Kentucky offers several business incentive tax credits that may reduce a taxpayer's Kentucky income tax liability. Most credits require approval, certification, or documentation from a Kentucky agency and are generally entered from a Schedule K-1, tax credit certificate, or other supporting document.
Returns claiming any of these credits must be printed and mailed to the Kentucky Department of Revenue. Include all required supporting documentation for each credit claimed.
Program Entry
State Section → Kentucky Return → Credits → Business Incentive and Other Tax Credits
Information
Nonrefundable Limited Liability Entity Credit
A nonrefundable credit passed through from a partnership, LLC, S corporation, or other qualifying entity.
Kentucky Small Business Tax Credit
A nonrefundable credit for approved small businesses that create and maintain eligible jobs in Kentucky.
Skills Training Investment Credit
A nonrefundable credit for qualified rehabilitation expenses incurred on approved historic structures.
Unemployment Credit
A nonrefundable credit related to approved unemployment tax incentive programs.
Recycling/Composting Equipment Credit
A nonrefundable credit for investments in qualifying recycling or composting equipment.
Kentucky Investment Fund Credit
A nonrefundable credit for investments made in approved Kentucky investment funds.
Qualified Research Facility Credit
A nonrefundable credit for constructing, expanding, or improving qualified research facilities.
GED Incentive Credit
A nonrefundable credit available to employers who support employees in obtaining a GED credential.
Voluntary Environmental Remediation Credit
A nonrefundable credit for approved environmental cleanup and remediation projects.
Biodiesel Credit
A nonrefundable credit related to the production, blending, or distribution of biodiesel fuel.
Clean Coal Incentive Credit
A nonrefundable credit for approved clean coal projects and related investments.
Ethanol Credit
A nonrefundable credit associated with qualifying ethanol production activities.
Cellulosic Ethanol Credit
A nonrefundable credit for the production of ethanol derived from cellulosic biomass materials.
Railroad Maintenance and Improvement Credit
A nonrefundable credit for qualifying railroad track maintenance and improvement expenses.
Endow Kentucky Credit
A nonrefundable credit for approved charitable contributions made through qualified community foundation endowments.
New Markets Development Program Credit
A nonrefundable credit designed to encourage investment in low-income and underserved communities.
Distilled Spirits Credit
A nonrefundable credit available to qualifying distilled spirits producers based on certain taxes paid on aging distilled spirits inventories.
Angel Investor Credit
A nonrefundable credit for approved investments in qualifying Kentucky startup and early-stage businesses.
Renewable Chemical Production Credit
A nonrefundable credit for producing qualifying renewable chemicals within Kentucky.
Qualified Broadband Investment Credit
A nonrefundable credit for approved investments that expand broadband access within Kentucky.
Inventory Credit
For more information on this credit see this article.
Notes
- Returns claiming these credits must be printed and mailed to the Kentucky Department of Revenue.
- Include all required schedules, certificates, approval letters, and supporting documentation with the return.
- Nonrefundable credits can reduce Kentucky tax liability but generally cannot increase a refund.
- Taxpayers should retain copies of all documentation used to support the credit claimed.