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Kansas PEAK Program: A Withholding Tax Incentive

The Kansas legislature created the Promoting Employment Across Kansas (“PEAK”) program to encourage economic development in Kansas by incenting companies to locate, relocate, or expand business operations and jobs in Kansas. State legislative sessions in 2010 and 2011 passed subsequent changes to the program by broadening eligibility criteria to increase the companies that can apply for program benefits. More recently, in the 2014 legislative session, House Bill 2430 was passed, effective July 1, 2014 which further broadens program benefits and extends the life of the program.

Kansas

The benefit to companies participating in the PEAK program is the ability to retain 95% of the state payroll withholding tax that would otherwise be remitted to the state on employees in PEAK-eligible job positions.   Since the state payroll tax withholding rate varies depending on the annualized wages of the job position, the potential benefit to an employer eligible for the PEAK program will vary; higher wages are subject to a higher withholding rate.

There are two benefit levels of the PEAK program: Basic and High-Impact.  To be eligible for the Basic PEAK program, an employer must agree to create five new job positions in non-metropolitan counties, or ten new job positions in certain metropolitan counties over a two-year period.  The counties designated as metropolitan counties are: Shawnee, Douglas, Wyandotte, Johnson, Leavenworth, and Sedgwick.  Depending on the wages paid relative to industry standards or the county median wage, benefits under the Basic PEAK program can range from five to seven years.  To be eligible for the High-Impact PEAK program, an employer must agree to create 100 new job positions state-wide over a two-year period.   Depending on the wages paid relative to industry standards or the county median wage, benefits under the High-Impact PEAK program can range from seven to ten years.

Other eligibility criteria include:

  • An employer of full-time employees must offer health insurance coverage and pay at least 50% of such coverage premiums.
  • Applications for PEAK program benefits must be submitted prior to creating PEAK-eligible job positions or hiring or relocating employees for such positions.
  • Certain industries are excluded from participation, including gambling, religious, retail, educational, utilities, bioscience, food service, and drinking locations.
  • Exempt industries, listed above, may be eligible if the PEAK-eligible positions are in the  headquarters or back-office serving a multi-state or international region.

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