Tax Credits for Renewable Energy Facilities (Kentucky)
Last modified on February 12, 2015.
Financial Incentive Program
|Name||Tax Credits for Renewable Energy Facilities|
|Incentive Type||Corporate Tax Credit|
|Eligible Technologies||Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Renewable Fuels|
|Energy Category||Renewable Energy Incentive Programs|
|Eligible System Size|| 1,000,000 minimum capital investment|
Solar power facilities must generate at least 50 kW
|Funding Source||General Funds|
|Maximum Incentive|| 100% of the corporate income tax|
100% of Limited Liability Entity Tax
|Program Administrator||Kentucky Cabinet for Economic Development (Dept. of Financial Incentives)|
|Date added to DSIRE||2007-10-03|
|Last DSIRE Review||2014-09-18|
In August 2007 Kentucky established the Incentives for Energy Independence Act to promote the development of renewable energy and alternative fuel facilities, energy efficient buildings, alternative fuel vehicles, research & development activities and other energy initiatives. For renewable energy facilities, the bill provides incentives to companies that build or renovate facilities that utilize renewable energy, which may include:
- up to 100% of the Kentucky income tax or the limited liability entity tax
- sales and use tax incentives of up to 100%
- a wage assessment of up to 4% for associated employees
- advanced disbursement of post-construction incentives
A renewable energy facility is defined as one that generates at least 50 kilowatts (kW) of electricity from solar power or at least 1 megawatt (MW) from wind power, biomass resources, landfill gas, hydropower or similar renewable resources. The electricity must be sold to an unrelated party. The minimum investment in any renewable energy facility must be $1 million in capital expenditure which is defined to include various non-capital costs such as labor.
The tax credit allows approved facilities to receive a credit up to 100% of Kentucky income tax and the limited liability tax for projects that construct, retrofit or upgrade facilities that generate power from renewable resources.
In addition, companies may also receive a sales tax incentive of up to 100% of the Kentucky sales and use tax paid (on or after the activation date) on materials, machinery and equipment used to construct, retrofit or upgrade an eligible project.
Approved companies may also require that employees whose jobs were created as a result of the associated project, as a condition of employment, agree to pay a wage assessment of up to 4% of their gross wages. Employees will be allowed a Kentucky income tax credit equal to the assessment withheld from their wages.
The maximum recovery for a single project from all incentives, including the income and liability entity tax credit, sales tax refund and the wage assessment, may not exceed 50% of the capital investment.
Prior to making any capital investments in a project, each eligible company must submit an application for incentives to the Kentucky Economic Development Finance Authority. There is a $1,000 application fee. Each incentive contract is negotiated on a case-by-case basis to determine the conditions and termination date of the project, not to exceed 25 years from the project's activation date. There is also a 0.25% administrative fee assessed after the final incentives package is settled (capped at $50,000).
|Contact Name||Don Goodin|
|Department||Kentucky Cabinet for Economic Development|
|Division||Department of Financial Incentives|
|Address||Old Capitol Annex|
|Address 2||300 West Broadway|
|Phone||(502) 564-4554 Ext:3413|
|Contact Name||Taxpayer Services|
|Department||Kentucky Department of Revenue|
|Address||501 High Street|
|Phone 2||(502) 564-3875|
Authorities (Please contact the if there are any file problems.)
|Authority 1:||103 KAR 31:190|
|Authority 2:||KRS § 139.517-518|
|Authority 3:||KRS § 154.27-010 et seq.|
|Authority 4:||307 KAR 1:040|
- Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.