Historically, the Kentucky Small Business Tax Credit (KSBTC) has rewarded employers for hiring new employees and purchasing fixed assets. Effective July 14, 2018, Kentucky eased the factors for qualification. These include eliminating the minimum cost per fixed asset, changing the useful life to one year or more, and expanding the date of purchase to be within a two year window prior to the application date.
A credit of $3,500 is available for each eligible position (defined later). A business can apply for the credit multiple times each year, up to a maximum credit of $25,000 per calendar year.
In order to qualify for the credit, an eligible small business (business that has 50 or fewer full-time employees) must do all of the following:
Create one or more eligible positions
- Full-time position – at least 35 hours per week
- Fill the position(s) for 12 months
- Increases base employment (number of full-time employees subject to Kentucky income tax the day prior to the hire date of first employee filling a new eligible position) of the business
- Pays at least 150 percent of federal minimum wage ($10.88)
- Subject to Kentucky individual income tax (in other words, employees live in Kentucky)
Invest $5,000 or more in qualifying equipment or technology
- Tangible property
- Purchased by the business and used in the business in Kentucky
- Purchased within 24 months before the application date
Apply for the credit within 24 months of meeting the first program requirement
- Hire date of the eligible position or purchase of initial qualifying equipment or technology
In the past two years, we have successfully assisted our clients in being awarded approximately $130,000 in Kentucky Small Business Tax Credits with an additional $20,000 in process. Please contact one of our professionals to discuss applying for this generous Kentucky tax credit 859-331-1717.
