Kentucky's refundable and nonrefundable credits are:
Kentucky Education Credit:
Kentucky offers their own version of the Hope Credit and Lifetime Learning Credit. You can review the full qualifications in this article.
Business Incentive Tax Credits:
Kentucky has a variety of different business incentive credits available. For more information, see this article.
Angel Investor Credit:
Kentucky offers the Angel Investor Credit program to encourage qualified individual investors to make capital investments in Kentucky small businesses, create additional jobs, and promote development of new products and technologies. For more information please see this Kentucky website.
Inventory Tax Credit:
As a sole proprietor reporting business income or loss on federal Form Schedule C may claim a credit for inventory tax paid against individual income tax. For more information please see the Kentucky Department of Revenue site here.
Child and dependent care:
Kentucky residents may claim the non-refundable tax credit for household and dependent care services necessary for employment. For more information please visit the Kentucky legislature page here.
Family Size Tax Credit:
Individual taxpayers may be able to claim a tax credit based on their modified gross income and size of their family. For more information please see here.
Personal and Dependency Credit:
Individuals may receive a $40.00 credit for each individual reported on their return that is aged 65 or over. For more information on this credit, please see the Kentucky website here.
Credit for taxes paid to another State:
If you are a resident of Kentucky, you can claim a credit for taxes paid to another State on income that is also taxed on your Kentucky return.
Flow through credits:
Kentucky offers many flow through business credits for certain individuals. For more information please see here.
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 Film Industry Tax Credit:
According to Kentucky's instructions, "for taxable years beginning on or after January 1, 2022, or applications approved on or after January 1, 2022, a refundable credit against the taxes imposed by KRS 141.020 or KRS 141.040 and KRS 141.0401 is available for taxpayers who have received notification from the Kentucky Cabinet for Economic Development that the approved company has satisfied all requirements of KRS 154.61-020 and KRS 154.61-030. Attach certification to the return claiming the credit. KRS 141.383."
Refundable Development Area Tax Credit:
Taxpayers who owned "residential property" on January 1, 2021, that was located in the West End Development area in Louisville may be entitled to this tax credit. The credit will be equal to the amount in which the property tax timely paid on the residential property exceeds the amount of property tax assessed on that residential property on January 1, 2021.
Refundable Decontamination Credit
For tax years 2022-2031, taxpayers who make a qualifying expenditure at a qualifying decontamination property will be allowed this refundable credit against the taxes imposed by KRS 141.020 or 141.040.