In this section

Taxes

Business Formation Fees

Corporate Franchise Taxes

Income Taxes - Corporate

Income Taxes - Individual

Property Taxes

Sales & Use Taxes

Unemployment Insurance

Workers' Compensation

Incentives

Advanced Energy

Enterprise Zones

Financing Programs

Foreign Trade Zones

Income Tax Credits

Int'l Trade Incentives

Life Sciences and R&D

Property Tax Exemptions

Sales & Use Tax Exemptions

Training Programs

Utility Incentives

Venture Capital

Tax & Incentive Profile

Income Tax Credits

INFORMATION FOR BOTH KANSAS AND MISSOURI IS PRESENTED BELOW.

Kansas

Promoting Employment Across Kansas (PEAK)

PEAK offers "qualified" companies relocating operations to Kansas the ability to retain employee withholding taxes. Qualified companies include both new operations in Kansas as well as relocated operations to the state. In 2013, it will be available for qualifying business retention projects as well.

Companies locating in a metropolitan county (Douglas, Johnson, Leavenworth, Shawnee or Wyandotte) and hiring at least 10 new employees within two years or locating in a non-metropolitan county and hiring at least five new employees within two years would be eligible to retain 95 percent of new employee withholding taxes for a period of five to seven years, provided such employees are compensated at a rate equal to, or greater than, 100 percent of the county median wage. Certain "high-impact" projects resulting in the hiring of at least 100 new employees within two years, regardless of location, could qualify for withholding tax diversions of 95% for seven to ten years. The number of years the withholding tax will be retained is dependent on the level the median annual wage exceeds the county wage and the discretion of the Secretary of Commerce.

Business entities within certain industry groups and sectors (including bioscience companies, gambling entities, retailers and utilities) would be excluded from being considered as "qualified' companies. Certain income tax credits associated with hiring new employees under current law also would no longer be available to companies participating in PEAK.

The PEAK program also has an alternative wage threshold that requires the company to pay above county average wages in the comparable NAICS code for businesses in the region. This alternative carries with it a limit of 5 years on any PEAK benefits.

The Kansas Department of Commerce has discretionary authority in the consideration of any application.

Enterprise Zone Tax Credits

The Kansas Enterprise Zone Act offers corporate income tax credits for new job creation and qualified capital investment and sales tax exemptions to qualifying new and expanding businesses. The exact amount of the Enterprise Zone Act benefit differs depending on the location of the facility (metropolitan, non-metropolitan or designated non-metropolitan).

Starting on January 1, 2011, the Enterprise Zone job creation and investment tax credits will continue to be available throughout Kansas except for the metropolitan counties of Douglas, Johnson, Leavenworth, Shawnee and Wyandotte; however, the sales tax exemption under the Enterprise Zone program is still available for metro-designated counties. All non-metropolitan counties are considered in an Enterprise Zone under this program and can offer the benefits of this program to eligible companies. The benefits include corporate income tax credits of $1,500 per net, new job created an a one percent tax credit on qualified net, new capital investment. Designated non-metropolitan counties can offer a tax credit of $2,500 per net, new job created. The credits can be used to significantly reduce a firms's corporate income tax liability in a given year, and any unused credits may be carried forward until exhausted.

To be eligible, manufacturing facilities must create at least two net new jobs and non-manufacturing facilities must create at least five net new jobs, and ancillary support and headquarters need to create at least 20 net new jobs.

Job Expansion & Investment Tax Credits

These 10-year credits are available to businesses not eligible for enterprise zone credits. They may offset up to 50% of a company's annual state income tax liability and are determined by the amount of qualified business investment made in the company and the number of new jobs created.

The job creation tax credit is $100 per net new job (companies must create at least two). The investment tax credit is $100 per $100,000 of qualified business investment. Credits can be deferred for up to three years, but unused credits may not be carried forward.

Starting on January 1, 2011, the job expansion and business investment tax credits will not be available for metro-designated counties.

Angel Investor Tax Credits

Tax credits are offered against Kansas income tax liability for accredited investors making investments in seed and early-stage capital financing for emerging Kansas businesses engaged in the development, implementation and commercialization of innovative technologies, products and agencies.

• The credit is 50% of the investor’s cash investment in the qualified business.
•  If the amount of credit exceeds the investor’s tax liability in any one taxable year, the remaining portion of the credit may be carried forward until the total amount of the credit is used.
• The Kansas Department of Revenue will not allow tax credits that are attributable to an individual of more than $50,000 of cash investments in the qualified securities of a single Kansas business for cash investments in the qualified securities of more than five Kansas businesses each year.

High Performance Business Tax Credits

The High Performance Incentive Program (HPIP) is designed to retain Kansas' existing high performance businesses, encourage investment by existing companies in worker training and education, and spur the attraction of new, high quality firms to the state.

Income tax incentives extended to qualified firms include:

• A 10% investment tax credit against corporate income tax on capital investment exceeding $50,000.
• A workforce training tax credit of up to $50,000 per annum on training expenditures above 2% of total company payroll.

Participating businesses must be either:

• Manufacturers, wholesalers, or certain business service firms in major SIC categories 20-51 or 60-89 (for businesses in SIC categories 40-49 or 60-89, at least 51% of sales must be to Kansas manufacturers and/or out-of-state commercial or government customers).
• Identified as a corporate or regional headquarters or back-office operation of a national or multi-national corporation, regardless of SIC code.

Additionally, qualified firms pay above-average wages for their industry in the county or region where they are located.

The investment tax credit is a one-time credit with a 16-year carry over provision, subject to requalification, for any unused credits. An investment tax credit may cover up to 100% of a firm's annual tax liability. A firm may not simultaneously claim the investment tax credit that is tied to job creation and this 10% investment tax credit available to high performance establishments.

Companies are required to submit a Capital Investment Project Description estimating the scope of anticipated investment before the company commits to any investment on which it expects to claim HPIP investment tax credit.

Child Day Care Assistance Tax Credits

Tax credits are offered against Kansas income tax liability for businesses that pay for or provide child care services for their employees or that provide facilities and necessary equipment for child daycare services.

• Credit is equal to 30% of the amount spent in Kansas during the tax year for childcare services purchased for dependent children of taxpayer's employees. The credit cannot exceed $30,000 for any tax year.
• Credit of up to 50% of the amount spent to establish a day care facility for employees' dependent children is allowed. The credit cannot exceed $45,000 per taxpayer during the first year. One or more taxpayers may work together to establish such a facility.
• The annual credit available in taxable years after the year of establishment is 30% of the amount expended for annual operation of the facility. The total credit allowed to any taxpayer cannot exceed $30,000 for any tax year.

Research & Development Tax Credits

Taxpayers who invest in research and development (R&D) are entitled to tax credits against their Kansas income tax liability. Qualified R&D expenditures are defined under the U.S. Internal Revenue Code. Qualified R&D expenditures are defined under the U.S. Internal Revenue Code. The credits are based on the amount of current tax year R&D expenditures less average R&D expenditures. The maximum credit is 6.5% of this amount. Only 25% of the allowable annual tax credit may be claimed in any one year. Any remaining credit may be used in 25% increments against future income tax obligations, until the total amount of credit is exhausted.

Kansas Venture Capital and Seed Capital Credits

A credit for a portion of a taxpayer's investment in Kansas Venture Capital, Inc., Sunflower Technology Venture, LP, or a certified private venture capital company or local seed capital pool may be claimed against its Kansas income tax liability. The amount of the credit will be 25% of the total amount of cash investment. The amount of credit exceeding the taxpayer's liability in any one taxable year may be carried forward until the total amount of credit is used.

Community Service Contribution Tax Credits

Any business firm which contributes to a community service organization or governmental entity which engages in the activities of providing community services is allowed a credit against its Kansas income tax liability. "In kind" contributions of property or services may also qualify for the credit. The credit is 50% of the total amount contributed during the taxable year. However, if the approved community service organization is in a rural community as defined by the law, the credit is 70%. If the credit allowed exceeds tax liability, the excess will be refunded. Non-Kansas taxpayers may transfer the credits to others.

Alternative-Fuel Tax Credits

Expenditures for qualified alternative-fueled motor vehicles or for a qualified alternative-fuel fueling station qualifies for income tax credits. Alternatives fuels are defined under Title 42 of the U.S. Code Section 13211 and include fuels that are substantially not petroleum and yield substantial energy security and environmental benefits. For qualified alternative-fuel motor vehicles, the credit is 40% of the conversion or incremental cost, up to the maximum for the vehicle's gross weight (ranging from $2,400 for GVW under 10,000 pounds to $40,000 for GVW over 26,000 pounds). The credit available for a qualified alternative-fuel fueling station is 40% of the total amount expended up to a maximum of $160,000 for each fueling station. The amount of credit which exceeds tax liability may be carried forward to the next three tax years or until used, whichever is earlier.

Other Tax Credit Programs

Kansas offers additional tax credit programs for contributions to a variety of funds and programs. The Historic Preservation Tax Credit is available for the rehabilitation of qualified historic structures. The credit is 25% of qualified expenditures when the total amount of expenditures exceeds $5,000. The Telecommunications Tax Credit is available for specified telecommunications companies. Specified telecommunications companies are those whose primary business is the transmissions of communications in the form of voice, data, signals, or facsimile by wire or fiber optic cables. The credit amount is the difference between the property tax levied for property tax year 2001, and all years thereafter, at the assessed rate of 33%. Additional Kansas tax credits include the Employer Health Contribution Credit and the Disabled Access Credit.

Missouri

Missouri Quality Jobs

The Missouri Quality Jobs Program facilitates new quality jobs by targeted business projects through the retention of Missouri state withholding tax on new jobs and state tax credits, which are refundable and/or sellable. Eligible businesses include for-profits and non-profit businesses except for gambling, retail trade, food and drinking places, companies regulated by the Public Service Commission, companies that are delinquent in non-protested taxes or other payment, any company that has filed for or has publicly announced its intention to file for bankruptcy, public entities or religious entities.

The Missouri Quality Jobs Act is divided into three separate programs each with separate qualification requirements: The Small Business and Expanding Business Program; the Technology Business Program; and the High Impact Projects Program. The programs will be overseen by the Missouri Department of Economic Development.

The average wage of the new jobs must equal or exceed the county average wage, and the company must offer health insurance and pay at least 50% of the premium. There is no annual cap on the retained withholding taxes, but the annual cap of tax credits for all projects is $80,000,000, which is provided on a first come basis.

Technology Business Program (classified by NAICS code)

• Qualifying employers must provide a minimum 10 new jobs within two years;
• Qualifying employers providing jobs at county average wage may retain withholding taxes and receive refundable tax credits for a total amount equal to 5% of the payroll resulting from the newly created jobs for a period of five years;
• Qualifying employers providing jobs at 120% of county average wage may retain withholding taxes and receive refundable tax credits for a total amount equal to 5.5% of the payroll resulting from the newly created jobs for a period of five years;
• Qualifying employers providing jobs at 140% or more of county average wage may retain withholding taxes and receive refundable tax credits for a total amount equal to 6% of the payroll resulting from the newly created jobs for a period of five years; and
• Maximum annual tax credits per company are $500,000. No limit on the withholding tax.

Small Business and Expanding Business Program

• Qualifying employers must provide a minimum 20 new jobs in rural areas (counties with less than 75,000 population or that do not contain a city with more than 50,000 population) or 40 new jobs in non-rural areas within two years;
• Jobs must pay at least the county average wage for the county in which the project is located
• Qualifying employers providing jobs at county average wage may retain all withholding taxes resulting from the newly created jobs for a period of three years;
• Qualifying employers providing jobs at 120% of the county average wage may retain all withholding taxes resulting from the newly created jobs for a period of five years.

High Impact Projects Program

• Qualifying employers must provide a minimum of 100 new jobs within two years of the date of hiring the first new job, and the first new job must be within one year of the proposal date;
• Qualifying employers providing jobs at county average wage may retain withholding taxes and receive refundable tax credits for a total amount equal to 3% of the payroll resulting from the newly created jobs for a period of five years; or,
• Qualifying employers providing jobs at 120% of county average wage may retain withholding taxes and receive refundable tax credits for a total amount equal to 3.5% of the payroll resulting from the newly created jobs for a period of five years; or,
• Qualifying employers providing jobs at 140% of county average wage may retain withholding taxes and receive refundable tax credits for a total amount equal to 4% of the payroll resulting from the newly created jobs for a period of five years; or
• If the local government provides benefits equal to 10-24% of their new local tax revenue, qualifying employers may retain withholding taxes and receive tax credits for a total amount equal to an additional 1% of the payroll resulting from the newly created jobs for a period of five years; or
• If the local government provides benefits equal to 25-49% of their new local tax revenue, qualifying employers may retain withholding taxes and receive tax credits for a total amount equal to an additional 2% of the payroll resulting from the newly created jobs for a period of five years; or
• If the local government provides benefits equal to 50% or more of their new local tax revenue, qualifying employers may retain withholding taxes and receive refundable tax credits for a total amount equal to an additional 3% of the payroll resulting from the newly created jobs for a period of five years; and
• Maximum annual tax credits per company are $750,000 (or $1 million, if approved by the Quality Jobs Task Force). No limit on the withholding tax.

Annual Average Wages by County (effective until 7.01.08)
County	Rural/Non-rural	Annual Average Wage (MERIC)
Buchanan	Non-rural	$31,947
Cass	Rural	$27,571
Clay	Non-rural	$39,539
Clinton	Rural	$24,681
Jackson*	Non-rural	$42,769
Johnson	Rural	$24,866
Lafayette	Rural	$23,415
Livingston	Rural	$25,183
Platte	Rural	$34,805
Ray	Rural	$23,688
MISSOURI		$37, 379

Note: 620.1875. Sections 620.1875 to 620.1890, shall be known and may be cited as the "Missouri Quality Jobs Act."

620.1878. For the purposes of sections 620.1875 to 620.1890, the following terms shall mean:

(1) "Average wage," the new payroll divided by the number of new jobs;

(2) "Commencement of operations," the starting date for the qualified company's first new employee, which must be no later than twelve months from the date of the proposal;

*"County average wage," the average wages in each county as determined by the department for the most recently completed full calendar year. However, if the computed county average wage is above the statewide average wage, the statewide average wage shall be deemed the county average wage for such county. The department shall publish the county average wage for each county at least annually.

Enhanced Enterprise Zone Tax Credits

The state of Missouri grants tax credits to new or expanding businesses in a Missouri Enhanced Enterprise Zone. Enhanced Enterprise Zones are specified geographic areas designated by local governments and certified by the Department of Economic Development (DED). Individual business eligibility will be determined by the zone based on creation of sustainable jobs in a targeted industry or demonstrated impact on local industry cluster development. Gambling establishments, retail trade, and food and drinking places are prohibited from receiving the state tax credits. Service industries can be eligible if a majority of their annual revenues will be derived from services provided out of the state. DED will consult with the local government in determining eligibility.

The Enhanced Enterprise Zone Program is a discretionary program offering state tax credits to Enhanced Business Enterprises. Tax credits may be provided each year for up to ten tax years after the project commences operations. To receive tax credits in any of the ten years, the facility must create at least two new jobs and $100,000 in new investment in that year as compared to the base year (the year prior to the commencement of operations at the facility). Eligible investment expenditures include the original cost of machinery, equipment, furniture, fixtures, land and building, and/or eight times the annual rental rate paid for the same. Inventory is not eligible.

Tax credits can only be applied to tax liability for the year in which they were earned. The tax credits are refundable or may be transferred, sold or assigned. The sale price cannot be less than 75% of the par value of such credits.

Tax credits will be an amount authorized by DED based on the state economic benefit, supported by the number of new jobs and new capital investment that the project will create. The program benefits include:

• 2% of the payroll of the New Jobs, and,
• 1/2% of the New Private Capital Investment.
• Each year for five years.
• After initial five years, may apply for an additional five years if minimum thresholds met.
• Maximum of 10 years of program benefits from first year.

Tax credits issued under this program are limited to $14,000,000 annually, effective 12/03/07.

Applicants must be eligible for and receive at least ten years’ local property tax abatement at 50% pursuant to the local enhanced enterprise zone plan. A facility may not earn tax credits for more than one 10 year period. A business cannot earn tax credits under this program if earning Business Facility, Missouri Quality Jobs, Rebuilding Communities or Brownfield Jobs and Investment tax credits for the same project for the same tax period.

Research Expense Tax Credit Program

In order to induce existing businesses to increase their research efforts, businesses are permitted to claim a tax credit equal to 6.5% of the excess of qualified research expenses during the tax year, over the average amount of qualified research expenses incurred in Missouri during the preceding three tax years. The credit may be carried forward for up to five additional years. The amount of the tax credits cannot exceed $10 million annually.

The Brownfield "Jobs & Investment" Tax Credit Program

Any person or business operating an eligible project of redevelopment on certain abandoned and contaminated property may be eligible to earn state income tax credits for new investment and new jobs for up to 10 years. The program provides state income tax benefits for up to 100% of remediation costs. The company may obtain (for up to 10 years) tax credits between $500 and $1,300 per year for each new job created, tax credits based on 2% (annually) of new capital investment, a 50% income exemption, and abatement of local real property taxes (ten to 25 years).

The eligible project must be in a blighted area and must comply with the Dept. of Natural Resources' environmental conditions. A new company must create and maintain 10 new jobs, and an existing company must retain 25 jobs to receive benefits.

Missouri Development Finance Board Tax Credit Programs

Any taxpayer may receive a state tax credit equal to 50% of any amount contributed to the Industrial Development and Reserve Fund, the Infrastructure Development Fund, or the Export Finance Fund. Contributions to these funds are used to make direct loans and loan guarantees to new and expanding businesses and nonprofit organizations, and to make grants to public entities. Credits may be transferred or sold and there is a five-year carry-over provision.

Development Tax Credit Program

The state provides income tax credits based on a contribution by a company to a local non-profit corporation (NPC) for projects approved by the Department of Economic Development (DED). The amount of credits approved will be based on the economic impact of the project and the minimum amount of credits required to cause the project to occur. The purpose of the program is to create full-time, year-round jobs. The project must be located in a "blighted" or "distressed" area.

Eligible donations include cash, machinery and equipment, and real estate. The NPC will lease the real or personal property to a business entity. The lease is structured to facilitate the business' project and lease payments will be based on the costs of the non-profit to operate and maintain the subject assets (if any). In most cases the NPC will provide DED the lease payments received in an amount to repay the tax credits plus interest. The tax credits may be used in the year received, or for up to five years if desired. Credits also may be sold or transferred.

Rebuilding Communities Tax Credit Program

The Rebuilding Communities Program designates a number of cities, towns, and census block group areas as distressed or "rebuilding" communities. Businesses locating or expanding in these areas are eligible for tax credits and other financial incentives.

Eligible businesses must have more than 75% of its employees at the facility in the distressed community and must have fewer than 100 employees total for all facilities. The business must be classified among the following: manufacturing, biomedical, medical devices, scientific research, animal research, computer software design or development, computer programming, including Internet, web hosting, and other information technology, wireless or wired or other telecommunications, or certain types of professional firms.

A new or relocating business may choose one of two 40% tax credits:

• An income tax credit of 40% of their income taxes due (to a maximum of $125,000 per year) for each of the three years following the move; or
• An income tax credit of 40% of the amount of funds expended for certain equipment and equipment maintenance (to a maximum of $75,000 per year) for the year of commencement of operations plus the next three years.

Existing businesses which expend funds for qualified equipment, in an amount exceeding their average expenditures in the prior two years, are eligible to receive a 25% tax credit (to a maximum of $75,000). Qualified equipment includes computer equipment, medical laboratories and equipment, research laboratory equipment, manufacturing equipment, fiber optic equipment, high speed telecommunications, wiring, or software development expense.

These tax credits may be used for taxes owed the previous three years and in any of the five tax years thereafter. They may be transferred, sold, or assigned. A business cannot earn Rebuilding Community tax credits and Enhanced Enterprise Zone or New and Expanding Business Facility tax credits for the same project for the same tax period.

The program also provides the employees of new and relocating businesses a tax credit against their individual income taxes equal to 1.5% of their gross salary for each of the years that the facility received one of the 40% credits. The 1.5% credit may be sold or transferred, but may not be carried forward or carried back.

Transportation Development Tax Credit Program

A company (or individual) may be provided state income tax credit for up to 50% of either a contribution to a public entity or an investment by the company in a project needed to facilitate a business project or community development/public infrastructure improvement. Eligible activities are generally transportation facilities owned by a public entity for use by the public. The benefit is available for qualified investments in distressed communities. Unused credits can be carried forward for up to 10 years and carried back for the previous three years, and they may be transferred, sold, or assigned.

New Markets Tax Credit Program

In December 2000, Congress passed the Community Renewal Tax Relief Act of 2000, creating the New Markets Tax Credit (“NMTC”) program. The program, which is administered by the Community Development Financial Institutions Fund (CDFI Fund), a branch of the Department of the Treasury, is designed to stimulate the flow of capital into low-income and economically-distressed areas by providing investors (corporate or individual) with a tax incentive for investing in a qualified Community Development Entities (CDE). The CDE, in turn, is charged with providing capital to low-income areas by investing in qualified low-income community businesses (QALICB), which can be a for-profit or not-for-profit business, operating in qualified census tracts. Participating CDE's are given NMTC allocation authority to offer investors a federal tax credit equal to 5 percent of the investment amount in each of the first three years following the initial investment, and a credit equal to 6 percent of the investment amount in each of the following four years. In total, investors receive a credit equal to 39 percent of the initial investment amount. The benefit to the QALICB is access to low-cost of capital which can be used to fund activities including property/land acquisition, construction, equipment purchase, even working capital.

For more information, please link to: http://www.kcmo.org/CKCMO/Depts/Finance/NewMarketsTaxCredit/index.htm

Other Tax Credit Programs

Missouri offers several programs which provide significant tax credits to businesses making contributions to a variety of projects and funds. Some of the programs include the Business Modernization and Technology (Seed Capital) Tax Credit Program, the Small Business Incubator Tax Credit Program, the Neighborhood Assistance Program, the Skills Development Tax Credit Program, the Historic Preservation Tax Credit Program, and the Community Bank Investment Tax Credit Program. Tax credits available range from 45% to 70% of contributions to qualified projects. Effectively, such programs enable businesses to redirect their tax dollars to help finance local job creation, growth of the tax base, elimination of blight, and a variety of other purposes. Some programs allow credits to be used in ensuing tax periods or to be sold or transferred to other taxpayers.

 

DEFINING THE GREATER KC METRO AREA

Kansas City is a Missouri/Kansas bi-state metropolitan area. All statistical references made to Kansas City Metropolitan Statistical Area (MSA) include the counties of Cass, Clay, Clinton, Jackson, Lafayette, Platte and Ray in Missouri, and Johnson, Leavenworth, Miami and Wyandotte counties in Kansas. The greater Kansas City area also includes the adjoining Lawrence, KS, St. Joseph, MO, and Topeka, KS MSAs, as well as the Atchison, KS, Chillicothe, MO, Ottawa, KS, and Warrensburg, MO areas.