Business Incentives

Listed below are additional state and federal incentives and programs that are available to Kansas businesses to encourage investments in energy efficiency and alternative energy.

Click here for state and federal programs & incentives for individual consumers.

Energy Efficiency Incentives (for Businesses)

Commercial Buildings Tax Incentives

Contact: 1-800-829-4933 or contact your local Internal Revenue Service office
Businesses that reduce energy consumption associated with heating and cooling commercial buildings are eligible for a federal income tax deduction of up to $1.80 per square foot, provided the energy usage is 50% less than a building that meets ASHRAE Standard 90.1-2001. A partial tax deduction can be taken for measures improving building envelope, lighting, or heating and cooling systems. This deduction is available until December 31, 2013.

Tax Credit for Builders and Manufacturers of Energy Efficient Homes

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Builders of energy efficient homes—those projected to achieve 50% energy savings for heating and cooling over the 2004 Supplement to the 2003 International Energy Conservation Code (IECC)—are eligible to receive a $2,000 federal income tax credit. At east 1/5 of the savings must come from improvements to the building envelope. This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards. There is also a $1,000 tax credit to the producer of a new manufactured home achieving 30% energy savings for heating and cooling over the 2004 IECC and supplements (at least 1/3 of the savings must come from building envelope improvements), or a manufactured home meeting the requirements established by EPA under the ENERGY STAR program. Click here for more information on Energy Star qualified manufactured homes.

Energy Efficient Appliance Manufacturer tax credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Manufacturers of high-efficiency dishwashers, clothes washers, and refrigerators (produced in 2008, 2009, and 2010) are eligible to receive a per-unit federal income tax credit. The amount of the tax credit varies depending on the year the unit is manufactured and the efficiency of the unit.

Rural Energy for America Program Grant (REAP Grants)

Contact: Gary Smith [], USDA Rural Development, Kansas Office, 785-271-2730
This program, administered by USDA Rural Development, provides grants for small businesses in rural areas to perform energy audits, make energy efficiency improvements, and install renewable energy systems. These funds are awarded on a competitive basis, based on financial need and technical feasibility, and are limited to a maximum of 25% of eligible project costs.

Rural Energy for America Program Guaranteed Loan Program (REAP Loans)

Contact: Gary Smith [], USDA Rural Development’s Kansas Office, 785-271-2730
This program, administered by USDA Rural Development, provides loan guarantees for rural small businesses for financing renewable energy and energy efficiency projects. USDA Rural Development guarantees up to 85% of a loan from qualified local lender, which may result in lower interest rates or allow businesses to receive financing when they otherwise might not qualify. Loans guaranteed by this program must be for no more than 50% of qualified project costs.

Facility Conservation and Improvement Program (FCIP)

Contact: Peter Armesto [], State Energy Office, 785-271-3170
The FCIP is a streamlined state program that enables public agencies (state, municipalities, counties, and schools) to use energy savings performance contracting to access financing for energy efficiency and conservation projects. Tax-exempt financing with a low interest rate makes projects more economical and reduces the pay-back period. Click here for more information on FCIP.

Idle Reduction Equipment Excise Tax Exemption

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that invest in qualified on-board idle-reduction devices and systems in heavy-duty trucks are exempt from the 12% retail federal excise tax imposed on heavy-duty trucks and trailers. This tax exemption only applies to equipment sold after October 3, 2008.

Alternative Energy Incentives (for Businesses)

Advanced Technology Vehicle Manufacturing Loan Program

Contact: The U.S. Department of Energy, 1-800-342-5363
The Advanced Technology Vehicle Manufacturing Loan Program (ATVM), administered by the Department of Energy, provides loans to manufacturers of automobile and automobile parts to help cover the costs of re-equipping, expanding, and establishing manufacturing facilities that manufacture advanced technology vehicles.

Hybrid-electric and “Advanced Lean Burn Technology” Vehicles Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Business which purchase hybrid-electric and “advanced lean burn technology” cars and light trucks after 2005 are eligible to receive a tax credit off of their federal income taxes. The amount of this tax credit differs from model to model, and is phased out after a manufacturer has sold 60,000 eligible vehicles. Because of this phase-out, new purchases of vehicles manufactured by Toyota (including Toyota’s division Lexus) or Honda do not qualify. This tax credit will be discontinued for all vehicles purchased after December 31, 2010.

Tax Credits for Heavy-Duty Hybrids

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that purchase heavy-duty hybrid vehicles from January 1, 2006, through December 31, 2009, are eligible to receive a federal income tax credit. This per-vehicle credit varies based on the vehicle’s weight class, incremental cost, and fuel economy relative to a comparable conventional vehicle.

Plug-in Electric Vehicles Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Business that purchase plug-in electric hybrids after January 1, 2009, are eligible to receive a tax credit off their annual federal income taxes. The amount of this tax credit ranges from $2,500 to $7,500, depending on the vehicle model, and is phased out after a manufacturer has sold 250,000 such vehicles. Note: This is a new program recently introduced in the American Recovery and Reinvestment Act of 2009.

Alternative-Fuel Tax Credit

Contact: Kathleen Smith [], Kansas Department of Revenue, 785-296-3070
Businesses that purchase qualified alternative-fueled vehicles after January 1, 1996, are eligible for state income tax credits, the amount of which depends on vehicle weight and whether the vehicle was purchased before January 1, 2005. For vehicles purchased before July 1, 2007, a wide variety of alternative-fueled vehicles are eligible, but for vehicles purchased on or after July 1, 2007, only vehicles that run on biomass-derived fuels are eligible. Click here for details on eligible alternative-fueled vehicles.

Business Energy Investment Tax Credit (ITC)

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
This tax credit was expanded significantly by the Energy Improvement and Extension Act of 2008, and further expanded by the American Recovery and Reinvestment Act of 2009. In general, credits are available for eligible systems—including small wind turbines, solar, fuel cells, geothermal, microturbines, and combined heat and power (CHP)—placed in service on or before December 31, 2016. The amount of the credit is 30% of the system cost for solar, fuel cells, and small wind, and 10% of the system cost for geothermal, microturbines, and CHP. This tax credit cannot be claimed in combination with the Production Tax Credit (PTC).

Renewable Electricity Production Tax Credit (PTC)

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that produce electricity derived from wind, biomass, geothermal, landfill gas, municipal solid waste, marine and hydrokinetic, and qualified hydroelectric sources are eligible to receive a per-kWh Production Tax Credit (PTC). The amount of the credit is adjusted for inflation annually. In 2009, the credits are 2.1¢ per kWh for wind, closed-loop biomass, and geothermal-derived electricity, and 1.0¢ for all other covered electrical production. The PTC for wind is scheduled to expire on December 31, 2012, and the other PTC’s are scheduled to expire on December 31, 2013. This tax credit can not be claimed in combination with the Investment Tax Credit (ITC).

Solar Water Heating and Tax Credits

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that install qualified solar water heating systems for their own use between January 1, 2006, and December 31, 2016, are eligible to receive a tax credit equal to 30% of the cost of the system. For systems installed before January 1, 2009, the maximum amount that can be claimed is $2,000. Systems installed on or after January 1, 2009, are not subject to this cap under a provision of the American Recovery and Reinvestment Act of 2009.

Solar Photovoltaic Electricity Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that install photovoltaic systems for their own use between January 1, 2006, and December 31, 2016, are eligible to receive a tax credit equal to 30% of the cost of the system. For systems installed before January 1, 2009, the maximum amount that can be claimed is $2,000. Systems installed on or after January 1, 2009, are not subject to $2,000 maximum limit.

Small Wind Energy Systems Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that install wind turbines for their own use from January 1, 2008, to December 31, 2016, are eligible for a federal tax credit equal to 30% of the cost of the turbines, up to $4,000 or $500 per each half kilowatt of nameplate capacity, whichever is less. Systems installed on or after January 1, 2009, are not subject to this cap under a provision of the American Recovery and Reinvestment Act of 2009.

Geothermal Heat Pump Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that install geothermal heat pumps for their own use from October 3, 2008, to December 31, 2016, are eligible for a federal tax credit equal to 30% of the unit’s cost. For qualified geothermal heat pumps installed before January 1, 2009, the maximum amount that can be claimed in tax credits is $2,000. Geothermal heat pumps installed on or after January 1, 2009, are not subject to this maximum limit under a provision of the American Recovery and Reinvestment Act of 2009.

Rural Energy for America Program Grant (REAP Grants)

Contact: Gary Smith [], USDA Rural Development’s Kansas Office, 785-271-2730
This program, administered by USDA Rural Development, provides grants for small businesses in rural areas to perform energy audits, make energy efficiency improvements, and install renewable energy systems. These funds are awarded on a competitive basis, based on financial need and technical feasibility, and are limited to a maximum of 25% of eligible project costs. Click here for fact sheet summarizing Energy Programs in 2009 Farm Bill.

Rural Energy for America Program Guaranteed Loan Program (REAP Loans)

Contact: Gary Smith [], USDA Rural Development’s Kansas Office, 785-271-2730
This program, administered by USDA Rural Development, provides loan guarantees to rural small businesses for financing renewable energy and energy efficiency projects. USDA Rural Development guarantees up to 85% of a loan from qualified local lender, which may result in lower interest rates or allow businesses to receive financing when they otherwise might not qualify. Loans guaranteed by this program must be for no more than 50% of qualified project costs. Click here for fact sheet summarizing Energy Programs in 2009 Farm Bill.

Renewable Energy Property Tax Exemption

Contact: Kansas Department of Revenue, Property Valuation Division, 785-296-2365, or contact your local county appraiser
Property used by businesses to generate electricity from renewable sources in Kansas—large-scale and small-scale projects—are exempt from state property taxes, beginning January 1, 1999. Property used for the transportation and treatment of landfill gas are also exempt from state property taxes beginning January 1, 2002.

Renewable Energy Cogeneration Facility Tax Credit

Contact: Mari Tucker [], Kansas Department of Commerce, 785-296-6080
Businesses that construct a renewable electric cogeneration facility in Kansas (from December 31, 2006, to January 1, 2012) to offset the electricity used for a industrial, commercial, or agricultural process are eligible for a tax credit against state income taxes. This tax credit is equal to 10% of the first $50 million invested, and 5% of investments thereafter.

Cellulosic Biofuel Producer Tax Credit

Contact: U.S. Internal Revenue Service (IRS), Excise Tax Branch, 202-622-3130, or contact your local IRS office
Businesses that produce cellulosic biofuels from January 1, 2009, to December 31, 2012, may be eligible to receive a per-gallon Production Tax Credit (PTC) of $1.01 per gallon produced. For more information, see IRS Publication 510 and IRS Forms 637 and 6478, which are available via the IRS web site.

Biodiesel and Diesel Derived From Biomass Producer Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that produce and market biodiesel and biomass-derived diesel are eligible to receive a per-gallon Production Tax Credit (PTC). The amount of the credit is $1.00 per gallon for biodiesel and biomass-derived diesel, and $0.50 per gallon for diesel fuel created through co-processing.

Allowances for Cellulosic Biofuels Property

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
For cellulosic biofuel facilities placed in service before January 1, 2013, the taxpayer can immediately write off 50% of the cost of the facility. Previously, this tax credit was limited to cellulosic ethanol, but it has been expanded to include all cellulosic biofuels.

Alternative Fuel Pumps Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Investments in “alternative fueling property,” such as E85 and compressed natural gas (CNG) pumps, installed between January 1, 2009, and December 31, 2010, are eligible for a federal tax credit equal to 50% of the cost of the property. This credit was previously limited to 30%, but was extended to 50% under a provision of the American Recovery and Reinvestment Act of 2009.

Bioenergy Program for Advanced Biofuels

Contact: USDA Rural Development, Business Programs, Energy Branch, 202-720-1400
This federal program, authorized by Section 9005 of the 2008 Farm Bill, provides funding to eligible agricultural producers to support and ensure an expanding production of advanced biofuels. Click here for fact sheet summarizing Energy Programs in 2009 Farm Bill.

Biorefinery Assistance Program

Contact: USDA Rural Development, Business Programs, Energy Branch, 202-720-1400
This federal program, operated by the Department of Agriculture (USDA), provides private loan guarantees for the development, construction, and retrofitting of commercial-scale biorefineries, as well as grants to help pay for the development and construction costs of demonstration-scale biorefineries. Funds provided by this program are awarded on a competitive basis. Click here for fact sheet summarizing Energy Programs in 2009 Farm Bill.

Repowering Assistance

Contact: USDA Rural Development, Business Programs, Energy Branch, 202-720-1400
This federal program, operated by the Department of Agriculture (USDA), provides funding for existing biorefineries (including ethanol and biodiesel plants) to use renewable biomass to replace fossil fuels used to produce heat or power. Click here for fact sheet summarizing Energy Programs in 2009 Farm Bill.

Biomass Crop Assistance Program

Contact: Kansas State USDA Farm Service Agency (FSA) office, 785-539-3531, or your local FSA county office.
This federal program, operated by the USDA Farm Service Agency, provides financial support to establish, produce, and transport crops for the purpose of conversion to bioenergy. Click here for PDF summary.

Ethyl Alcohol Production Incentive

Contact: Edie Martin [], Kansas Department of Revenue, 785-296-5327
Businesses that produce at least 5 million gallons of ethyl alcohol annually are eligible to receive a $0.075 payment for each gallon sold. This state incentive expires July 1, 2011.

Biodiesel Fuel Producer Incentive

Contact: Edie Martin [], Kansas Department of Revenue, 785-296-5327
Producers of biodiesel fuels are eligible to receive a $0.30 payment per gallon sold. This state program expires July 1, 2016.

Kansas Retail Dealers Incentive Fund

Contact: Kathleen Smith [], Kansas Department of Revenue, 785-296-3070
This fund, operated by the Kansas Department of Revenue, offers incentives to Kansas retail dealers who sell and dispense renewable fuels or biodiesel. For retail dealers of renewable fuels, the incentive rate is 6.5¢ per gallon; for retail dealers of biodiesel, the incentive rate is 3¢ per gallon. To qualify for this incentive, the retail dealer’s renewable fuels percentage must be 10% or greater, or 2% or greater in the case of biodiesel, for any quarter in calendar year 2009. These threshold amounts increase each year by 1% per year for renewable fuels and 2% per year for biodiesel, until 2024.

Agriculture Value Added Loans

Contact: Mari Tucker [], Kansas Department of Commerce, 785-296-6080
Biofuel feasibility studies are eligible for the Agriculture Value Added Loan program, administered by the Department of Commerce. These loans are for 50% of the costs of the feasibility study and are often forgivable if the project does not move forward.

Alternative-Fuel Fueling Station Tax Credit

Contact: Kathleen Smith [], Kansas Department of Revenue, 785-296-3070
Qualified alternative-fuel fueling stations placed in service on or after January 1, 2005, are eligible for a state income tax credit. This tax credit is equal to 40% of the cost of the fueling station; for qualified fueling stations installed before January 1, 2009, the maximum amount that can be claimed through this tax credit is $160,000; for those installed after January 1, 2009, this amount is reduced to $100,000.

Biomass-to-Energy Plant Tax Credit

Contact: Mari Tucker [], Kansas Department of Commerce, 785-296-6080
Biomass-to-energy plants that are constructed or expanded before January 1, 2011, are eligible for a tax credit against state income taxes. This tax credit is for 10% of the taxpayer’s qualified investment on the first $250 million invested, and 5% of qualified investments thereafter.

Storage and Blending Equipment Tax Credit

Contact: Mari Tucker [], Kansas Department of Commerce, 785-296-6080
Businesses that install any equipment used to store or blend biofuels with petroleum-based fuels from December 31, 2006, to January 1, 2012, are eligible for a state income tax credit. This tax credit is equal to 10% of the taxpayer’s qualified investment for the first $10 million invested, and 5% of qualified investments thereafter.

Indirect Incentives for Businesses (may be applicable to energy efficiency and alternative energy projects)

Certified Development Company Economic Development Loan Program

Contact: U.S. Small Business Administration, , 1-800-827-5722, for a listing of private-sector lenders in your area.
Also know as SBA 504 loans, these loans are administered by private-sector nonprofit organizations to allow small business owners to buy, build, or renovate commercial real estate. These loans can be used to purchase energy efficient machinery and equipment, or to conduct other energy efficiency renovations. Interest rates and terms of such loans are subject to market conditions.

U.S. Department of Energy Guaranteed Loan Program

Contact: U.S. Department of Energy, Loan Guarantee Program Office, 202-586-8336
This program provides loan guarantees to eligible commercial projects that utilize advanced renewable energy technologies. These loans are awarded on a competitive basis. Under the American Recovery and Reinvestment Act of 2009, $6 billion of loan guarantees will target renewable-energy power generation and transmission projects.

Business and Industry Guaranteed Loan (B&I) Program

Contact: Gary Smith [], USDA Rural Development, Kansas Office, 785-271-2730
For businesses looking to invest in programs that create jobs and stimulate rural economics, the Rural Development division of the Department of Agriculture (USDA) will guarantee up to 80% of a loan made by a commercial lender. This program is limited to investments that create jobs in rural areas and cities with populations under 50,000.

Intermediary Relending Program (IRP)

Contact: Gary Smith [], USDA Rural Development, Kansas Office, 785-271-2730
USDA Rural Development, through intermediaries, provides loans for businesses that are developing business facilities or community development projects. These funds are only available for use in rural areas, including cities with a population of less than 25,000.

Rural Business Enterprise Grant (RBEG) Program

Contact: Gary Smith [], USDA Rural Development, Kansas Office, 785-271-2730
USDA Rural Development—through public entities, nonprofit corporations, and federally recognized Indian tribal groups—provides financing to facilitate development of small and emerging private businesses. These funds are only available for use outside of cities with more than 50,000 people.

Rural Business Opportunity Grants

Contact: Gary Smith [], USDA Rural Development’s Kansas Office, 785-271-2730
Eligible nonprofit corporations can apply for Rural Business Opportunity Grant funds to be used for technical assistance, training, and planning activities that improve economic conditions in rural areas. These grants are limited to $50,000 and restricted to businesses in non-metropolitan areas with populations under 50,000.

Enterprise Zone Incentives

Contact: Darla Price [], Kansas Department of Commerce, 785-296-1868
Businesses that create a minimum of two new jobs through expansion in Kansas are eligible to receive Enterprise Zone Incentives. These incentives consist of (1) an investment tax credit of $1,000 for each qualified business facility investment of $51,000 or more; (2) a per-job-created tax credit of $1,500 (for jobs created in urban Kansas) or $2,500 (for jobs created in rural Kansas); and (3) an exemption from state and local sales taxes on all property purchased for the construction, enlarging, or remodeling of a business.

CDBG – Economic Development Loans

Contact: Terry Marlin [], Kansas Department of Commerce, 785-296-4703
Businesses that invest in infrastructure projects that create jobs for low- and moderate-income Kansans are eligible for Economic Development Loans through the Department of Commerce. The amount of the loans is $35,000 per created job, up to a maximum of $750,000. One-half of the amount of the loan is repaid over a 10-year period through a special assessment against the created property’s property tax; the other half is forgiven, provided the jobs created benefit low- and moderate-income people (otherwise, these funds will be repaid back through normal means at a 4% interest rate).

Workforce Training Funds

Contact: Mari Tucker [], Kansas Department of Commerce, 785-296-8097
The Kansas Industrial Training program is designed to offset the costs of training workers in new and expanding companies. This training can be pre-employment, on-the-job, and/or classroom training. The average reimbursement level under the program is $300 to $500 per position.

Waste Heat Utilization System

Contact: Kathleen Smith [], Kansas Department of Revenue, 785-296-3070
Systems designed to capture waste heat generated in the process of generating electricity and to use this heat to generate additional electricity or to produce renewable fuels are exempt from state property taxes for 10 years following the installation of such equipment. In addition, after December 31, 2006, businesses may amortize the cost of the waste heat system for deductions on their state income tax.

Machinery and Equipment Sales Tax and Property Tax Exemptions

Contact: Ed Serrano [], Kansas Department of Commerce, 785-368-7293
The sale of qualified machinery and equipment (including repair and replacement parts and accessories) is exempt from sales and property tax after June 30, 2006. In order to qualify, the machinery must be used in Kansas as an essential part of an integrated production operation by a manufacturing or processing facility.

High Performance Incentive Program (HPIP)

Contact: Ed Bryan [], Kansas Department of Commerce, 785-296-7174
Companies that pay above-average wages and meet investment requirements for developing the skills of their workers are eligible to receive an investment tax credit equal to 10% of eligible investments that exceed $50,000. This investment tax credit cannot be taken in conjunction with the investment tax credit offer through the Enterprise Zone Incentives program.

Microturbine tax credit

Contact: 1-800-829-4933 or your local Internal Revenue Service office.
Businesses that install microturbines with a nameplate capacity less than 2,000kW and an efficiency of at least 26%, from January 1, 2006 to December 31, 2016, are eligible for a federal tax credit of 10% of the cost of the microturbine (up to $200 per kW of capacity).

Combined Heat and Power Tax Incentive

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that invest in combined heat and power, or cogeneration, are eligible for a 10% federal investment tax credit for the first 15 MW. This tax credit is only available for the original constructor or user of a system smaller than 50 MW that is placed in service between October 3, 2008, and January 1, 2017. Click here for more information on Combined Heat and Power.

Refinery Tax Credit

Contact: Mari Tucker [], Kansas Department of Commerce, 785-296-6080
Businesses that construct a new refinery, or expand an existing refinery, from December 31, 2005, to January 1, 2011, are eligible for a 10-year state income tax credit. The tax credit is equal to 10% of the first $250 million invested, and 5% of investments thereafter.

Carbon Dioxide Capture/Sequestration Tax Deduction

Contact: Kathleen Smith [], Kansas Department of Revenue, 785-296-3070
Businesses are allowed to deduct from state income taxes the amortized costs of machinery and equipment used to capture and sequester carbon dioxide. The amortization deduction is equal to 55% of the costs of such machinery and equipment for the first taxable year, and 5% in subsequent years.

Click here for state and federal programs & incentives for individual consumers.