With the legislative changes to the Kansas Business and Jobs Credit and the High Performance Incentive Program, many businesses may mistakenly believe that the state of Kansas no longer provides incentives to expand or relocate an existing business to Kansas or locate a new business in Kansas.
With the Promoting Employment Across Kansas (“PEAK”) program, qualifying companies may retain 95% of the Kansas payroll withholding tax of PEAK eligible jobs created in or relocated to Kansas for five to ten years.
The requirements for inclusion in the PEAK program vary based the industry of the business and the location of the new jobs.
Generally, a qualifying business must:
- Be a “for profit” business or not-for-profit with regional, national, or international headquarters in Kansas,
- Relocate or create 5 new jobs if in a non-metropolitan county (10 jobs if in a metropolitan county),
- Metropolitan counties are Johnson, Wyandotte, Leavenworth, Sedgwick, Shawnee, and Douglas
- Provide “adequate health insurance coverage”,
- Pay a median wage equal to or in excess of the county median wage, and
- Receive approval from Secretary of Commerce prior to retaining withholding tax
For example, Business A expands its Kansas City, Kansas facility and adds 10 new jobs. Business A provides adequate health insurance and pays a wage of $50,000 for each new job.
Assuming all other requirements are met, the estimated PEAK program benefit would be:
New Jobs | Total Wages | W/H Rate | Benefit
Year 1: 10 x $50,000 x 4.1% x 95% = $,19,475
Year 2: 10 x $50,000 x 4.1% x 95% = $,19,475
Year 3: 10 x $50,000 x 4.1% x 95% = $,19,475
Year 4: 10 x $50,000 x 4.1% x 95% = $,19,475
Year 5: 10 x $50,000 x 4.1% x 95% = $,19,475
Flow through entities that relocate jobs to Kansas may elect to have an income tax credit of 95% of the resident individual income tax attributable to the business operations relocated to Kansas rather than retain 95% of the Kansas payroll withholding tax.
Companies that are contemplating adding jobs to an existing business in Kansas, relocating jobs of existing business to Kansas, or starting a new business in Kansas should consider applying for inclusion in Kansas PEAK program.
For the employees to be qualified PEAK employees, the PEAK application must be received by the Kansas Department of Commerce prior to hiring the individuals in Kansas.
Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.
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