Kentucky Jobs Retention Act Program

KRS tit. XII, ch. 154, subch. 25

in effect

KRS 154.25-010 Definitions for subchapter

154.25-010. Definitions for subchapter As used in this subchapter: (1) "Activation date" means a date selected by an approved company and set forth in the jobs retention agreement at any time within a three (3) year period after the date of final approval of the agreement by the authority upon which the required investment shall be made and the jobs retention project completed; (2) "Agreement" means a jobs retention agreement entered into pursuant to KRS 154.25-030 on behalf of the authority and an approved company with respect to a jobs retention project; (3) "Agribusiness" has the same meaning as in KRS 154.32-010; (4) "Approved company" means any eligible company approved by the authority pursuant to KRS 154.25-030 for a jobs retention project; (5) "Approved costs" means that portion of the eligible costs approved by the authority that an approved company may recover through the inducements authorized by KRS 154.25-030, being a percentage of eligible costs as approved by the authority; (6) "Assessment" means the wage assessment fee authorized by KRS 154.25-040; (7) "Authority" means the Kentucky Economic Development Finance Authority created by KRS 154.20-010; (8) "Commonwealth" means the Commonwealth of Kentucky; (9) "Eligible company": (a) Means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity that has been operating within the Commonwealth on a continuous basis for at least sixty (60) months preceding the request for approval by the authority of the project which meets the standards set forth in KRS 154.25-020, has been previously approved for economic development incentives from the Commonwealth related to one (1) or more of its facilities, and employs a minimum of two hundred fifty (250) full-time persons for a project located in a heritage county or one thousand (1,000) full-time persons for a project located in any other county, engaged in one (1) or more of the following activities: 1. Manufacturing; 2. Agribusiness; 3. Nonretail service or technology; or 4. Headquarters operations, regardless of the underlying business activity of the company; and (b) 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; (10) "Eligible costs" means: (a) Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, deliverymen, and materialmen in connection with the acquisition, construction, equipping, rehabilitation, and installation of a jobs retention project; (b) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of a jobs retention project which is not paid by the vendor, supplier, deliveryman, contractor, or otherwise provided; (c) All costs of architectural and engineering services, including estimates, plans and specifications, preliminary investigations, and supervision of construction, rehabilitation, and installation, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, equipping, rehabilitation, and installation of a jobs retention project; (d) All costs required to be paid under the terms of any contract for the acquisition, construction, equipping, rehabilitation, and installation of a jobs retention project; (e) All costs required for the installation of utilities, including but not limited to water, sewer, sewer treatment, gas, electricity, communications, and railroads, and including off-site construction of the facilities paid for by the approved company; and (f) All other costs comparable with those described above; (11) "Final approval" means the action taken by the authority authorizing the eligible company to receive inducements under this subchapter; (12) "Headquarters" has the same meaning as in KRS 154.32 -010; (13) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21 -017 scores greater than or equal to ninety-seven (97); (14) "Inducements" means the Kentucky tax credit and the wage assessment fee as prescribed in KRS 154.25-030 and 154.25-040; (15) "Jobs retention project" or "project" means the acquisition, construction, and installation of new equipment and, with respect thereto, the construction, rehabilitation, and installation of improvements to facilities necessary to house the acquisition, construction, and installation of new equipment, including surveys; installation of utilities, including water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; off-site construction of utility extensions to the boundaries of the real estate on which the facilities are located; and shall contain eligible costs of not less than twenty-five million dollars ($25,000,000) for a project located in a heritage county or one hundred million dollars ($100,000,000) for a project located in any other county, all of which are utilized to improve the economic and operational situation of an approved company to allow the approved company to reinvest in its operations and retain a significant number of existing jobs within the Commonwealth; (16) "Kentucky gross profits" means Kentucky gross profits as defined in KRS 141.0401; (17) "Kentucky gross receipts" means Kentucky gross receipts as defined in KRS 141.0401; (18) "Manufacturing" has the same meaning as in KRS 154.32-010; (19) "Nonretail service or technology" has the same meaning as in KRS 154.32-010; (20) "Preliminary approval" means the action taken by the authority conditioning final approval by the authority upon satisfaction by the eligible company of the requirements under this subchapter; (21) "Supplemental project" means an additional jobs retention project proposed by the approved company or its affiliate during the term of a previously approved jobs retention project, which may be included in the jobs retention agreement by way of amendment and which may result in increased inducements and an extension of the original project term as set forth in KRS 154.25-050; and (22) "Transferred credits" means unused approved costs as determined by the Department of Revenue from a previously approved, independent, active project under a different incentive program governed by the Cabinet for Economic Development that may be transferred to a jobs retention project and used by the approved company pursuant to a jobs retention agreement. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 9, effective April 27, 2026. -- Amended 2019 Ky. Acts ch. 172, sec. 2, effective March 26, 2019. -- Amended 2014 Ky. Acts ch. 97, sec. 1, effective July 15, 2014. -- Amended 2012 Ky. Acts ch. 23, sec. 1, effective July 12, 2012. -- Created 2007 Ky. Acts ch. 91, sec. 1, effective March 23, 2007.

KRS 154.25-020 Criteria for approval of eligible companies and job retention projects -- Preliminary approval

154.25-020. Criteria for approval of eligible companies and job retention projects -- Preliminary approval (1) The criteria for approval of eligible companies and jobs retention projects shall include but not be limited to: (a) The need for the project, as indicated by the impact of the existing facility upon the local community and the economic and employment impact that the loss of the facility would have; (b) The new capital investment in its facilities and the likelihood that the capital investment will increase potential for sustainability of its workforce and facilities in the future; and (c) The retention or creation of employment at the facility where the jobs retention project will occur as well as any other facilities owned by the approved company in the Commonwealth. (2) With respect to each eligible company making an application to the authority for inducements, and with respect to the economic development project described in the application, the authority shall request materials and make inquiries of the applicant as necessary or appropriate. Upon review of the application and completion of initial inquiries, the authority may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily approved company and authorizing the undertaking of the jobs retention project. The authority and the preliminarily approved company shall enter into a memorandum of agreement that sets forth the conditions necessary for the company to obtain final approval of the project. Upon satisfaction of the conditions set forth in the memorandum of agreement, the authority may, by resolution, designate the preliminarily approved company to be an approved company and authorize the execution of a jobs retention agreement. Effective: March 23, 2007 History: Created 2007 Ky. Acts ch. 91, sec. 2, effective March 23, 2007.

KRS 154.25-030 Jobs retention project agreement -- Requirements, limitations, and permitted inducements

154.25-030. Jobs retention project agreement -- Requirements, limitations, and permitted inducements (1) The authority, upon adoption of its final approval, may enter into, with any approved company, an agreement with respect to the jobs retention proj ect. The terms and provisions of each agreement, including the amount of approved costs, the amount of the inducement, the job maintenance requirement, and any limitations the authority may deem necessary, shall be determined by negotiations between the authority and the approved company, except that each agreement shall include the following provisions: (a) The amount the approved company may recover through inducements under this subchapter for the initial project, which shall be a negotiated percentage not to exceed fifty percent (50%) of eligible costs. However, the authority may negotiate an increase in the percentage such that both the initial project and any supplemental projects are eligible for seventy -five percent (75%) of eligible costs upon approval of a supplemental project. The adjustment to the initial project shall be made on the total approved costs and any credits taken prior to the addition of a supplemental project shall then be subtracted from that increased amount of approved costs. Neit her the initial project nor any supplemental project shall ever be eligible for inducements greater than seventy-five percent (75%) of the eligible costs. The authority shall negotiate a maximum allowable inducement for each year of the agreement, and the approved company may not recover inducements above that maximum in any year during the term of the agreement, except that the annual maximum allowable inducement may be exceeded if a carry -forward of unused inducements from previous years exists. Any carry -forward of unused inducements will lapse upon maturity or termination of the agreement; (b) A provision that sets the activation date for the initial project within three (3) years of the final approval. Prior to the activation date, the authority may extend the time for the completion of the jobs retention project and compliance with the required investment upon request of the approved company for good cause; however, the ten (10) year period for the term of the agreement shall begin from the activation d ate. No inducements from the jobs retention project shall be available, other than the transferred credits provided for under subsection (2) of this section, until activation. Upon activation, the balance of transferred credits shall expire; (c) A provision that states that within three (3) months of the completion of the jobs retention project, the approved company shall document the actual cost of the project in a manner acceptable to the authority. The authority may employ an independent consultant or utilize technical resources to verify the cost of the project. The approved company shall reimburse the authority for the cost of the consultant; (d) A provision that establishes a minimum required number of full -time jobs that must be maintained at the site of the jobs retention project and filled with residents of the Commonwealth subject to Kentucky income tax and states that the authorized inducements may be suspended at the discretion of the authority from the date of noncompliance until the date compliance is reestablished if the approved company's employment falls below the established minimum employment requirement. If the company does not increase the number of full-time employees at the site who are residents of the Commonwealth and subject to Kentucky income tax sufficiently to meet the minimum employment requirement within one (1) year from the date of the initial suspension, the remaining unused inducements may be terminated at the discretion of the authority; (e) A provision that gives the authority discretion to suspend or terminate the authorized inducements for any failure to comply with the terms of the agreement; and (f) 1. A provision that provides the term shall not be longer than the earlier of: a. The date on which the approved company has received inducements or withheld assessments equal to the amount that the company may recover under paragraph (a) of this subsection; or b. Ten (10) years from the activation date. 2. The term in subparagraph 1. of this paragraph may be extended to a period longer than ten (10) years upon: a. The approved company demonstrating that less than seventy -five percent (75%) of the incentives awarded under the agreement will be claimed during the term of the agreement; or b. The addition of a supplemental project as negotiated and approved by the authority. 3. An extension of the term shall not amend any provision of the agreement impacting the scope of the project or the maximum amount of incentives awarded under the agreement. (2) In consideration of the execution of the agreement, during the time the agreement is in effect, which time shall commence on the date of the agreement, the approved company may be permitted the following inducements: (a) Beginning on the effective date of the jobs retention agreement, which shall also be the date of final approval, if the approved company has a balance of unused approved costs on a previously existing and active incentive agreement approved by the authority pursuant to KRS Chapter 154, the approved company may impose wage assessments on employees whose jobs are at the facility where the project defined in the previously existing incentive agreement was located. The wage assessments may be imposed as provided in KRS 154.25-040, and shall be available in an amount up to the balance of transferred credits from the previously existing project. 1. The transferred credits shall only be available to the approved company until the activation date, the term from the original incentive agreement expires, or the balance of transferred credits is exhausted, whichever occurs first; and 2. Should the approved company exercise this option, the incentive agreement from which the credits were transferred shall be termina ted upon transfer and all parties shall be released from their obligations thereunder. (b) After the activation date: 1. A one hundred percent (100%) credit against the taxes imposed by KRS 141.020, 141.040, and 141.0401 that would otherwise be owed by the approved company, in the approved company's taxable year, as determined under KRS 141.402, on the taxable income, Kentucky gross receipts, or Kentucky gross profits of the approved company generated by or arising from the jobs retention project. The ordering of credits shall be as provided in KRS 141.0205; and 2. The aggregate assessment withheld by the approved company as provided in KRS 154.25-040 in each year after the activation date; (c) The tax credits allowed to the approved company shall be equal to the lesser of the total amount of the tax liability or the amount that the company may recover under subsection (1)(a) of this section that has not yet been recovered, reduced by any recovery through the collection of assessments subject to the annual maximum inducements authorized pursuant to subsection (1)(a) of this section. The credit shall be allowed for each taxable year of the approved company during the term of the agreement and for which a tax return of the approved company is filed until the amount that the company may recover under subsection(1)(a) of this section has been received through a combination of credits and assessments, if the company elects to impose assessments. The approved company shall not be required to pay estimated tax payments as prescribed under KRS 141.044 or 141.305 on income, Kentucky gross profits, or Kentucky gross receipts from the jobs retention project. One hundred eighty (180) days after the filing of the tax return of the approved company, the Department of Revenue shall certify to the authority the state tax liability for the preceding taxable year of the approved company and the amount of any tax credits taken pursuant to this section; (d) Prior to execution of the agreement, the eligible company shall secure from all local governmental authorities responsible for collecting local occupational license fees a resolution or order of the local governmental entities acknowledging and consenting to the termination or partial termination of the receipt of local occupational license fees on wages subject to the agreement paid by the approved company on behalf of its employees to the local government entities; (e) If more than one (1) local occupational license fee is imposed upon the employees of the approved company, the assessment imposed upon the employees shall be credited against the local occupational license fee and shall be apportioned to each local occupational license fee according to each local occupational license fee's proportion to the total of all local occupational license fees for such employees. No credit or portion thereof shall be allowed against any local occupational license fee imposed by or dedicated solely to a local board of education; and (f) If, in any taxable year of the approved company during wh ich the agreement is in effect, the assessment collected from the wages of the employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, or exceeds the annual maximum negotiated by the authority, the assessment collected from the wages of the employees shall cease for the remainder of that taxable year of the approved company. The approved company shall resume normal personal income tax and occupational license fee withholdings from the employees' wages for the remainder of that taxable year, and the approved company shall remit to the Commonwealth and applicable local jurisdictions their respective shares of the excess assessment collected on the withholding filing date for employees' wages next succeeding the first date when the approved company collected excess assessments. (3) The jobs retention agreement and inducements available pursuant thereto shall not be transferable or assignable by the approved company without the expressed written consent of the authority. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 10, effective April 27, 2026. -- Amended 2012 Ky. Acts ch. 23, sec. 2, effective July 12, 2012. -- Created 2007 Ky. Acts ch. 91, sec. 3, effective March 23, 2007. Legislative Research Commission Note (3/23/2007) Although subsection (1)(b) of 2007 Ky. Acts ch. 91, sec. 3, refers to "transferred credits provided for under Section 3 of this Act, "it appears from context and on advice of the drafter that the reference should have been to "transferred credits provided for under subsection (2) of this section." The Reviser of Statutes has made this change pursuant to KRS 7.136.

KRS 154.25-040 Wage assessment -- Tax credits for employees -- Department of Revenue to make annual report to authority

154.25-040. Wage assessment -- Tax credits for employees -- Department of Revenue to make annual report to authority (1) The approved company may require that each employee subject to the income tax imposed by KRS 141.020, whose job was preserved or created as a result of the project, as a condition of employment or the retention of employment, agree to pay an assessment up to one hundred percent (100%) of the individual income tax rate imposed by KRS 141.020 for each employee subject to the income ta x imposed by KRS 141.020. The Commonwealth's wage assessment shall be equal to the following: (a) Up to eighty percent (80%) of the individual income tax rate imposed by KRS 141.020 if the project is located in a local jurisdiction where: 1. No local occupational license fee is imposed; 2. a. A local occupational fee greater than or equal to twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and b. The local jurisdiction agrees to forgo the local wage assessment of at least twenty percent (20%) of the individual income tax rate imposed by KRS 141.020 via credits against the local occupational license fee for the affected employees; or 3. a. A local occupational license fee less than twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and b. The local jurisdiction agrees to forgo the total amount of the local occupational license fee as the local wage assessment; or (b) Up to four (4) times the forgone local wage assessment rate if the project is located in a local jurisdiction where: 1. a. A local occupational license fee greater than or equal to twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and b. The local jurisdiction agrees to forgo an amount of the local occupational license fee that is less than twenty percent (20%) of the individual income tax rate imposed by KRS 141.020 as the local wage assessment; or 2. a. A local occupational license fee less than twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and b. The local jurisdiction agrees to forgo only a portion of the total amount of the local occupational license fee as the local wage assessment. (2) Each assessed employee shall be entitled to a credit against the Kentucky income tax required to be withheld under KRS 141.310 in the form of a simultane ous adjustment equal to the Commonwealth's assessment outlined in subsection (1) of this section. (3) Each employee assessed under subsection (1) of this section also shall be entitled to a credit against the local occupational license fee in the form of a simultaneous adjustment of the local occupational license fee withholding equal to the local wage assessment outlined in subsection (1) of this section. (4) If an approved company elects to impose the assessment as a condition of employment or the retention of employment, the approved company shall deduct the assessment from each paycheck of each employee subject to the provisions of subsections (2) and (3) of this section. (5) Any approved company collecting an assessment shall make its payroll books and records available to the authority at such reasonable times as the authority shall request and shall file with the authority the documentation respecting the assessment the authority may require. (6) Any assessment of the wages of the employees of an approved company shall permanently lapse upon expiration or termination of the agreement unless the agreement has been amended to extend the termination as a result of a supplemental project. (7) By October 1 of each year, the Department of Revenue shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the taxable year ending June 30 of that year and wage assessment fees taken during the prior calendar year by approved companies with respect to their jobs retention projects under this subchapter, and shall certify to the authority, within one hundred eighty (180) days from the date an approved company has filed its state tax return, when an approved company has taken tax credits equal to its total inducements. Effective: June 29, 2023 History: Amended 2023 Ky. Acts ch. 75, sec. 20, effective June 29, 2023. -- Created 2007 Ky. Acts ch. 91, sec. 4, effective March 23, 2007.

KRS 154.25-050 Supplemental projects -- Application for and approval of -- Project's activation date -- Inducements, when authorized

154.25-050. Supplemental projects -- Application for and approval of -- Project's activation date -- Inducements, when authorized (1) If an approved company makes additional investments in the form of additional jobs retention projects during the term of the initial jobs retention project, the approved company may apply for, and the authority may approve, a supplemental project. (2) The authority, upon adoption of its final approval of a supplemental project, may enter into, with any approved company, an amended agreement with respect to both the initial jobs retention project and the supplemental project which shall jointly make up its project. The terms and provisions of each amended agreement, including the amount of approved costs, the amount of the tax credit pursuant to KRS 154.25-030, the job maintenance requirement established by the agreement, and any limitations the authority may deem necessary, shall be determined by negotiations between the authority and the approved company, except that each agreement shall include the following provisions: (a) Upon approval of a supplemental project, the amount the approved company may recover through inducements for the initial project and any supplemental projects shall be a negotiated percentage not to exc eed seventy-five percent (75%) of the eligible costs from the initial project and all newly incurred eligible costs from any supplemental projects, subject to the annual maximum negotiated and approved by the authority. At the time a supplemental project is approved, the recoverable amount and the annual maximum inducement for the initial jobs retention project and any previous supplemental projects may also be increased at the discretion of the authority pursuant to KRS 154.25 - 030; (b) The activation date for a supplemental project shall be no more than three (3) years from final approval of the supplemental project. Prior to the activation date, the authority may extend the time for the completion of the jobs retention project and compliance with the requi red investment upon request of the approved company for good cause; however, the ten (10) year period for the term of the agreement shall begin from the activation date. Within three (3) months of the completion date for a supplemental project, the approve d company shall document the actual cost of the project in a manner acceptable to the authority. The authority may employ an independent consultant to verify the cost of the supplemental project subject to reimbursement for the cost of same from the approved company; and (c) In consideration of the execution of the amended agreement, on the date stated in the agreement, the approved company may be permitted during the term of the amended agreement to take the inducements set forth in KRS 154.25-030(2)(b), (2)(c), and (3)(a), subject to the remaining terms of that section. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 12, effective April 27, 2026. -- Amended 2012 Ky. Acts ch. 23, sec. 3, effective July 12, 2012. -- Created 2007 Ky. Acts ch. 91, sec. 5, effective March 23, 2007. Legislative Research Commission Note (4/27/2026). In subsection (2)(c) of this statute, there is a reference to KRS 154.25-030(3)(a), a provision that does not exist. Language that would have added a new subsection (3)(a) to KRS 154.25-030 was proposed in the House Committee Substitute to 2026 House Bill 869, but that language was deleted before the final version of the bill was enacted. An internal reference to that deleted provision, however, was inadvertently left in place.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=37784Fetched: 10/20/2026