As you make plans to add employees in the coming year, or invest in property, plant and equipment, do not overlook the opportunity to tap into state tax credits and incentives.

While both Missouri and Kansas are looking to recruit new businesses to their respective states, it is important to remember that they also want to encourage and reward their current companies for growing. So, even if you are happy with your current state of choice, you don’t necessarily have to miss out on the credit and incentive party.

Adding Employees

If you are located in a “metro” county on either side of the state line, and might grow by 10 employees over the next 24 months, you should act now. The Missouri Works Program allows such companies (who otherwise qualify) to retain the payroll withholding taxes of the new employees for up to six years. Even if you are in a metro Missouri county, if your business happens to be located in certain designated areas, the required number of new employees over the 24 months can actually drop to two.

Missouri’s program is statutory in nature—in other words, if your company qualifies, it cannot be denied. And since you do not start retaining the withholding until you reach the required number of new employees, there is no risk involved in applying for the program.

But you do need to file a Notice of Intent before any of the new employees start, or they cannot count towards the required growth.
Kansas can offer similar incentives for companies under its PEAK Program, but the incentives are discretionary for existing Kansas companies. Businesses must seek approval from the Department of Commerce ahead of time. But again, there is no risk involved in asking.

Both Kansas’ PEAK Program and the Missouri Works Program exclude certain business categories from participating. (For example, strictly retail locations cannot qualify). They also have certain similarities: both states have wage standards that must be met, and both states require the employer to offer adequate health insurance and pay at least 50 percent of the cost of coverage for the employees.

Capital Investment

While Missouri consolidated most of its incentive programs into its Missouri Works Program in 2013, Kansas can still offer incentives for investments under its High Performance Incentive Program (HPIP).

Before discussing the benefits, it is critical to note that HPIP was designed as a “but for” program. A Project Description form must be submitted before a company commits to any capital investment it hopes to earn credits on.

While generally described as a credit, there are actually three distinct benefits available under HPIP—an investment tax credit of 10 percent on capital investment over a threshold amount, an employee training tax credit, and a sales tax project exemption. In order to receive any or all of those benefits, businesses must both qualify and go through a certification process.

Certain business categories are (again) excluded, but the two primary requirements to participate are that the company pays above-average wages and meets certain training requirements.

The investment tax credit equals 10 percent on the capital investment exceeding $1 million in the metropolitan counties of Douglas, Johnson, Sedgwick, Shawnee and Wyandotte; the threshold is $50,000 in all other counties. Capital investments include all asset purchases, both real and personal, and eight times any annual lease payments. The investment credit can be carried forward for up to 16 years.

The training credit, if earned, can be up to $50,000 per annum dollar-for-dollar on eligible training expenditures above two percent of total company payroll. No carry-forward of the training credit is allowed.

Finally, a sales tax exemption on purchases is also available.

So, if your company has plans to add employees or make capital investments in the coming years, be sure to take advantage of the programs that your state has to offer.