Kentucky · Modernization · KY-KRA-001
Kentucky Reinvestment Act Credit
Publication revised September 24, 2026. Sourcebook page 123.
Credit amount / calculation
Credit against corporate income/limited liability entity tax tied to approved eligible costs and retention/investment commitments.
Business fit and eligible activity
Existing manufacturers can receive credits for qualifying reinvestment/modernization projects. Qualified investment or approved project activity; confirm eligible property, location and taxpayer type.
Illustrative business benefit
A sawmill is replacing a headrig and adding scanning, material handling, and electrical controls in a project of roughly $2 million. The credit calculation would be based only on the costs the program recognizes as qualified investment. Before issuing purchase orders, the mill should obtain a written view on whether installation, electrical work, used equipment, and software are included.
Timing / first action
Seek approval before starting the overall project, including site work or construction. Contact the administering agency and secure the required approval before the project is publicly or contractually committed.
Official sources
- cedky.com — July 2023 (cedky.com)
Related programs
Historic Rehabilitation Tax Credit
Percentage of qualified rehabilitation expenditures subject
Certified historic mills and industrial properties can qualify for a state rehabilitation credit.
Kentucky Business Investment Credit
Project-specific approved tax credits
New or expanding manufacturers can receive negotiated income/limited are met.
Qualified Research Facility Tax Credit
5% of qualified construction, remodeling and equipment costs
A business constructing/remodeling/equipping a research facility can claim a straightforward credit.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Clean Electricity Production Credit (Internal Revenue Code §45Y)
Production-based
Alternative to the investment credit for owners/operators of qualifying clean-electricity facilities; potentially relevant to qualifying on-site generation.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.