Kentucky Small Business Tax Credit (KSBTC) Program: Fuel Your Business Growth with State Tax Incentives

Grant Overview

Unlock Up to $25,000 Annually in Kentucky Tax Credits for Job Creation and Technology Investment

Donor: Kentucky Cabinet for Economic Development (Administered by the Office of Entrepreneurship and Innovation, approved by the Kentucky Economic Development Finance Authority – KEDFA)

About: The Kentucky Small Business Tax Credit (KSBTC) Program is a significant initiative by the Commonwealth of Kentucky designed to foster growth and expansion among its small business sector. This program offers a non-refundable state income tax credit to eligible small businesses that create new jobs and invest in qualifying equipment or technology. It’s a direct incentive aimed at rewarding companies for contributing to Kentucky’s economic vitality. Navigating the landscape of grant categories can be complex, but state-specific programs like the KSBTC offer targeted support. Understanding the nuances of such programs is crucial for maximizing potential benefits for your enterprise.

To qualify, businesses must meet specific criteria related to job creation and capital investment. This includes hiring at least one new full-time employee who meets wage and employment duration requirements, and investing a minimum of $5,000 in new equipment or technology. The KSBTC program underscores Kentucky’s commitment to supporting its entrepreneurial ecosystem. For businesses looking to expand, this tax credit can provide valuable financial relief, freeing up capital for further investment and innovation. If your business is located in Kentucky, exploring this opportunity could be a strategic move for sustainable growth.

Key Program Features and Application Insights

The KSBTC provides a tax credit ranging from $3,500 to $25,000 per calendar year, per applicant. The actual credit amount is determined by the lesser of $3,500 per new eligible position created or the total dollar amount invested in qualifying equipment or technology. There’s an overall annual cap of $3 million for the KSBTC program (shared with the Kentucky Selling Farmer Tax Credit program), with specific allocation rules for the first and second halves of the state’s fiscal year. This structure emphasizes the importance of timely application once eligibility criteria are met. Businesses exploring grants for for-profit businesses will find this tax credit a compelling state-level incentive.

The application process involves a thorough review by the Cabinet for Economic Development’s Office of Entrepreneurship and Innovation, followed by potential approval from the Kentucky Economic Development Finance Authority (KEDFA). An application fee, calculated as one percent of the eligible tax credit amount, is due if the application is selected for KEDFA submission. Unused tax credits can be carried forward for up to five years, offering long-term financial planning benefits. For comprehensive support in identifying and applying for such opportunities, including assistance with grant research, Grantaura offers expert services to guide you through each step.

Strategic Growth and Grantaura’s Support

The KSBTC program is more than just a tax break; it’s a strategic tool for small businesses in Kentucky aiming for substantial growth. By incentivizing job creation and technology upgrades, the program helps businesses scale, improve productivity, and enhance their competitive edge. This aligns perfectly with the goals of many entrepreneurs seeking grants for startups or expansion funding. Successfully leveraging this program requires careful planning and adherence to all guidelines, from understanding base employment calculations to documenting qualifying investments.

At Grantaura, we understand the challenges small businesses face in securing funding and navigating complex application processes. Our team can assist with various aspects, from initial eligibility checks for programs like the KSBTC to preparing comprehensive documentation, such as business plans and financial projections, that can strengthen your application. We can also help you explore other USA funding ready grants that may complement your growth strategy. Let Grantaura be your partner in unlocking the financial resources your Kentucky business needs to thrive.

Focus: Small business growth, Job creation, Equipment investment, Technology investment, Economic development

Region: Kentucky, United States

Eligibility:
– Must be a for-profit small business operating in Kentucky. This includes:
— Sole proprietorships
— Partnerships
— Limited partnerships
— Corporations
— Limited liability companies
— Joint ventures
— Associations
— Cooperatives
– Must have fifty (50) or fewer full-time employees at the time of application.
– Minimum Job Creation Requirement:
— Create and fill at least one new “Eligible Position.”
— An Eligible Position must be a full-time position (average 35+ hours/week).
— The position must be filled for twelve (12) consecutive months within the 24-month period preceding application submission.
— The position must pay an average hourly wage of at least 150% of the federal minimum wage.
— The employee in the Eligible Position must be subject to Kentucky income tax (KRS 141.020).
— The position must increase the base employment of the small business.
– Minimum Investment Requirement:
— Must spend $5,000 or more on “qualifying equipment or technology.”
— Qualifying equipment or technology must be purchased within the twenty-four (24) month period immediately preceding submission of an application.
— Qualifying equipment/technology is defined as tangible property purchased for business use in Kentucky (not for resale or personal use), with an expected useful life of one year or more, and approved by the Office of Entrepreneurship and Innovation. Examples include computers, equipment, furniture, fixtures (excluding artwork), and vehicles titled in the business’s legal name. Real property, buildings, and consumable supplies do not qualify.
– Ineligible Business Types:
— Businesses engaged in any type of illegal activity.
— Businesses in default on any federal, state, or local taxes.
— Businesses not in good standing with the Kentucky Secretary of State’s office (if required to be registered).
— Businesses that do not hold all current licenses, permits, and registrations necessary to legally operate in Kentucky.
— Businesses presenting live performances of a prurient sexual nature or deriving more than 5% of annual gross revenue from such activities.
— Businesses principally engaged in overt religious indoctrination.
— Businesses deriving more than 50% of annual gross revenues from lobbying activities.
– Businesses that receive KEDFA approved loans, grants, or tax incentives based on job creation/equipment purchases cannot apply if the same Eligible Position/equipment was used for another KEDFA program.

Benefits:
– A non-refundable Kentucky state income tax credit.
– Credit amount is between $3,500 and $25,000 per applicant for each calendar year.
– The credit is the lesser of:
— $3,500 per Eligible Position created and filled.
— The rounded eligible dollar amount invested in qualifying equipment or technology (rounded down to the nearest $100).
– A maximum tax credit cap of $25,000 per applicant for each calendar year.
– Unused tax credits may be carried forward for up to five years.
– The program is subject to a total statutory cap of $3,000,000 in tax credits per state fiscal year (shared between the KSBTC program and the Kentucky Selling Farmer Tax Credit program).

Deadline: Ongoing, subject to annual credit caps and program funding availability. Applications must be submitted after program requirements (job creation for 12 months and $5,000 investment) are met and within the 24-month period after the first program requirement occurs.

Terms:
– KSBTC: Kentucky Small Business Tax Credit. This program provides tax incentives for job creation and investment.
– KEDFA: Kentucky Economic Development Finance Authority. The body responsible for final approval of the tax credits.
– KRS: Kentucky Revised Statutes. The laws governing the KSBTC program, specifically KRS 154.60.
– Eligible Position: A newly created full-time position (35+ hours/week) filled for 12 consecutive months, paying at least 150% of federal minimum wage, subject to KY income tax, and increasing the business’s base employment.
– Qualifying Equipment or Technology: Tangible property purchased for business use in Kentucky (not for resale/personal use), with a useful life of one year or more, approved by the Office of Entrepreneurship and Innovation. Excludes real property, buildings, and consumable supplies.
– Base Employment: The number of full-time employees subject to Kentucky income tax on the day prior to hiring for the earliest Eligible Position in an initial application. For subsequent applications, it’s the base employment from the first approved application plus all previously approved tax-credit Eligible Positions.
– Office of Entrepreneurship and Innovation: The office within the Kentucky Cabinet for Economic Development that administers the KSBTC program and reviews applications.