New Machinery and Equipment Now Exempt from Property Tax
In 2006, the Kansas Legislature repealed the business machinery and equipment property tax for all types of businesses. This exemption includes all business-related equipment including computers, desks, and copiers as well as large machinery and equipment used in manufacturing operations and warehousing. The property tax exemption applies to new or used property purchased or leased after July 1, 2006. The property tax on business machinery and equipment, which this new law repeals, was levied per the Kansas Constitution at 25% of the assessed value, depreciating over seven
years to 20%. The law also increases the de minimus exemption to $1,500 (from the current $400). So all property less than $1,500 currently on
the tax rolls will be taken off.

Example of new savings:
Appraised Value                                $1,000,000
Assessment Rate                                         25%
Assessed Valuation                            $ 250,000
Mills                                                            .157035
Personal Property Tax Savings         $ 39,259
(Based on purchases made after July 1, 2006)

Sales Tax Exemption
Electricity, gas, and water consumed during manufacturing are exempt from Kansas sales tax. An exemption may also be claimed on the purchase of machinery, equipment, and certain other tangible property if the business qualifies for Job and Investment Tax Credits and is located within an E-Zone. The sales tax exemption may be applied to manufacturing machinery and equipment, as well as quality and pollution control equipment.

Other beneficial sales tax exemptions:
• Labor and services used in original construction.
• Tangible personal property purchased by a city from the proceeds of industrial revenue bonds. At the time of initial purchase, the building cost and all fixed equipment are entitled to exemption from Kansas sales tax at the time of initial purchase. The exemption does not extend to movable machinery and equipment.
• Incoming and outgoing interstate wide area telephone or transmission services (WATTS). The gross receipts from sales of interstate telephone or telegraph services that utilize a WATTS line are specifically exempted from sales tax.

Research Tax Credit
To stimulate increased research and development activity, the state of Kansas offers an income tax credit equal to 6.5% of an investment in research and development, above an average expenditure of the previous three-year period.

Inventory Tax Exemption
All merchant and manufacturer inventory is exempt from property tax.