Kentucky provides several categories of credits that may reduce the amount of tax owed or increase a taxpayer's refund. Depending on the credit, additional information, supporting documentation, or state-issued forms may be required.
Education Credit
Use this section to enter any qualifying Kentucky education credits.
For more information, please see this article.
Business Incentive and Other Tax Credits
Kentucky has a variety of different business incentive credits available. For more information, see this article.
Credit for Taxes Paid to Another State
Use this section if income was taxed by both Kentucky and another state and the taxpayer may qualify for a credit for taxes paid to the other state.
Refundable Certified Rehabilitation Credit
The credit is for completing a certified rehabilitation to a certified historic structure which is located:
- within the jurisdiction of a consolidated local government or urban-county government; and
- within one-half (1/2) mile of a tax increment financing that has received at least preliminary approval.
For more information, see Kentucky website.
Refundable Entertainment Incentive Tax Credit
The Kentucky Entertainment Incentive (KEI) Program provides tax incentives for approved film, television, digital media, and other entertainment production projects conducted in Kentucky. The program is designed to encourage productions to film in Kentucky, create jobs, generate economic activity, and promote Kentucky locations and businesses. The program is administered by the Kentucky Film Office and the Kentucky Film Leadership Council (KFLC).
Taxpayers claiming a KEI credit will generally receive documentation showing the approved credit amount after completing the program's application, approval, and audit requirements. The credit is not self-calculated on an individual tax return. Information may come from:
- A Kentucky Entertainment Incentive approval letter
- A credit certificate
- A Schedule K-1 from a pass-through entity
- Other documentation issued by the Kentucky Film Office or Kentucky Cabinet for Economic Development
DIY Tax Tip: If you did not participate in an approved Kentucky film, television, digital media, or entertainment production project and did not receive official Kentucky approval documentation, this credit likely does not apply to you.
Refundable Development Area Tax Credit
Economic Development Tax Credits are Kentucky tax credits available to businesses with projects that have been approved by the Kentucky Cabinet for Economic Development, the Kentucky Economic Development Finance Authority (KEDFA), or the Bluegrass State Skills Corporation (BSSC). These credits are intended to encourage job creation, business expansion, workforce training, and investment in Kentucky.
Most taxpayers claiming this credit will receive the allowable credit amount from:
- A Kentucky tax credit approval letter or certificate.
- A Schedule K-1 from a partnership, LLC, or S corporation.
- Other documentation issued as part of an approved Kentucky economic development incentive program.
Tax Tip: If you did not receive a credit certificate, approval letter, or Schedule K-1 reporting an Economic Development Tax Credit, this credit likely does not apply to you. These credits are not self-calculated on an individual return.
Refundable Decontamination Tax Credit
A credit for taxpayers who incur approved costs to clean up, remediate, or remove environmental contamination from qualifying property in Kentucky. Qualifying expenses may include cleanup costs, demolition, asbestos removal, engineering and consulting fees, equipment, labor, and other approved remediation expenses.
This credit is generally available only for projects that meet Kentucky's environmental remediation requirements and have been approved through the applicable state programs. Taxpayers claiming the credit will typically receive supporting documentation, approval notices, or credit certificates showing the allowable credit amount.
Tax Tip: If you did not participate in an approved environmental cleanup or brownfield redevelopment project and did not receive documentation from the state, this credit likely does not apply to you. The credit amount is generally entered from state-issued documentation and is not calculated directly on the tax return
Refundable Pass-Through Entity Tax Credit
A refundable credit passed through from a partnership, S corporation, or other pass-through entity that elected to pay Kentucky tax at the entity level. For more information, see this article.
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