Fueling Business Growth in Kansas: Spotlight on PEAK and HPIP Incentives

Kansas is known for its central location, skilled workforce, and business-friendly climate, but one of the state’s strongest selling points is its robust package of economic development incentives. Leading the way are two high-impact programs: the Promoting Employment Across Kansas (PEAK) program and the High Performance Incentive Program (HPIP). These incentives are designed to reward companies that create quality jobs, invest in capital improvements, and pay quality wages for their industry. Here is a detailed look at how PEAK and HPIP can benefit your business and a quick overview of the other top programs Kansas has to offer. 

Promoting Employment Across Kansas (PEAK)

PEAK is one of the most powerful job creation incentives, giving companies the ability to retain 95% of their payroll withholding taxes for new jobs. The benefit period ranges from five to 10 years for qualified companies based on the project type and location. The incentives are available for both new-to-Kansas companies and in-state expansions.

PEAK qualifying criteria:

• For-profit entities in an eligible NAICS category or for-profit entities locating a headquarters or administrative office serving an international or national region.
• Not-for-profit entities locating a new national or international headquarters in Kansas.
• Relocate or create within two years, a minimum of five new jobs to non-metropolitan areas or 10 new jobs to metropolitan areas (Shawnee, Douglas, Wyandotte, Johnson, Leavenworth, and Sedgwick counties) in Kansas.
• Aggregate median wages of all PEAK jobs/employees must exceed the relevant county median wage, or if the aggregate median wage of the PEAK jobs/employees does not qualify the project for PEAK, the aggregate average wage of the jobs can be used.
• Offer adequate health insurance coverage and pay at least 50% of the premium for health insurance for full-time employees.
• Companies must comply with PEAK reporting requirements and enter into a formal agreement with the Kansas Department of Commerce.

High Performance Incentive Program (HPIP)

The HPIP program rewards companies that are making significant capital investments and fostering a high-performance workforce through robust training initiatives.

HPIP benefits include:

1. HPIP offers a 10% nonrefundable corporate income tax credit to a qualified company on eligible capital investments above $50,000 ($1M for urban counties of Douglas, Johnson, Sedgwick, Shawnee, and Wyandotte). Investment can include the purchase or lease of a facility or equipment, remodeling or build-out costs, fixtures, furniture, and business equipment.
   
   A project description form must be submitted before the company commits to those investments. Prior to claiming the corporate income tax credit, the company must apply for HPIP certification with the Kansas Department of Commerce and receive an HPIP certification approval letter.
   
   
2. A 100% sales tax exemption is available on items used to construct, remodel, furnish, and equip a worksite. Companies must apply for a Project Exemption Certificate (sales tax exemption).
   
   To qualify for the sales tax exemption:
   •  Companies applying for the sales tax exemption under the HPIP Program need to qualify for HPIP Certification.
   •  A Request for Project Exemption Certificate (sales tax exemption) should be filed with the Kansas Department of Revenue before making taxable purchases related to the project. An HPIP certification letter from the Kansas Department of Commerce is required for the sales tax exemption to be approved and issued.
   
   
3. A company may also qualify for up to $50,000 in a training and education tax credit if it meets the criteria. 

HPIP qualifying criteria:

• Classify as a headquarters or ancillary support back-office operation of a national or multinational corporation in any NAICS category.
• Be a manufacturer.
• If not in a manufacturing NAICS category, be able to document that 51% or more of sales are to either Kansas manufacturers and/or out-of-state business or government agencies.
• Pay salaries that are above average for similar types of businesses within the county/region where the company is located.
• Capital Investment Threshold: At least $50,000 (non-metro) or $1M (metro areas).
• Must secure HPIP certification prior to claiming tax credits.

For projects placed into service on or after January 1, 2021, a taxpayer may sell or transfer up to 50% of the HPIP tax credit allowed. The amount of the credit that exceeds the transferee’s tax liability for such a year may be carried forward for 16 years.  

Additional economic incentives in Kansas

Beyond PEAK and HPIP, Kansas offers a variety of other incentives to support business growth:

• Industrial Revenue Bonds (IRBs): IRBs allow for fixed-rate financing for the life of the bond for the project and are issued by cities and counties to help creditworthy companies acquire land, finance new construction, and equip new facilities, or to purchase, remodel, or expand existing facilities.
• Community Development Block Grants (CDBG): Source of financing for companies that are expanding an existing facility or starting a new operation in a non-metropolitan area of Kansas.  The maximum amount available is $750,000 per project.
• Kansas Industrial Training (KIT): Grants for developing custom training programs for new hires.
• Kansas Industrial Retraining (KIR): Assistance for retraining existing employees to meet evolving industry demands.
• Sales Tax Exemptions: Relief on the purchase of manufacturing machinery, raw materials, and certain construction expenses.
• Real Property Tax Abatement: State law allows for a 100% property tax abatement for 10 years on real property if industrial revenue bonds are utilized or if it qualifies under the Kansas Constitution. Tax Abatements are offered by the city or county where the property is located.
• Personal Property Tax Exemption: Kansas law exempts the property tax on commercial and industrial machinery and equipment purchased or transferred into Kansas after June 30, 2006.

Conclusion

Kansas is dedicated to fostering a vibrant business environment by providing incentives that lower operational costs, drive job creation, and encourage investment in workforce training. Whether you’re expanding an existing operation or launching a new venture, programs like PEAK and HPIP are designed to offer significant financial and strategic benefits. By leveraging these incentives, businesses can enhance their competitive edge while contributing to the state’s robust economic growth.

If you’re ready to explore the opportunities Kansas has to offer or need personalized assistance in navigating these programs, don’t hesitate to reach out to Site Selection Group’s economic experts.