Kansas offers a powerful incentive for companies who invest in their facilities and workforce: the High Performance Incentive Program (HPIP). This program rewards companies who pay above-average wages and commit to employee training with valuable tax benefits. If your business is considering expansion, relocation or significant capital investment, HPIP could help reduce your tax burden and improve your bottom line.

What is HPIP?

HPIP provides qualifying businesses with: 

  • A 10% income tax credit on eligible capital investment
  • A sales tax exemption on purchases related to the qualified project
  • A training tax credit of up to $50,000 for employee education and skills development

The investment threshold depends on location: 

  • $50,000 in most Kansas counties
  • $1 million in the five metro counties: Douglas, Johnson, Sedgwick, Shawnee and Wyandotte

Unused credits can be carried forward for up to 16 years, provided the facility continues to meet HPIP requirements. 

Who Qualifies for HPIP? 

To qualify, a business must: 

  • Be a for-profit company subject to Kansas taxes
  • Pay above-average wages compared to similar firms in the same region and industry
  • Be a manufacturer or demonstrate that most sales are to Kansas manufacturers, out-of-state businesses or government agencies
  • Alternatively, a business in any NAICS code can qualify if it serves as a headquarters or back-office operation for a national or multinational corporation

HPIP Tax Credit Transfers 

One of the most significant updates to HPIP is the ability to transfer tax credits: 

  • For projects placed in service on or after Jan. 1, 2021, a taxpayer may transfer up to 50% of the HPIP tax credit in a single tax year. 
  • Transfers can be made to any individual or entity and the transferee can carry forward the credit for up to 16 years. 
  • The original taxpayer remains liable if the credit is later disallowed. 
  • Administrative fees apply: $1,500 for the first recipient and $500 for each additional recipient. 
  • Transfers must be approved by the Kansas Department of Commerce and typically take up to 30 days for review. 

How to Apply (Procedures to Claim the Credit)

Applications for this program are accepted year-round. 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.

Why HPIP Matters for Manufacturers 

HPIP is especially valuable for manufacturers because: 

  • Capital investments in equipment and facilities often exceed the minimum thresholds. 
  • The program supports employee training, helping manufacturers build a skilled workforce. 
  • The ability to transfer credits provides flexibility for companies that cannot fully utilize the credit in the current year. 

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 are interested in exploring HPIP and what recent changes can mean for your company, contact an Adams Brown manufacturing advisor.