Kentucky Angel Investment Tax Credit
Kentucky Cabinet for Economic Development (CED)
25%–40% of investment
Kentucky angel credit — 25% (40% in enhanced counties)
Kentucky's Angel Investment Tax Credit provides accredited investors a nonrefundable state income tax credit on qualified investments in Kentucky small businesses in approved sectors (tech, manufacturing, agri-tech, life sciences). The credit rate is 25% statewide, rising to 40% for investments in companies located in counties designated as enhanced (high-unemployment or economically distressed). Program is capped at $3 million in credits annually; first-come, first-served. Startups must be CED-certified.
- Funding type
- Tax Credit
- Level
- State
- Amount
- 25% Kentucky income tax credit on qualifying investment statewide; 40% for investments in companies in designated high-unemployment or economically distressed (enhanced) counties. Annual statewide cap: $3,000,000 in credits. Credits are non-refundable with 15-year carryforward.
- Realistic amount
- An angel investing $100,000 in a certified KY company in a standard county receives a $25,000 KY income tax credit; in a…
- Deadline
- Rolling — company certification accepted year-round. Annual credit cap may be exhausted mid-year — investors should commit capital early in calendar year.
- Status
- active
- States
- KY
- Payment model
- tax offset
Who qualifies
- INVESTOR: Must be a natural person who is an accredited investor under SEC Regulation D
- INVESTOR: Must invest in a Kentucky CED-certified Kentucky small business in an approved sector
- INVESTOR: Must have KY income tax liability against which to apply the credit (non-refundable)
- COMPANY: Must be incorporated and primarily operating in Kentucky
- COMPANY: Must be in an approved sector (technology, manufacturing, agri-technology, life sciences — verify with CED for full list)
- COMPANY: Must have fewer than 100 full-time-equivalent employees
- COMPANY: Less than $2,000,000 in annual gross receipts (or less than $10M in certain tech sectors — verify with CED)
- COMPANY: Must apply for and receive CED certification before investor claims credit
Hard requirements
- Must be incorporated
What it covers
Eligible expenses
- Cash equity investments in KY CED-certified small businesses
- Convertible notes that convert to equity in certified KY companies
- Investment tranches in KY-qualified funding rounds
Ineligible expenses
- Pure debt investments (loans without equity conversion)
- In-kind investments (services, equipment — cash only)
- Investments in non-certified companies
- Investments in out-of-state companies
- Real estate investments
How to apply
-
1
Company applies for KY CED certification
Submit company certification application to Kentucky CED. Include: articles of incorporation, business plan, sector classification, employee count, revenue documentation, and KY headquarters proof.
~2 hrs
-
2
CED issues certification
CED reviews and issues certification within approximately 30 days if the company qualifies. Certification is required before any investment can earn the angel credit.
~2 hrs
-
3
Angel investor makes qualifying investment
Accredited investor makes cash equity investment in the certified company. Obtain a receipt or investment documentation from the company showing the investment amount and date.
~2 hrs
-
4
File for angel credit with KY CED
Investor applies to KY CED for the credit allocation — CED reserves the 25% (or 40% for enhanced county companies) credit against the statewide $3M cap. Once reserved, claim the credit on KY income tax return using Form KY-8863.
~2 hrs
KY's angel credit is 25% statewide but rises to 40% for companies in designated enhanced (high-unemployment) counties — a meaningful difference worth confirming at CED. The $3M annual cap can exhaust mid-year; get certified early and have investors reserve their credit allocation promptly. KY angels write larger checks when they know the tax credit reduces their effective cost.
Deadline & timing
The $3M statewide credit cap is first-come, first-served — credits are allocated to investors as investments are certified throughout the year. Investors who plan large angel investments should engage KY CED early in the calendar year to assess remaining cap availability.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.