Kentucky small businesses that add one or more employees, equipment,or technology in the past 24 months may qualify for a tax credit of up to $25,000 on their 2018 tax return through the Kentucky Small Business Tax Credit program. The program is available to most for-profit businesses with 50 or fewer full-time employees.
If this is you, read on for more information about this credit.
The credit is calculated as the lesser of:
• $3,500 per eligible position added, the total dollar amount invested in qualifying equipment or technology, or
• $25,000 per calendar year.
To qualify for the credit, employers must meet the following qualifications:
• Add at least one eligible position within the past 24 months (see below for the definition of an eligible position)
• Spend at least $5,000 on qualifying equipment (excluding real property) within six months before or after filling the new position
A new employee meets the eligible position requirements if the employee:
• Is subject to Kentucky individual income tax (i.e. Kentucky resident)
• Works an average of 35 hours per week or more for 12 consecutive months
• Is paid an hourly wage of at least $10.88 per hour (includes wages, tips, bonuses and commissions, but not employee benefits)
• Increases your business’s base employment (i.e. did not replace someone who left)
• Is replaced within 45 days if terminated within the 12 consecutive month period