High Performance Incentive Program

INVESTMENT TAX CREDIT

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

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

TRAINING AND EDUCATION TAX CREDIT

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

PRIVILEGE TAXPAYER-Effective for all taxable years beginning after Dec. 31, 1997.

The High Performance Incentive Program:

encourages companies to expand their capital investment in Kansas plant and equipment by providing an investment tax credit and an exemption from sales tax for a specific project;
encourages accelerated growth in a business, leading to related job creation, by making state funds available to reimburse 50 percent of the costs of approved consulting services;
gives companies a tax credit for making a cash investment in the training and education of its employees; and,
stimulates growth in the Kansas economy by encouraging eligible nonmanufacturing companies to sell to specific kinds of out-of-state customers and to Kansas manufacturers.

Investment Tax Credit

A tax credit is available to those qualified businesses who make an investment in a qualified business facility.

Qualifications

A firm must be qualified by the Secretary of Commerce to be eligible for the investment tax credit. To become certified, a business must meet the following requirements:

Must be a for-profit establishment subject to state income, sales or property taxes; AND EITHER,
- Identified under the North American Industry classification system, subsectors 311 to 339 (manufacturing) or the appropriate North American Industry Classification System (NAICS) designation as in effect Oct. 1, 2000;OR,
- Identified under the North American Industry classification system, subsectors 221, 423 to 425, 481 to 519, 521 to 721, and 811 to 928. At least 51 percent of the sales made by these groups must be to Kansas manufacturers and/or out-of-state commercial customers and/or out-of-state government agencies; OR,
- Identified as a corporate or regional headquarters or back office operation of a national or multi-national corporation regardless of NAICS code; AND EITHER,
The company pays above average wages compared to other firms in its appropriate NAICS designation; OR,
Is the only company in its appropriate NAICS designation; OR,
Pays an average wage of at least 1.5 times the average wage paid by other industries (covered by the employment security law based on data maintained by the Secretary of Human Resources) but excluding compensation paid to owners with a 5 percent or more interest.

For information on the certification process, contact the Kansas Department of Commerce at 785-296-5298.

Credit Amount

For taxable years commencing on or after Jan. 1, 2012, for a qualified business facility investment in the county of Douglas, Johnson, Sedgwick, Shawnee or Wyandotte, the credit shall be an amount equal to 10 percent of that portion of the qualified business facility investment that exceeds $1,000,000.

For taxable years commencing prior to Jan. 1, 2012, for a qualified business facility investment in the county of Douglas, Johnson, Sedgwick, Shawnee or Wyandotte, the credit shall be an amount equal to 10 percent of that portion of the qualified business facility investment that exceeds $50,000.

For a qualified business facility investment made in any county in Kansas other than Douglas, Johnson, Sedgwick, Shawnee, or Wyandotte, the credit shall be an amount equal to 10 percent of that portion of the qualified business facility investment that exceeds $50,000.

Limitation of Credit

The credit is limited to the taxpayer's tax liability.

For qualified business facility investment placed into service in taxable years commencing after Dec. 31, 2000 for which the amount of tax credit exceeds the tax liability in any one taxable year, the excess amount may be carried forward for a period of 16 years.

Transfer of Credit

For projects placed into service on and after January 1, 2021, a taxpayer may transfer up to 50% of the tax credit allowed. The taxpayer may make a transfer to one or more transferees, but the total of all transfers shall not exceed 50% of the taxpayer’s tax credit. The taxpayer shall make the transfer or transfers within a single tax year. The credit may be transferred to any individual or entity and shall be claimed in the year the credit was transferred against the transferee's tax liability for the income tax under the Kansas income tax act or the premium tax or privilege fees imposed pursuant to K.S.A. 40-252, and amendments thereto, or the privilege tax as measured by the net income of financial institutions imposed pursuant to article 11 of chapter 79 of the Kansas Statutes Annotated, and amendments thereto. The amount of the credit that exceeds the transferee's tax liability for such year may be carried forward for credit in the succeeding taxable year or years until the total amount of the tax credit is used, except that no such credit shall be carried forward for deduction after the 16th taxable year succeeding the taxable year in which such credit was initially claimed.

In the event the tax credit earned by the taxpayer and transferred to a transferee is later disallowed in whole or in part by the secretary of revenue, the taxpayer that originally earned the tax credit shall be liable for repayment to the state in the amount disallowed.

For information on the transfer process, contact the Kansas Department of Commerce at 785-296-5298 or at https://www.kansascommerce.gov/program/business-incentives-and-services/hpip/.

Procedures to Claim the Credit

You may download Schedule K-59 to claim the high performance incentive program credit. This schedule must be completed and submitted with the income or privilege tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-59. 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.

Training and Education Tax Credit

The high performance incentive program gives qualified firms an income tax credit for making a cash investment in the training and education of its employees for all taxable years beginning after Dec. 31, 1992. The program also gives qualified firms a privilege tax credit for making a cash investment in the training and education of its employees for all taxable years beginning after Dec. 31, 1997.

The tax credit must be claimed in its entirety in the tax year eligible.

Qualifications

For the training and education tax credit, a firm must be qualified by the Secretary of Commerce. To become certified a business must meet the following requirements:

Must be a for-profit establishment subject to state income, sales or property taxes; AND EITHER,
- Identified under the North American Industry classification system, subsectors 311 to 339 (manufacturing) or the appropriate North American Industry Classification System (NAICS) designation as in effect Oct. 1, 2000;OR,
- Identified under the North American Industry classification system, subsectors 221, 423 to 425, 481 to 519, 521 to 721, and 811 to 928. At least 51 percent of the sales made by these groups must be to Kansas manufacturers and/or out-of-state commercial customers and/or out-of-state government agencies; OR,
- Identified as a corporate or regional headquarters or back office operation of a national or multi-national corporation regardless of NAICS code; AND EITHER,
The company pays above average wages compared to other firms in its appropriate NAICS designation; OR,
Is the only company in its appropriate NAICS designation; OR,
Pays an average wage of at least 1.5 times the average wage paid by other industries (covered by the employment security law based on data maintained by the Secretary of Human Resources) but excluding compensation paid to owners with a 5 percent or more interest.

In addition to certification by the Secretary of Commerce, a firm must spend at least 2 percent of their total wages paid on worker training and education to qualify for the training and education tax credit.

For information on the certification process, contact the Kansas Department of Commerce at 785-296-5298 or at https://www.kansascommerce.gov/program/business-incentives-and-services/hpip/.

Credit Amount

The credit is equal to the portion of the investment in the training and education that exceeds 2 percent of the businesses total payroll costs.

Limitation of Credit

The maximum credit in any single tax year is $50,000 or the taxpayers tax liability whichever is less.

Procedures to Claim the Credit

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Investment Tax Credit

A tax credit is available to those qualified businesses who make an investment in a qualified business facility.

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