Kentucky Tax Credits
Skills Training Investment Credit
The Skills Training Investment Credit (STIC) program's basic purpose is to improve and promote employment opportunities for the residents of Kentucky through tax credits with business and industry. The STIC program provides tax credits to companies for company specific training activities. To be considered, a company must complete and submit an application to the Bluegrass State Skills Corporation Board of Directors. Once the application is preliminarily approved by the board the company can begin eligible training.
The maximum tax credit amount for individual companies during each two year state biennium funding period (July 1, 2014 – June 30, 2016) is the lesser of $100,000 or $500 multiplied by the company’s number of full-time Kentucky resident employees. Companies can receive only one approved application per biennium. The BSSC has a maximum of $2.5 million in tax credits to award to eligible companies in each state fiscal year (July 1 to June 30).
The company must have been engaged in one of the following qualified activities within Kentucky for not less than three consecutive years immediately preceding the submission of an STIC application: manufacturing, including the processing, assembly, production or warehousing of any property; processing of agricultural and forestry products; telecommunications; healthcare; product research and engineering; tool and tie and machine technology; mining; tourism and operation of facilities to be used in the entertainment, recreation and convention industry; and transportation in support of manufacturing. Companies located in a Tax Increment Financing (TIF) district may not be eligible if corporate income tax credits have already been pledged to the TIF project. Any business whose primary purpose is the sale of goods at retail does not qualify.
The following training types are allowed under GIA guidelines: in-house training; educational institution and consultant training; instructional materials, texts and supplies; trainee wages and registered apprenticeship training – year two, three and four apprentices. Safety, mandated, and regulatory training is eligible if it totals less than 50% of the overall eligible training. Retroactive training and pro/con union training are not eligible. The STIC allows tax credits for up to 50% of eligible training costs. The STIC will provide credits up to $25 per hour for all in-house training.
Participants in the STIC program must be residents of Kentucky who are full-time employees of the applicant company. Eligible employees must be paid the equivalent of at least $10.88 per hour plus 15% benefits.
Training Grant-in-Aid Program
The competitive grant-in-aid program's basic purpose is to improve and promote employment opportunities for the residents of Kentucky through training grants with business and industry. The GIA program provides up to 50% reimbursement of eligible costs to companies/consortia for approved training activities. Consortia projects, which promote collaborative training initiatives for companies that have common training needs, must be industry driven and be a partnership between business/industry, education, and government working together to maximize the effectiveness of the current and future workforce. For GIA grant funding consideration a
company must complete and submit an application and receive approval from the Bluegrass State Skills Corporation Board of Directors. Once the application is approved by the board the company can begin eligible training.
The maximum funding amount for individual companies during a BSSC fiscal year (July 1 – June 30) is $25,000 for companies with 1-499 employees and $50,000 for companies with 500 or more employees. The consortia funding maximum is $75,000. Funding cannot exceed the number of trainees multiplied by $2,000. The minimum application amount is $6,000.
The following firms are eligible to apply for BSSC funds: manufacturing; service and technology (non-retail); public or non-profit hospitals; and training consortia with three or more eligible companies. Any business whose primary purpose is the sale of goods at retail does not qualify.
The GIA allows up to 50% reimbursement for eligible training activities. GIA allows reimbursement of $25 per hour for all in-house training. The total reimbursement cannot exceed an average of $2,000 per trainee. Participants in the GIA program must be residents of Kentucky who are full-time employees of the applicant company. Eligible employees must be paid the equivalent of at least $10.88 per hour plus 15% benefits.
Business Investment Program
As with all state administered tax incentive programs, any inducements offered to an eligible company under the KBI program are negotiated by Cabinet for Economic Development officials and subject to approval by the Kentucky Economic Development Finance Authority (KEDFA).
The goal is to provide incentives for eligible companies and to encourage the location or expansion of manufacturing facilities, agribusiness operations, nonretail service or technology facilities, and regional or national corporate headquarters in the Commonwealth to advance the public purposes of
To qualify for the incentives provided by subsection (3) of this section, an approved company shall:
Any business entity engaged in one or more of the following activities:
Eligible company does not include companies where the primary activity to be conducted within the Commonwealth is forestry, fishing, mining, coal or mineral processing, the provision of utilities, construction, wholesale trade, retail trade, real estate, rental and leasing, educational services, accommodation and food services or public administration services.
Kentucky counties are designated “enhanced incentive” eligible by meeting at least one of the three following criteria: (1) counties with an average annual unemployment rate exceeding the state average annual unemployment rate in the five preceding calendar years; (2) counties with an unemployment rate greater than 200 percent of the statewide unemployment rate for the preceding year; and (3) counties identified as one of the sixty most distressed counties based on a three part test (three-year unemployment, education attainment and road quality). Once a company enters into a tax incentive agreement, the company maintains its enhanced benefits for the term of the agreement regardless of any change in the county’s status. Any project located in an enhanced incentive county that has been decertified shall have until July 1 of the third year following the decertification to obtain final approval. Click here for map.