Many Kentucky companies are surprised to learn about the various incentives and tax credits available to them for special and routine business activities. Not only does the state provide generous incentives for standard business items such as hiring, education and healthcare, but there are also special programs for those launching large scale programs. To help clients prospects and others understand the myriad of opportunities available to them, Barnes Dennig has outlined some of the incentives available in 2014 to companies. Please note that this is not a comprehensive list and we will discuss additional incentives in future blog posts.
Key Kentucky Incentives & Credits
- Unemployment Tax Credit – A credit of $100 per employee is available to companies that hire new employees for a period of 180m consecutive days. To qualify, the company must hire worker that has been unemployed for at least 60 days. Please note that the credit cannot be claimed for dependents, close relatives and person with ownership in the company.
- Kentucky Business Investment Program – Companies eligible for this incentive need to be engaged in manufacturing, agribusiness, national headquarter operations or specific non-retail or technology services. They must have a new business project in the state that creates 10 new full time jobs for Kentucky residents, incurs $100K in costs and offers a minimum level of wages and benefits. A minimum level of benefits includes health, dental and vision insurance plus a retirement plan option. If a project qualifies then the business may take up to a 100% credit against Kentucky state corporate income tax arising from the project. An interesting note about this program is that the incentive is available for as long as the project is outstanding and only expire at the end of the agreement with the state.
- GED State Income Tax Credit – A state income tax credit is provided to employers who offer time off to employees to study for the General Educational Development (GED) test. The credit is calculated by multiplying 50% of the hours released for exam study time by the employer by the employees hourly wage. Please note the credit may not exceed $1,250.
- Kentucky Reinvestment Act (KRA) – To qualify for the incentive a company must be a permanent Kentucky enterprise engaging in manufacturing operations starting a new project. In addition, a prospective company must have equipment and related costs of at least $2,5M, employee retention rate of 85%, not received incentives from the Kentucky Industrial Revitalization Act within the last 5 years and prove a project would not be feasible without incentives. Once approved a manufacturing company can recover project costs which include 50% of eligible equipment expenses and 100% of the job skills upgrade training costs. The incentive is available for up to 10 years and may be recovered again Kentucky income tax credits applied against corporate income tax. It’s important to note that a maximum incentive of 20% can be claimed within a single year.
- Insurance Coverage Affordability – The Insurance Coverage Affordability and Relief to Small Employers Program provides consumer directed health plans for small business. It’s a four year program established by the state that allowed small employers that will insure 2-25 employees to participate. To qualify company wages should be less than 300% of the federal poverty level and pay at least 50% of insurance premiums. The incentive is $40 to $60 per month depending on the type of coverage the employee selects. Note that the incentive reduces by 25% each year until the end of the program.
To find out if your company qualifies for these or other incentive, please contact us today!