Tax credits for capital investment and training

Capital investments and training can pay off for manufacturers

Kansas manufacturers can earn significant tax breaks through the High Performance Incentive Program.

The Kansas High Performance Incentive Program (HPIP) provides tax incentives to eligible employers in two different areas: capital investments and training. This program recognizes the need for Kansas companies to remain competitive and encourages capital investment in facilities, technology and continued employee training and education. The investment tax credit and the training tax credit are separate benefits with combined qualification requirements.

With a little planning, manufacturers can use these programs to earn significant tax breaks. The types of organization which are most likely to benefit are those which are:

  • Investing in eligible employee training and education
  • Making significant investments in capital asset purchases
  • Locating, relocating, expanding or renovating facilities in Kansas

The manufacturing sector, with its typically large capital expenditures, major facilities and skilled workforce, is a good candidate for these types of credits.

Investment tax credit

Before making any capital investment, manufacturers should first consider whether they can benefit from the investment tax credit. The critical first step in the credit process is the completion of the project description form, which demonstrates the applicant’s understanding of the program. This form must be submitted before a company formally commits to any capital investment on which it expects to earn the credit. Eligible capital investment may include the value of real and tangible personal property (land and assets) that are used by the taxpayer in the operation of the facility.

Upon completion of the certification requirements, qualified taxpayers may receive an investment tax credit of up to 10% of eligible capital expenditures which exceed $50,000. In the five metro counties of Johnson, Douglas, Shawnee, Wyandotte, and Sedgwick, the threshold is $1 million. You may also earn a sales tax exemption on eligible capital expenditures.

Training tax credit

To earn the training portion of HPIP tax credit, a business must invest 2% of payroll expenses in its own training programs. For this program, employers may earn up to $50,000 per year in tax credits.

In summary

If your company meets the eligibility criteria for HPIP, it’s well worth your time to explore the potential benefits that can be earned. These programs can help offset the expense of capital expenditures, and serve as a tool manufacturers can leverage to become more competitive. If you have additional questions about HPIP, its qualifications and benefits, please contact Shawn Sullivan using the information below.

Shawn Sullivan

Executive Vice President
Tax Services

Shawn leads the firm’s tax group and serves on AGH’s board of directors. In addition to enhancing business performance to minimize tax consequences, he has extensive experience in mergers and acquisitions, international tax and business structuring. Shawn has public and private experience in the fields of tax and accounting and works frequently with clients in the manufacturing, automotive, wholesale distribution, real estate development and construction industries.

A certified public accountant, Shawn is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants (KSCPA) and chairs the KSCPA Committee on Taxation.

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