New Program Updates and Tax Credit Transfers

A recent bill was passed in the Kansas state Senate during the 2021 Legislative Session that permits a High Performance Incentive Program (HPIP) certified company to transfer HPIP tax credits to another entity or individual under certain conditions. To find out more and see if your company qualifies, read on.

What is HPIP?

HPIP is a program that provides tax incentives to qualifying employers who pay above average wages and are committed to teaching skills development for their workers. This program provides a 10% tax credit eligible for capital investment of at least $50,000 at the company’s facility. In the five metro counties of Douglas, Johnson, Sedgwick, Shawnee and Wyandotte, the threshold is $1 million. This credit has a 16-year carryforward, provided that the facilities continue to requalify for the program.

How to Apply (Procedures to Claim the Credit)

Applications for this program are accepted year-round. To qualify for this program, your business:

  • The business must be for-profit establishment subject to state income, sales, or property taxes
  • The business must pay above average wages compared to other firms or is the only company in its appropriate designation or pays an average wage of at least 1.5 times the average wage paid by other industries but excluding compensation paid to owners with a 5% or more interest.

Read more about qualifications for this program on the Kansas Department of Commerce website. Often, it is easier for businesses in rural areas of Kansas to qualify since the threshold is lower for the investment level and median wages are lower than they are in Wichita or Kansas City. However, businesses throughout Kansas are welcome to apply. Please note, there is a project description form that needs to be completed with the state before any formal commitment is made for the project or investment.

New HPIP Tax Credit Transfers

If a project falls on or after January 1, 2021, a taxpayer may transfer up to 50% of the allowed HPIP tax credit to another project within a single tax year. The credit can be transferred to any individual or entity but must be claimed within the year. Taxpayers that are unable to fully utilize their HPIP investment credits can use this to their advantage, and the transferee can carry forward the transferred credit for up to 16 years.

The changes implemented by this bill make HPIP certification more accessible to those considering relocating or expanding in Kansas, as well as to companies with existing operations within Kansas. Taxpayers no longer need to qualify for the Kansas Industrial Training (KIT) or Kansas Industrial Retraining (KIR) workforce training tax credits to be eligible for HPIP. This removes the annual requirement of applying for and receiving approval for these separate state training agreements.

Adams Brown has helped various manufacturing companies determine their eligibility for the HPIP tax credit programs, including companies that were looking to expand their business or building or purchase new equipment. If you’re interested in exploring HPIP and what recent changes can mean for your company, contact your Adams Brown advisor.