Kentucky Tax Incentives
Biodiesel Production and Blending Tax Credit
Qualified biodiesel producers or blenders are eligible for an income tax credit of $1.00 per gallon of pure biodiesel (B100) produced or $1.00 per gallon of biodiesel used in the blending process; re-blending of blended biodiesel does not qualify. The total amount of credit for all biodiesel producers may not exceed the annual biodiesel tax credit cap of $10 million. Unused credits may not be carried forward and applied to a future tax return. For the purpose of this credit, biodiesel must meet ASTM specification D6751. (Reference Kentucky Revised Statutes 141.422 to 141.424)
Ethanol Production Tax Credit
Qualified ethanol producers are eligible for an income tax credit of $1.00 per gallon of corn- or cellulosic-based ethanol that meets ASTM standard D4806. The total credit amount for all corn and cellulosic ethanol producers is $5 million for each taxable year. Unused credits may not be carried forward and applied to a future tax return. However, unused ethanol credits from one ethanol-based cap, such as corn, may be applied to another ethanol-based cap, such as cellulosic, in the same taxable year. (Reference Kentucky Revised Statutes 141.4244 to 141.4248)
Alternative Fuel Production Tax Incentives
The Kentucky Economic Development and Finance Authority (KEDFA) provides tax incentives to construct, retrofit, or upgrade an alternative fuel production or gasification facility that uses coal or biomass as a feedstock. The incentives may consist of: 1) a refund of up to 100% of the state sales tax paid on the purchase of personal property used to construct the facility; 2) a credit of up to 100% of an approved company's state income tax and limited liability entity tax that is generated by the project; 3) up to 4% of the wage assessment of employees whose jobs were created as a result of the construction, retrofit, upgrade or operation of a qualified facility; and 4) a credit for up to 80% of the coal severance tax paid for coal used as a feedstock. The incentives expire at the time of receipt of the authorized incentives or 25 years from activation of the project, whichever occurs first. Approved companies may recover up to 50% of their capital investment via the authorized tax incentives. The minimum capital investment for incentive eligibility is $25 million for an alternative fuel or gasification facility that uses biomass as the primary feedstock and $100 million for a facility that uses coal as the primary feedstock. (Reference Kentucky Revised Statutes 154.27-010 to 154.27-090)
Point of Contact
Don Goodin
Kentucky Economic Development Finance Authority
Phone (502) 564-4554
Fax (502) 564-7697
don.goodin@ky.gov
http://www.thinkkentucky.com/
Liquefied Petroleum Gas (LPG) Excise Tax Exemption
LPG is exempt from the state excise tax when it is used to operate motor vehicles on public highways, given that those vehicles are equipped with carburetion systems approved by the Kentucky Natural Resources and Environmental Protection Cabinet. (Reference Kentucky Revised Statutes 234.321)
