As an existing or prospective business owner, understanding your business tax situation
is a necessary aspect of running your business. Business taxes help to support government programs
at the local, state, and federal level. As such, a business owner should stay aware of pending
legislation at those levels that may impact their business. Sales and use taxes, payroll taxes and
withholding taxes, property taxes, and corporation and income taxes are just some of the types
of taxes that you may encounter as a business owner.
Kentucky has modernized its tax code to create a more proactive, business friendly taxation model. As
a result, there have been several major changes to the tax code. Major changes affecting Kentucky's
business climate include:
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The Kentucky Environmental Stewardship Act (KESA) provides income tax credit for manufacture of
environmentally preferred products
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The Kentucky Enterprise Initiative Act (KEIA) replaces the Kentucky Enterprise Zone program, allowing
approved companies statewide a refund of sales and use tax on building materials and R&D equipment
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Eliminates corporate license tax
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Highest corporate income tax rate is lowered to 6%
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The state property tax rate on qualifying voluntary environmental remediation property is reduced to
$0.015 per $100 and the property is exempt from local property taxes for 3 years
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Provides an income tax credit up to $150,000 per taxpayer for expenditures to characterize the extent
of contamination or remediate contamination on qualifying voluntary environmental remediation property
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Exempts intangible property from state and local taxation, except for financial institutions and life
insurance companies
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Establishes biodiesel fuel income tax credit of $1 per biodiesel gallon produced or blended in this state
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Biotechnology products are exempt from local property tax
-
"Major Recycling Project" program for qualifying projects with an investment of more than $10
million in recycling or composting equipment
The Kentucky Department of Revenue,
administers the tax laws and collects tax revenue for the state and can provide more detailed
information. The Internal Revenue Service
can also provide assistance regarding business tax issues. The services of an accountant should
also be considered.
For additional information or assistance, please email us at
econdev@ky.gov or call 800-626-2930.
Additional Resources:
Major Business Taxes in Kentucky in PDF version*
Major Personal Taxes in Kentucky in PDF version*
State Indices of Relative Business Costs
- PDF version*
Kentucky Business Incentives and Financial Programs
Downloadable Kentucky Business Tax Forms
– Dept. of Revenue
IRS Information on Taxes
for Small Businesses and Self-Employed Individuals
Apply For a Federal
Employer Tax I.D. Number Online
Federal Tax
Information for Small Businesses Including Forms and Publications
SBA Information on
Payroll Taxes
SBA Online
Training Courses on Federal Taxes