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.
Kentucky offers the following Business Incentive Tax Credits:
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.
Certified Rehabilitation Credit
A nonrefundable credit designed to encourage the preservation of historic properties.
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.
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.
Program Entry
- State
- Edit Kentucky using the three dots
- Credits
- Business Incentive and Other Tax Credits
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.