As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Kentucky. I was able to speak with some Kentucky economic development professionals and learned some details (Kentucky Cabinet for Economic Development’s Think Kentucky site click here).
Kentucky’s main tax credits and incentives are meant to encourage new jobs and investments within the state. Incentives and credits are available to a decent range of targeted industries that include manufacturing, energy, technology, motion picture production, headquarters facilities, and others.
Kentucky’s credits and incentives range in complexity and are typically more generous than other states.
- Kentucky Business Investment Program (KBI) – Up to 100% tax credit or wage assessment up to 5% of gross wages for projects creating 10 new jobs and $100,000 investment.
- Kentucky Reinvestment Act (KRA) – Provides up to 50% of project costs and 100% of job skills upgrade costs for investments by manufacturers of $2.5 million (plus other qualifications) for up to 10 years.
- Kentucky Enterprise Initiative Act (KEIA) – Sales and use tax refunds for minimum investments of $500,000 on materials, equipment, and IT.
- Skills Training Investment Credit – Tax credit for existing companies, providing up to 50% of approved costs for occupational and skills upgrade training, limited to $500 per Kentucky resident not to exceed $100,000 per company per biennium.
- Other incentives include tax credits, grants, loans, and reimbursements for “environmental stewardship,” industrial revitalization, research and development, alternative fuel development, and small business investments, among others.
- Bluegrass State Skills Corporation (BSSC) – A leading workforce training program, BSSC provides grants for training and employment services for new, expanding, and existing companies (click here).
Compared to Georgia, Kentucky has:
- Similar tax rates and structure
- A similar range of incentives and credits.
- A somewhat smaller range of companies eligible for most credits.
- Similar qualifying activities and somewhat smaller incentive $$ amounts.
- A more hands-on approach to working with companies and projects.
- BIG DIFFERENCE – most incentives must be pre-approved and carefully planned.
To summarize, Kentucky is very competitive with surrounding states. However, prospective and existing Kentucky businesses must get permission from the state to receive benefits from most of the credits and incentive programs.
Do any of your clients have Kentucky connections? If so, check out the Blue Grass State’s opportunities.