Sales Tax Exemptions & Other Incentives

State Tax Exemptions
Kansas state sales and use tax rate are 6.15 percent. However, there are several state tax exemptions available, including:
  • Labor services related to original construction
  • Remodeling costs, furnishings, furniture, machinery and equipment
  • New machinery and equipment for manufacturing and distribution
  • Tangible personal property that becomes an ingredient or component part of a finished product
  • Tangible personal property that is immediately consumed in the production process
  • Incoming and outgoing interstate telephone or transmission services (WATTS)
  • Real and personal property financed with an Industrial Revenue Bond
Other Business Incentives
In addition, the Kansas Edge offers a several business friendly advantages, including:
  • Right-to-work state where union membership is 6.8 percent, well below the national average
  • Inventory tax exemption that includes all merchant and manufacturer’s inventories
  • Research tax credit that features an income tax credit of 6.5 percent of a company’s investment in research and development above the average expenditure of the previous three-year period
  • No local income taxes are imposed by Kansas cities and counties
  • No Kansas franchise tax
  • Low workers’ compensation rates in Kansas, which ranks the ninth lowest in the U.S. for such rates
For more information about these exemptions and other incentives, contact Heather Pierson, Kansas Department of Commerce, at 785-296-5298.