The Kentucky Business Investment Program

KRS tit. XII, ch. 154, subch. 32

in effect

KRS 154.32-010 Definitions for subchapter

154.32-010. Definitions for subchapter As used in this subchapter: (1) "Activation date" means the date established in the tax incentive agreement that is within two (2) years of final approval; (2) "Affiliate" means the following: (a) Members of a family, including only brothers and sisters of the whole or half blood, spouse, ancestors, and lineal descendants of an individual; (b) An individual, and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for that individual; (c) An individual, and a limited liability company of which more than fifty percent (50%) of the capital interest or profits are owned or controlled, directly or indirectly, by or for that individual; (d) Two (2) corporations which are members of the same controlled group, which includes and is limited to: 1. One (1) or more chains of corporations connected through stock ownership with a common parent corporation if: a. Stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned by one (1) or more of the other corporations; and b. The common parent corporation owns stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fif ty percent (50%) of the total value of shares of all classes of stock of at least one (1) of the other corporations, excluding, in computing the voting power or value, stock owned directly by the other corporations; or 2. Two (2) or more corporations if fi ve (5) or fewer persons who are individuals, estates, or trusts own stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each person only to the extent the stock ownership is identical with respect to each corporation; (e) A grantor and a fiduciary of any trust; (f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a grantor of both trusts; (g) A fiduciary of a trust and a beneficiary of that trust; (h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a grantor of both trusts; (i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust; (j) A fiduciary of a trust and a limited liability company more than fifty percent (50%) of the capital interest, or the interest in profits, of which is owned directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust; (k) A corporation, a partnership, or a limited partnership if the same persons own: 1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and 2. More than fifty percent (50%) of the capital interest, or the profits interest, in the partnership or limited partnership; (l) A corporation and a limited liability company if the same persons own: 1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and 2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company; (m) A partnership or limited partnership and a limited liability company if the same persons own: 1. More than fifty percent (50%) of the capital interest or profits in the partnership or limited partnership; and 2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company; (n) An S corporation and another S corporation if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation; S corporation designation being the same as that designation under the Internal Revenue Code of 1986, as amended; (o) An S corporation and a C corporation, if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation; S and C corporation designations being the same as those designations under the Internal Revenue Code of 1986, as amended; or (p) Two (2) or more limited liability companies, if the same persons own more than fifty percent (50%) of the capital interest or are entitled to more than fifty percent (50%) of the capital profits in the limited liability companies; (3) "Agribusiness" means the processing of raw agricultural products, including but not limited to timber and industrial hemp, or the performance of value-added functions with regard to raw agricultural products; (4) "Alternative fuel production" means a Kentucky operation that primarily produces alternative transportation fuels for sale. The alternative fuel production may produce electricity as a by-product if the primary function of the operations remains the production and sale of alternative transportation fuels; (5) "Alternative transportation fuels" has the same meaning as in KRS 152.715; (6) "Approved company" means an eligible company that has received final approval to receive incentives under this subchapter; (7) "Approved costs" means the amount of eligible costs approved by the authority at final approval; (8) "Authority" means the Kentucky Economic Development Finance Authority established by KRS 154.20-010; (9) "Biomass resources" has the same meaning as in KRS 152.715; (10) "Capital lease" means a lease classified as a capital lease by the Statement of Financial Accounting Standards No. 13, Accounting for Leases, issued by the Financial Accounting Standards Board, November 1976, as amended; (11) "Carbon dioxide or hydrogen transmission pipeline" means the in-state portion of a pipeline, including appurtenant facilities, property rights, and easements, that is used exclusively for the purpose of transporting carbon dioxide or hydrogen to the point of sale, storage, or other carbon or hydrogen management applications; (12) "Coal severing and processing" means activities resulting in the eligible company being subject to the tax imposed by KRS Chapter 143; (13) "Commonwealth" means the Commonwealth of Kentucky; (14) "Confirmed approved costs" means: (a) For owned economic development projects, the documented eligible costs incurred on or before the activation date; or (b) For leased economic development projects: 1. The documented eligible costs incurred on or before the activation date; and 2. Estimated rent to be incurred by the approved company throughout the term of the tax incentive agreement. For both owned and leased economic development projects, "confirmed approved costs" may be less than approved costs, but shall not be more than approved costs; (15) "Department" means the Department of Revenue; (16) "Economic development project" means: (a) The acquisition, leasing, or construction of a new facility; (b) The acquisition, leasing, rehabilitation, or expansion of an existing facility; or (c) The installation and equipping of a facility; by an eligible company. "Economic development project" does not include any economic development project that will result in the replacement of facilities existing in the Commonwealth, except as provided in KRS 154.32-060; (17) (a) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity with a proposed economic development project that is engaged in or is planning to be engaged in one (1) or more of the following activities within the Commonwealth: 1. Manufacturing; 2. Agribusiness; 3. Nonretail service or technology; 4. Headquarters operations, regardless of the underlying business activity of the company; 5. Alternative fuel, gasification, energy-efficient alternative fuel, or renewable energy production; 6. Carbon dioxide or hydrogen transmission pipeline; 7. Coal severing and processing; 8. Hospital operations; 9. Development of the nuclear energy ecosystem, including but not limited to nuclear energy generating facility siting and development; or 10. Research and development. (b) "Eligible company" does not include companies where the primary activity to be conducted within the Commonwealth is forestry, fishing, the provision of utilities, except as provided in paragraph (a)9. of this subsection, construction, wholesale trade, retail trade, real estate, rental and leasing, educational services, accommodation and food services, or public administration services; (18) "Eligible costs" means: (a) For owned economic development projects: 1. Start-up costs to furnish and equip a facility, including: a. Office and manufacturing equipment; b. Software; c. Computers; d. Fixtures; and e. Fixed telecommunications equipm ent; 2. Nonrecurring obligations incurred for labor and nonrecurring payments to contractors, subcontractors, builders, and materialmen in connection with the economic development project; 3. The cost of acquiring land or rights in land and any cost incide ntal thereto, including recording fees; 4. The cost of contract bonds and of insurance of all kinds that may be required or necessary for completion of an economic development project which is not paid by a contractor or otherwise provided for; 5. All costs of architectural and engineering services, including test borings, surveys, estimated plans and specifications, preliminary investigations, and supervision of construction, as well as for the performance of all the duties required for construction of the economic development project; 6. All costs which are required to be paid under the terms of any contract for the economic development project; 7. All costs incurred for construction activities, including site tests and inspections; subsurface site work; e xcavation; removal of structures, roadways, cemeteries, and other surface obstructions; filling, grading, and providing drainage and storm water retention; installation of utilities such as water, sewer, sewage treatment, gas, electric, communications, and similar facilities; off-site construction of utility extensions to the boundaries of the real estate; construction and installation of railroad spurs as needed to connect the economic development project to existing railways; or similar activities as the authority may determine necessary for construction of the economic development project; and 8. All other costs of a nature comparable to those described in this paragraph, including but not limited to investments in: a. Laboratory equipment; b. Computer servers; c. Software; d. Capitalized leases; and e. Leasehold improvements; when the costs are integral to the operation of research and development, headquarters, high-technology operations, or service sector facilities; and (b) For leased economic development projects: 1. Start-up costs to furnish and equip a facility, including : a. Office and manufacturing equipment; b. Software; c. Computers; d. Fixtures; and e. Fixed telecommunications equipment; 2. Building/leasehold improvements; 3. Fifty percent (50%) of the estimated annual rent for each year of the tax incentive agreement; and 4. Investments in: a. Laboratory equipment; b. Computer servers; c. Software; and d. Capitalized leases; when the costs are directly related to the establishment or expansion of research and development, headquarters, high -technology operations, or service sector facilities; (19) "Employee benefits" means payments by an approved company for its full -time employees for health insurance, life insurance, dental insurance, vision insurance, defined benefits, 401(k), or similar plans; (20) "Energy-efficient alternative fuel production" means a Kentucky operation that produces for sale energy-efficient alternative fuels; (21) "Energy-efficient alternative fuels" means homogeneous fuels that: (a) Are produced from processes designed to densify feedstock coal , waste coal, or biomass resources; and (b) Have an energy content that is greater than the feedstock coal, waste coal, or biomass resource; (22) "Final approval" means the action taken by the authority authorizing the eligible company to receive incentives under this subchapter; (23) (a) "Full-time job" means a job held by a person who: 1. Is required to work a minimum of thirty-five (35) hours per week; and 2. a. Is subject to the Kentucky individual income tax imposed by KRS 141.020; or b. Works remotely away from the economic development project if the job meets all of the following conditions: i. Is held by a Kentucky resident; ii. Was created as a result of the economic development project; and iii. The payroll of this job is expensed to the economic development project. (b) "Full-time job" does not include a job held by a resident of any state with a reciprocal agreement between the Commonwealth and the other state as described in KRS 141.070; (24) "Gasification process" means a process that converts any carbon-containing material into a synthesis gas composed primarily of carbon monoxide and hydrogen; (25) "Gasification production" means a Kentucky operation that primarily produces for sale: (a) Alternative transportation fuels; (b) Synthetic natural gas; (c) Chemicals; (d) Chemical feedstocks; or (e) Liquid fuels; from coal, waste coal, coal-processing waste, or biomass resources, through a gasification process. The gasification production may produce electricity as a by- product if the primary function of the operations remains the production and sale of alternative transportation fuels, synthetic natural gas, chemicals, chemical feedstocks, or liquid fuels; (26) "Headquarters" means the principal office where the principal executives of the entity are located and from which other personnel, branches, affiliates, offices, or entities are controlled; (27) "Heritage county" means a county where the county populati on ranking determined by the cabinet under KRS 154.21 -017 scores greater than or equal to ninety-seven (97); (28) "Hospital" means a facility licensed by the Cabinet for Health and Family Services under KRS Chapter 216B for the operation of a hospital and the basic services provided by a hospital; (29) "Incentives" means the incentives available under this subchapter, as listed in KRS 154.32-020(3); (30) "Job target" means the annual average number of new full-time jobs that the approved company commits to create and maintain at the economic development project, which shall not be less than ten (10) new full-time jobs; (31) "Kentucky gross profits" has the same meaning as in KRS 141.0401; (32) "Kentucky gross receipts" has the same meaning as in KRS 141.0401; (33) "Lease agreement": (a) Means an agreement between: 1. An approved company and an unrelated entity conveying the right to use a facility, the terms of which reflect an arms' length transaction; or 2. An approved company and a related entity where the facility to be occupied by the approved company was conveyed by unrelated entity after the approved company received preliminary approval; and (b) Does not include a capital lease; (34) "Leased project" means an economic development project site occupied by an approved company pursuant to a lease agreement; (35) "Manufacturing" means any activity involving: (a) Processing, assembling, or production of any property, including the processing resulting in a change in the conditions of the property and any activity related to the processing, assembling, or production of property, together with the storage, warehousing, distribution, and related office facilities; or (b) Production of vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment; (36) (a) "Nonretail service or technology" means any activity where service or technology is provided predominantly outside the Commonwealth and designed to serve a multistate, national, or international market. (b) "Nonretail service or technology" includes but is not limited to call centers, centralized administrative or processing centers, telephone or internet sales order or processing centers, distribution or fulfillment centers, data processing centers, research and development facilities, and other similar activities; (37) "Owned project" means an economic development project owned in fee simple by the approved company or an affiliate, or possessed by the approved company or an affiliate pursuant to a capital lease; (38) "Personal protective equipment" means protective clothing, helmets, gloves, face shields, goggles, face masks, respirators, and other equipment designed to protect the user from injury or the spread of infection or illness; (39) "Preliminary approval" means the action taken by the authority preliminarily approving an eligible company for incentives under this subchapter; (40) "Renewable energy production" means a Kentucky operation that utilizes wind power, biomass resources, landfill methane gas, hydropower, solar power, or other similar renewable resources to generate electricity for sale to unrelated entities; (41) "Rent" means the actual annual rent or fee paid by an approved company under a lease agreement; (42) "Start-up costs" means nonrecurring costs, with the exception of paragraphs (d) and (e) of this subsection, incurred to furnish and equip a facility for an economic development project, including costs incurred for: (a) Computers, furnishings, office equipment, manufacturing equipment, and fixtures; (b) The relocation of out-of-state equipment; (c) Recurring software subscription or licensing fees covering a period not to exceed one (1) year form activation of the project; (d) The initial software and licensing costs association with each new full-time job created; (e) Cost of fixed telecommunications equipment; and (f) Investments in: 1. Laboratory equipment; 2. Computer servers; 3. Software; 4. Capitalized leases; and 5. Leasehold improvements; when the costs are necessary to accommodate research and development, headquarters, high-technology operations, or service sector facilities; as certified to the authority in accordance with KRS 154.32 -030; (43) "Synthetic natural gas" means the same thin g as in KRS 152.715; (44) "Tax incentive agreement" means the agreement entered into pursuant to KRS 154.32-040 between the authority and an approved company; (45) "Term," subject to KRS 154.32-040, means the period of time for which a tax incentive agreement may be in effect, which shall not exceed fifteen (15) years for an economic development project located in a heritage county, or ten (10) years for an economic development project not located in any other county; (46) "Vital medications" means any drug or biologic used to prevent or treat a serious life-threatening disease or medical condition for which there is no other available source with sufficient supply of that drug or biologic or alternative drug or biologic; (47) "Wage" means the per hour earnings of a full-time employee, including wages, tips, overtime, bonuses, and commissions, as reflected on the employee's federal form W-2 wage and tax statement, but excludes employee benefits; and (48) "Wage target" means the average total hourly compensati on amount, including the minimum wage and employee benefits, that the approved company commits to meet for all new full-time jobs created and maintained as a result of the economic development project, which shall not be less than: (a) Two hundred percent (200%) of the federal minimum wage in heritage counties; or (b) Three hundred percent (300%) of the federal minimum wage in any other counties. Effective: July 15, 2026 History: Amended 2026 Ky. Acts ch. 56, sec. 3, effective July 15, 2026; ch. 161, sec. 126, effective July 15, 2026; and ch. 198, sec. 13, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 22, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 118, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 33, effective July 14, 2018. -- Amended 2013 Ky. Acts ch. 134, sec. 16, effective June 25, 2013. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 9, effective June 26, 2009. Legislative Research Commission Note (4/27/2026). Under the authority of KRS 7.136(1), the reviser of statutes has altered the internal numbering of this statute during codification to place the terms in alphabetical order. The words in the text were not changed. Legislative Research Commission Note (7/15/2026). This statute was amended by 2026 Ky. Acts chs. 56, 161, and 198, which do not appear to be in conflict and have been codified together. Legislative Research Commission Note (4/27/2018). KRS 154.48-010 was repealed in 2018 Ky. Acts chs. 171, 199, and 207, but a conforming amendment was not made to this statute to address the reference it contains to KRS 154.48-010. The Reviser of Statutes has determined that making such a conforming change during the 2018 codification exceeds the permissible correction of manifest clerical or typographical errors under KRS 7.136(1)(h). Therefore, the reference to KRS 154.48-010 remains unchanged and would have to be changed pursuant to future legislative action.

KRS 154.32-020 Incentives to induce location of economic development projects in the Commonwealth -- Purposes -- Requirements -- Summary of incentives available -- Legislative findings

154.32-020. Incentives to induce location of economic development projects in the Commonwealth -- Purposes -- Requirements -- Summary of incentives available -- Legislative findings (1) The purposes of this subchapter are: (a) To provide incentives for eligible companies and to encourage the location or expansion of manufacturing facilities, agribusiness operations, nonretail service or technology facilities, headquarters operations, alternative fuel production facilities, gasification production faci lities, energy-efficient alternative fuel production facilities, renewable energy production facilities, carbon dioxide or hydrogen transmission pipelines, coal severing and processing, and hospital operations in the Commonwealth to advance the public purposes of: 1. Creation of new jobs that, but for the incentives offered by the authority, would not exist within the Commonwealth; 2. Creation of new sources of tax revenues for the support of public services provided by the Commonwealth; 3. Improvement in the quality of life for Kentucky citizens through the creation of sustainable jobs with higher salaries; and 4. Providing an economic stimulus to bolster in -state production of vital medications and personal protective equipment; and (b) To provide balanced incentives for companies that locate in heritage counties in recognition of the depressed economic conditions in those counties and the increased need for the growth and development caused by the depressed economic conditions. (2) To qualify for the incentives provided by subsection (3) of this section, an approved company shall: (a) Incur eligible costs of at least one hundred thousand dollars ($100,000); (b) Create at least ten (10) new full-time jobs and maintain an annual average number of at least ten (10) new full -time jobs; and (c) 1. Pay at least ninety percent (90%) of all new full -time employees whose jobs were created as a result of the economic devel opment project a minimum wage of at least two hundred percent (200%) of the federal minimum wage in heritage counties, and three hundred percent (300%) of the federal minimum wage in any other counties throughout the term of the economic development project; and 2. Provide employee benefits for all new full -time jobs equal to at least fifteen percent (15%) of the minimum wage requirement established by subparagraph 1. of this paragraph. If the eligible company does not provide employee benefits equal to at least fifteen percent (15%) of the minimum wage requirement established by subparagraph 1. of this paragraph, the eligible company may still qualify for incentives if it provides the full-time employees hired as a result of the economic development project total hourly compensation equal to or greater than one hundred fifteen percent (115%) of the minimum wage requirement established in subparagraph 1. of this paragraph through increased hourly wages combined with employee benefits; or (d) Produce vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment. (3) (a) The incentives available under this subchapter are as follows: 1. Tax credits of up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.020 or 141.040 and the limited liability entity tax imposed under KRS 141.0401 on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the economic development project, as set forth in KRS 141.415 and 154.32-070; 2. Authorization for the approved company to impose a wage assessment against the gross wages of each new employee subject to the Kentucky income tax as provided in KRS 154.32-090; and 3. An approved company receiving preliminary approval after July 1, 2026, may receive, in addition to the inducements provided under subparagraphs 1. and 2. of this paragraph, an income tax credit as provided under KRS 154.32-070. (b) Notwithstanding any provision of law to the contrary, for any economic development project with an eligible investment of more than two hundred million dollars ($200,000,000), the authority may authorize approval to the economic development project based upon terms and incentives applicable to economic development project locating in a heritage county. (4) The General Assembly hereby finds and declares that the authority granted in this subchapter and the purposes accomplished hereby are proper governmental and public purposes for which public moneys may be expended, and that the inducement of the location of economic development projects within the Commonwealth is of paramount importance to the economic well-being of the Commonwealth. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 14, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 23, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 119, effective June 29, 2021. -- Amended 2019 Ky. Acts ch. 172, sec. 3, effective March 26, 2019. -- Amended 2018 Ky. Acts ch. 199, sec. 34, effective July 14, 2018. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 10, effective June 26, 2009.

KRS 154.32-030 Application, approval, and review process -- Memorandum of agreement -- Preliminary and final approval -- Tax incentive agreement -- Standards for approval -- Partial satisfaction of eligibility requirements

154.32-030. Application, approval, and review process -- Memorandum of agreement -- Preliminary and final approval -- Tax incentive agreement -- Standards for approval -- Partial satisfaction of eligibility requirements (1) The application, approval, and review process under this subchapter shall be as follows: (a) An eligible company with a proposed economic development project may submit an application to the authority. The application shall include the information required by subsection (3) of this sec tion; (b) Upon review of the application and any additional information submitted, the authority may, by resolution, give preliminary approval to an eligible company and authorize the negotiation and execution of a memorandum of agreement. The memorandum of agreement shall establish a preliminary job target, minimum wage target, including employee benefits, and maximum total approved cost for the economic development project, and shall only allow the recovery of eligible costs incurred ninety (90) days prio r to receipt of preliminary approval. Upon preliminary approval, the preliminarily approved company may undertake the project in accordance with the memorandum of agreement, and may begin to hire employees that may be counted toward the minimum full-time job requirements established by the memorandum of agreement; (c) After preliminary approval but before final approval, the authority shall post the preliminarily approved company's name, the location of the economic development project, and the incentives t hat have been preliminarily approved on the Cabinet for Economic Development's website; (d) The preliminarily approved company shall submit any documentation required by the authority upon request of the authority; (e) To obtain final approval, the prelimi narily approved company shall submit: 1. Documentation required by the authority to confirm that the requirements established by the memorandum of agreement have been met; and 2. Documentation of official action taken by a local governmental entity detailing the manner and level of local contribution, if applicable. Upon review and confirmation of the documentation, the authority may, by resolution, give final approval to the preliminarily approved company, and authorize the execution of a tax incentive agreement between the authority and the approved company pursuant to KRS 154.32 -040. The tax incentive agreement shall establish an activation date, which shall be within two (2) years of final approval; (f) 1. On or before the activation date, the approved company shall notify the authority of its intention to activate the tax incentiv e agreement. The approved company shall submit: a. Documentation that it has met the minimum full -time job, minimum investment, and minimum wage and employee benefits requirements established by KRS 154.32 -020 as of the date of activation; and b. The confirmed approved costs incurred as of the date of activation, which shall be the total eligible costs that may be recovered by the approved company. 2. If the approved company fails to meet any of the minimum investment, full-time job, or wage requirements, including employee benefits, established by KRS 154.32-020 on the activation date, the tax incentive agreement shall be canceled and the approved company shall not be eligible for incentives. 3. If an approved company meets the minimum investment, full-time job, and wage requirements, including employee benefits, established by KRS 154.32-020, but fails to meet higher job targets and minimum wage targets, including employee benefits, established in the tax incentive agreement, then the provisions of subsection (4) of this section shall apply in determining the incentives for which the approved company qualifies. 4. Upon activation of a tax incentive agreement, the authority shall notify the department, and shall provide the department with the information necessary to monitor and track the incentives taken by the approved company; and (g) 1. The authority shall monitor the tax incentive agreement at least annually, and the approved company shall submit all documentation necessary for the authority to monitor the agreement. 2. The authority shall, based on the documentation provided, confirm that the approved company is in continued compliance with the provisions of the tax incentive agreement and, therefore, eligible for incentives. 3. Upon annual review, if the approved company meets the minimum job and wage requirements, including employee benefits, established by KRS 154.32-020, but fails to meet the job target and minimum wage target, including employee benefits, established in the tax incentive agreement, then the provisions of subsection (4) of this section shall apply in determining the incentives for which the approved company qualifies in any year. 4. Upon final approval, the authority shall notify the department that an approved company is eligible for incentives and shall provide the department with the information necessary to monitor the use of incentives by the approved company. If, at any time during the term of the tax incentive agreement, an approved company becomes ineligible for incentives, the authority shall notify the department, and the department shall discontinue the availability of incentives for the approved company. (2) (a) The authority may establish procedures and standards for the review and approval of eligible companies and their economic development projects through the promulgation of administrative regulations in accordance with KRS Chapter 13A. (b) Standards to be used by the authority in reviewing and approving an eligible company and its economic development project shall include but not be limited to: 1. The creditworthiness of the eligible company; 2. The proposed capital investment to be made; 3. The number of new full-time jobs to be provided for the residents of the Commonwealth and the wages to be paid; 4. Support of the local community; and 5. The likelihood of the economic success of the economic development project. (3) The application shall include but not be limited to: (a) The name of the applicant and identification of any affiliates of the applicant who will have some relation to the economic development project; (b) A description of the economic development project, including its location, the total investment in the economic development project, and total proposed eligible costs; (c) The projected number of new full-time jobs to be created as a result of the economic development project and identification of any affiliates who may employ persons hired to fill those jobs; (d) The number of existing full-time jobs at the site of the economic development project on the date of the application and a description and breakdown of the relevant affiliated employers; (e) Proposed wage and employee benefit amounts for the new full-time jobs to be created as a result of the proposed economic development project; (f) For proposed economic development projects new to the Commonwealth, certification by the eligible company that the economic development project could reasonably and efficiently locate outside of the Commonwealth and, without the incentives offered by the a uthority, the eligible company would likely locate outside the Commonwealth; (g) For eligible companies with an existing location in the Commonwealth considering an expansion, certification that the tax incentives are necessary for the expansion to occur; (h) A letter of support from a local governmental entity in the city or county where the economic development project will be located; and (i) Any other information the authority may require. (4) (a) An approved company that meets the minimum job and wage requirements, including employee benefits established by KRS 154.32 -020, but fails to meet the job target and minimum wage target, including employee benefits established by the tax incentive agreement, shall be eligible to receive the incentives authorized by the tax incentive agreement as provided in this subsection. (b) If, upon activation or annual review, an approved company achieves at least ninety percent (90%) of both the job target and minimum wage target, including employee benefits established by the tax incentive agreement, and no other default has occurred, then the approved company shall be eligible to receive full incentives as provided in the tax incentive agreement. (c) If, upon activation or annual review, an approved company achieves less than ninety percent (90%) of either the job target or minimum wage target, including employee benefits established in the tax incentive agreement, and no other default has occurred, then the incentives available to the approved company for the following year shall be reduced by a percentage equal to the percentage representing the difference between the job target or minimum wage target, including employee benefits established in the tax incentive agreement, and the actual average number of full-time jobs or average wage, including employee benefits, paid. If both the number of actual average full- time jobs and average wages paid, including employee benefits, are below ninety percent (90%) of the targets on the same measurement date, then the greater percentage reduction of the two (2) shall be applied rather than reducing the incentives available by the sum of the two (2). (d) If, upon annual review, either the actual number of new full-time jobs or the average wages paid for those jobs, including employee benefits, is less than the minimum requirements established by KRS 154.32-020, then the economic development project may be suspended automatically or, with approval of the authority, terminated. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 15, effective April 27, 2026. -- Amended 2019 Ky. Acts ch. 172, sec. 4, effective March 26, 2019. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 11, effective June 26, 2009.

KRS 154.32-040 Tax incentive agreement between authority and approved company -- Contents

154.32-040. Tax incentive agreement between authority and approved company -- Contents The authority, upon final approval of a company, may enter into a tax incentive agreement with the approved company. The terms and conditions of the tax incentive agreement shall be negotiated between the authority and the approved company. The terms of the tax incentive agreement shall include but not be limited to the following provisions: (1) The maximum approved costs that may be recovered over the term of the t ax incentive agreement and the annual maximum for approved costs; (2) That the approved company shall provide the authority with all documentation requested in a manner acceptable to the authority; (3) Identification of the contribution of the local govern ment to the economic development project, if any; (4) The activation date, which shall be within two (2) years of final approval; (5) That the approved company shall implement the activation date by notifying the authority; (6) That the approved company sh all provide documentation satisfactory to the authority within the timeframes required by the authority that it has met the minimum employment, minimum investment, and minimum wage requirements, including employee benefits, established by KRS 154.32 -020; (7) That failure of the approved company to meet any of the minimum job, minimum investment, or minimum wage requirements, including employee benefits, established by KRS 154.32 -020, on the activation date shall result in cancellation of the tax incentive a greement; (8) The term of the agreement, which shall not exceed fifteen (15) years for an economic development project located in a heritage county, or ten (10) years for an economic development project located in any other county; (9) Notwithstanding subs ection (8) of this section, an approved company that received preliminary approval of an economic development project prior to January 1, 2023, in which wage assessments were provided pursuant to KRS 154.32 -090 may request a one (1) time extension for up t o five (5) years under the following conditions: (a) At the time the extension is granted, the approved company has received less than seventy -five percent (75%) of the incentives awarded under the tax incentive agreement; and (b) The extension does not amend any provision of the tax incentive agreement impacting the scope of the project or the maximum amount of incentives awarded under the tax incentive agreement; (10) That, if confirmed approved costs are less than the maximum approved costs included in the tax incentive agreement, the confirmed approved co sts shall become the maximum amount that may be recovered by the approved company; (11) If the economic development project is a leased project, that future rent payments that are included in eligible costs shall be included as confirmed approved costs upon submission of a valid lease agreement executed after preliminary approval; (12) Establishment of a job target and minimum wage target, including employee benefits; (13) A requirement that the job target and minimum wage target, including employee benefits, be measured: (a) On the activation date, against the actual new full-time jobs created and the average wages, including employee benefits, paid for those jobs; and (b) Annually during each year of the agreement, against the annual average of the new full-time jobs and the average wages paid for those jobs, including employee benefits; (14) A provision requiring the approved company to notify the authority immediately if the approved company sells or otherwise transfers or disposes of the land on which an economic development project is located, if a lease relating to the economic development project is terminated or lapses, or if the approved company ceases or fundamentally alters operations at the economic development project; (15) A provision detailing the reductions in incentives that will occur pursuant to KRS 154.32-030(4) if an approved company fails to meet its job target or minimum wage target, including employee benefits; (16) That the agreement may be assigned by the approved company upon the ado ption of a resolution by the authority to that effect; (17) That the approved company shall make available to the authority all of its records pertaining to the economic development project, including but not limited to payroll records, records relating to eligible costs, and any other records pertaining to the economic development project that the authority may require; (18) That the authority may share information with the department for the purposes of monitoring and enforcing the terms of the tax incent ive agreement; (19) That, if an approved company fails to comply with its obligations under the tax incentive agreement other than the jobs target or minimum wage target, the authority may take any or all of the following actions: (a) Suspend the incentives available to the approved company; (b) Terminate the incentives available to the approved company; or (c) Pursue any other remedy set forth in the tax incentive agreement or to which it may be entitled by law; and (20) Any other provisions not inconsiste nt with this subchapter and determined to be necessary or appropriate by the parties to the tax incentive agreement. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 16, effective April 27, 2026. -- Amended 2021 Ky. Acts ch. 185, sec. 120, effective June 29, 2021. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 12, effective June 26, 2009.

KRS 154.32-060 Rehabilitation, replacement, or expansion of existing facilities -- Criteria for approval as economic development project

154.32-060. Rehabilitation, replacement, or expansion of existing facilities -- Criteria for approval as economic development project (1) The authority shall not approve an economic development project that otherwise meets the requirements of this subchapter if the economic development project will result in the replacement of facilities existing in the state, except as provided in this section. (2) The authority may approve an economic development project that: (a) Rehabilitates an existing facility used for activities of an eligible company, if: 1. The facility has not been in operation for a period of ninety (90) or more consecutive days; or 2. a. The current occupant of the facility has advertised a notice of closure; and b. The eligible company proposing the economic development project is not an affiliate of the current occupant of the facility; or 3. a. The facility is sold or transferred pursuant to a foreclosure ordered by a court of competent jurisdiction or an order of a bankruptcy court of competent jurisdiction; and b. The title to the facility prior to the sale is not vested in the eligible company or an affiliate of the eligible company; or 4. The existing facility is rehabilitated to enable a business to produce vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment; (b) Replaces an existing facility of an eligible company if: 1. a. Title to the facility: i. Is held by exercise of the power of eminent domain; or ii. May be taken pursuant to a nonappealable judgment granting authority to exercise the power of eminent domain; and b. Normal operations at the facility cannot be resumed within twelve (12) months; or 2. The facility has been damaged or destroyed by fire or other casualty to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or 3. The existing facility is replaced to enable a business to produce vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment; or (c) Replaces an existing facility located in the same county if the existing facility cannot be expanded due to the unavailability of real estate at or adjacent to the facility to be replaced. Any economic development project satisfying the requirements of this paragraph shall be eligible for incentives under this subchapter only to the extent of the expansion. No incentives shall be available for the equivalent of the facility to be replaced or rehabilitated. (3) The authority shall not approve an economic development project under this section which results in a lease abandonment or lease termination by the approved company without the consent of the lessor. Effective: June 29, 2021 History: Amended 2021 Ky. Acts ch. 185, sec. 121, effective June 29, 2021. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 14, effective June 26, 2009.

KRS 154.32-070 Tax credits for economic development project by approved company

154.32-070. Tax credits for economic development project by approved company (1) For taxable years beginning after December 31, 2009, an approved company may be eligible for a credit of up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.020 or 141.040, and the limited liability entity tax imposed under KRS 141.0401, that would otherwise be owed by the approved company to the Commonwealth for the approved company's taxable year, on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the economic development project. (2) The credit allowed the approved company shall be applied against both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with credit ordering as provided in KRS 141.0205, for the taxable year for which the tax return of the approved company is filed, subject to the annual maximum set forth in the tax incentive agreement. Any credit not used in the year in which it was first available may be carried forward to subsequent years, provided that no credit may be carried forward beyond the term of the tax incentive agreement. (3) The approved company shall not be required to pay estimated tax payments under KRS 141.044 on the Kentucky taxable income, Kentucky gross receipts, or Kentucky gross profits generated by or arising from the eligible project. (4) The credit provided by this section shall be determined as provided in KRS 141.415. (5) The amount of incentives allowed under subsections (1) to (4) of this section shall not exceed the lesser of the tax liability of the approved company related to the economic development project for that year or the annual maximum approved costs set forth in the tax incentive agreement in any year. The incentives shall be allowed for each fiscal year of the approved company during the term of the tax incentive agreement for which a tax return is filed by the approved company. (6) (a) An approved company receiving preliminary approval after July 1, 2026, may receive, in addition to the inducements provided under subsections (1) to (4) of this section, a credit as provided under KRS 141.399 in an amount up to: 1. Two and one-quarter percent (2.25%) of the wages paid to full-time employees who are subject to the tax imposed by KRS 141.020 and maintained at an economic development project located in a heritage county; and 2. One and one-quarter percent (1.25%) of the wages paid to full-time employees who are subject to the tax imposed by KRS 141.020 and maintained at an economic development project located in any other county. (b) The cumulative credits awarded: 1. To an approved company under this subsection for any year of the agreement shall not exceed the annual maximum approved costs of the economic development project as provided in the tax incentive agreement; and 2. Shall not exceed four million dollars ($4,000,000) per taxable year, of which no more than one million dollars ($1,000,000) shall be allowed for wages paid to full-time employees in counties other than heritage counties. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 17, effective April 27, 2026. -- Amended 2019 Ky. Acts ch. 151, sec. 71, effective June 27, 2019. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 16, effective June 26, 2009. Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch . 151 states that the amendments to this statute made in Section 71 of that Act apply retroactively to April 14, 2018.

KRS 154.32-090 Wage assessments against employees -- Calculation of amount -- Credit against individual income tax for employees -- Assessment to cease at expiration of tax incentive agreement

154.32-090. Wage assessments against employees -- Calculation of amount -- Credit against individual income tax for employees -- Assessment to cease at expiration of tax incentive agreement (1) An approved company or, with the authority's consent, an affiliate of an approved company may impose wage assessments against employees as provided in this section if a wage assessment is included in the incentives awarded to the approved company in the tax incentive agreement. The level of wage assessment shal l be negotiated as part of the tax incentive agreement. (2) If an economic development project is located in a heritage county, the approved company or, with the authority's consent, an affiliate of the approved company may require that each employee subject to the tax imposed by KRS 141.020, whose job is determined by the authority to be created as a result of the economic development project, as a condition of employment, agree to an assessment of up to one hundred percent (100%) of the individual income tax rate imposed by KRS 141.020, and that assessment shall operate as the Commonwealth's wage assessment. Although not required for an economic development project located in a heritage county, a local jurisdiction may agree to forgo all or a portion of it s local occupational license fee as a local wage assessment. (3) (a) If the economic development project is not located in a heritage county, and is located in a local jurisdiction where: 1. No local occupational license fee is imposed; 2. 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, as the local wage assessment, at least twenty percent (20%) of the individual inco me 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; then (b) An approved company or, with the authority's consent, an affiliate of an approved company may require that each employee subject to tax imposed by KRS 141.020, whose job is determined by the authority to be created as a result of the economic deve lopment project, as a condition of employment, agree to pay an assessment of up to sixty percent (60%) of the individual income tax rate imposed by KRS 141.020 and that assessment shall operate as the Commonwealth's wage assessment. (4) (a) If the economic development project is not located in a heritage county, and 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 in KRS 141.020 as the local wage assessment; or 2. a. A local occupational license fee of lesse r 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; then (b) An approved company or, with the authority's consent, an affiliate of an approved company may require that each employee subject to tax imposed by KRS 141.020, whose job is determined by the authority to be created as a result of the economic development project, a s a condition of employment, agree to pay an assessment equal to three (3) times the forgone local wage assessment rate and that assessment shall operate as the Commonwealth's wage assessment. (5) If the project is not located in a heritage county, and: (a) Is located in a local jurisdiction that does not impose a local occupational license fee, the local jurisdiction shall be required to provide some alternative inducement satisfactory to the authority at the local level in order for a preliminarily approved company to receive final approval. However, the authority may waive this requirement if there are reasonable circumstances that prevent the local jurisdiction from providing a reasonable inducement; or (b) Is located in a local jurisdiction that does im pose a local occupational license fee, the jurisdiction may request that the authority waive the local occupational license fee requirements established by subsection (3) or (4) of this section if the local jurisdiction offers alternative inducements of si milar value satisfactory to the authority. The authority shall review all requests for a waiver, and may waive the local occupational license fee requirements and instead require the local jurisdiction to provide alternative inducements of similar value if the authority determines that the circumstances warrant an alternative contribution by the local jurisdiction. (6) Each employee paying the assessment shall simultaneously be entitled to a credit against the Kentucky individual income tax required to be w ithheld under KRS 141.310 equal to the state portion of the assessment and shall be entitled to a credit against the local occupational license tax equal to the local portion of the assessment. (7) If more than one (1) local jurisdiction imposes an occupat ional license fee, the local jurisdiction portion of the assessment shall be prorated proportionately among the taxes imposed by the local jurisdictions unless one (1) local jurisdiction agrees to forgo the receipt of these taxes in an amount equal to the local jurisdiction portion of the wage assessment, in which case no proration shall be made. (8) If a full-time employee subject to state tax imposed by KRS 141.020 is already employed by the approved company at a site other than the site of the economic development project, that full-time employee's job shall be deemed to have been created when the full-time employee is transferred to the site of the economic development project if the full-time employee's existing job is filled with a new full-time employee. (9) If an approved company elects to impose the assessment as a condition of employment, it shall be authorized to deduct the assessment from each payment of wages to the employee. (10) Notwithstanding any other provision of the Kentucky Revised Statut es, if an approved company elects not to deduct the assessment from each payment of wages to the employee, but rather requests a reimbursement of state tax imposed by KRS 141.020 or local occupational tax in the aggregate after they have been paid to the state or local jurisdiction, no interest shall be paid by the state or by the local jurisdiction on that reimbursement. (11) No credit, or portion thereof, shall be allowed against any occupational license fee imposed by or dedicated solely to the board of education in a local jurisdiction. (12) An approved company imposing an assessment shall make its payroll, books, and records available to the authority or the department upon request, and shall file with the authority or department documentation pertainin g to the assessment as the authority or department may require. (13) Any assessment of the wages of employees of an approved company in connection with their employment at an economic development project shall permanently cease at the expiration of the tax incentive agreement. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 18, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 25, effective June 29, 2023. -- Amended 2019 Ky. Acts ch. 172, sec. 5, effective March 26, 2019 . -- Amended 2012 Ky. Acts ch. 43, sec. 1, effective July 12, 2012. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 18, effective June 26, 2009.

KRS 154.32-100 Annual report by department on tax credits and assessments -- Semiannual report by cabinet

154.32-100. Annual report by department on tax credits and assessments -- Semiannual report by cabinet (1) (a) By October 1 of each year, the department shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year and aggregate assessments taken during the prior calendar year by approved companies with respect to their economic development projects under this subchapter, and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state income tax return, when an approved company has taken tax credits or assessments equal to the total incentives available to the approved company. (b) For the economic development credit provided under KRS 141.399, the department shall report to the authority the total amount of economic development credit awarded for each taxable year, by county, including the following: 1. Each approved company awarded a credit; and 2. The total amount of wages paid to a full -time employee by an approved company and included in the credit computation. (2) On a semiannual basis, by May 1 and November 1 of each year, the cabinet shall prepare a report of the economic development credits provid ed under KRS 154.32- 070 to be submitted to the Governor and the Legislative Research Commission for referral to Interim Joint Committee on Appropriations and Revenue and made available on the cabinet's website. The report shall include but not be limited t o the following: (a) A summary of the economic development credits received and relevant statistics relating to actions taken by the cabinet, including: 1. The approved company; 2. The total amount of economic development credits awarded; 3. The number of full-time jobs created; and 4. The annual maximum approved costs of the economic development project; (b) The annual total of the economic development credits received; and (c) Recommendations for legislation or policy actions needed to increase the number of economic development projects. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 19, effective April 27, 2026. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 15, effective June 26, 2009.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=37792Fetched: 10/20/2026