The following counties are metropolitan counties:

  • Douglas
  • Johnson
  • Leavenworth
  • Sedgwick
  • Shawnee
  • Wyandotte

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Nonmetropolitan Region

A nonmetropolitan region is a region established under K.S.A. 74-50,116.

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Business Headquarters

Business headquarters is 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 or division of a business or regional division of a business.

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Ancillary Support

Ancillary support of an enterprise is a facility operated by a business and whose function is to provide services in support of the business, but is not directly engaged in the business' primary function.

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Electronic Shopping & Mail-order Houses

This industry comprises establishments primarily engaged in retailing all types of merchandise using non-store means, such as catalogs, toll free telephone numbers, or electronic media, such as interactive television or computer.  Included in this industry are establishments primarily engaged in retailing from catalog showrooms or mail-order houses.

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Software Publishers

This industry comprises establishments primarily engaged in computer software publishing or publishing and reproduction.  Establishments in this industry carry out operations necessary for producing and distributing computer software, such as designing, providing documentation, assisting in installation, and providing support services to software purchases.  These establishments may design, develop, and publish, or publish only.

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SERVICE PROVIDER SET FORTH IN K.S.A. 17-2707

Certified Public Accountant
Architect
Attorney-at-law
Chiropractor
Dentist
Engineer
Optometrist
Osteopathic physician or surgeon
Physician, surgeon or doctor of medicine
Veterinarian
Podiatrist
Pharmacist
Land surveyor
Licensed psychologist
Specialist in clinical social work
Licensed physical therapist
Landscape architect
Registered professional nurse
Real estate broker or salesperson
Clinical Professional Counselor
Geologist
Clinical Psychotherapist
Clinical Marriage and Family Therapist
Licensed Physician Assistant
Licensed Occupational Therapist
Licensed Audiologist
Licensed Speech Pathologist

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