Kentucky Small Business Tax Credit (KSBTC)
Kentucky Cabinet for Economic Development, KY Innovation
$3,500 to $25,000 per year in tax credits
State income tax credit of $3,500 to $25,000 a year for Kentucky small businesses that added a full-time job and bought $5,000+ of equipment. Applications are accepted year-round; Nov. 1 was the 2026 review cutoff.
The Kentucky Small Business Tax Credit gives for-profit businesses with 50 or fewer full-time employees a non-refundable state income tax credit of $3,500 to $25,000 per year. To qualify, a business must have added at least one net new full-time job that has been filled for 12 months and paid at least $10.88 an hour, and bought $5,000 or more of qualifying equipment or technology in the past 24 months. Applications are accepted all year; the Governor's September 3, 2026 release says complete applications received by Nov. 1 were fully reviewed for 2026 tax credits. A $250 fee is due only if the application is selected for final approval.
- Funding type
- Tax credit
- Level
- State
- Amount range
- $3,500 – $25,000
- Realistic amount
- $3,500 per eligible new full-time position, up to the amount spent on qualifying equipment; one new hire plus $5,000 of equipment earns $3,500.
- Deadline
- Accepted year-round. Complete applications received by November 1, 2026 were reviewed for 2026 credits; later ones may not count until the 2027 tax year.
- Status
- active
- States
- KY
Who qualifies
- For-profit business (sole proprietorship, partnership, LLC, corporation, cooperative and similar) with 50 or fewer full-time employees at the time of application
- At least one new full-time position created and filled for 12 consecutive months, averaging 35+ hours a week and $10.88+ an hour, held by a Kentucky income-tax-paying W-2 employee
- The position must increase the business's base full-time employment
- At least $5,000 spent on qualifying equipment or technology, bought within the 24 months before applying
- In good standing on taxes and licenses; not in default on any federal, state or local taxes
- Not using the same job or equipment to get a credit, grant or loan from another KEDFA program
What it covers
Eligible expenses
- Computers and technology
- Equipment
- Furniture, fixtures and furnishings (not artwork)
- Vehicles titled in the business's legal name
Ineligible expenses
- Real property and buildings
- Consumable supplies
- Items bought for resale or personal use
- Artwork
- Installation, delivery, labor and tax (subtracted from eligible cost)
How to apply
-
1
Check the guidelines
Confirm the hire (12 months, 35 hours a week, $10.88 an hour) and the $5,000 of equipment both fall within the last 24 months.
~1 hrs
-
2
Fill in the KSBTC application
Complete the application spreadsheet with positions, wages, hours and equipment details.
~3 hrs
-
3
Attach proof
Invoices and proof of payment for equipment, and payroll records for each position.
~2 hrs
-
4
Pay the $250 fee if selected
The fee is due only if the Cabinet picks the application to send to KEDFA for final approval.
~30 min
The credit is capped at the lesser of $3,500 per eligible position or what you spent on qualifying equipment, so one hire and $5,000 of equipment earns $3,500. Wages are measured as an average from the W-2, and the 12 months of employment must be complete before you apply.
Deadline & timing
Applications can be submitted at any time. Per the Governor's September 3, 2026 release, complete applications received by Nov. 1 were fully reviewed for 2026 tax-credit eligibility; later ones may not count until the 2027 tax year. Credits come from a $3,000,000 per fiscal year pool shared with the Selling Farmer Tax Credit.
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Required documents
- KSBTC application form
- Invoices and proof of payment for qualifying equipment or technology
- Payroll evidence for each eligible position (wages, hours, W-2 information)
- Base employment calculation
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Last updated October 31, 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.