Effective July 15, 2014, Kentucky has enacted a new Small Business Tax Credit Program to provide non-refundable state income tax credits for eligible companies with 50 or fewer employees. To qualify for the credit, small businesses must create and fill one or more eligible full-time positions and invest at least $5,000 in qualifying equipment or technology. Each qualified new position can generate up to $3,500 in credits, subject to an overall cap of $25,000 per company.
Eligible positions include positions that raise the base employment level of the business, pay an average hourly wage of at least $10.88 (150% of minimum wage), and require an employee to work an average of thirty-five or more hours a week for a 12-month period. The employees that fill these positions must be subject to Kentucky income tax in order to qualify for the credit.
Qualifying equipment or technology includes any tangible property with a minimum per-unit cost of $300. Examples include computers, equipment, furniture, fixtures, furnishings and vehicles.
Applications will be accepted on a first-come, first-served basis until the $3 million per fiscal year tax cap has been reached. If approved, the applicants are responsible for claiming the credit on their tax return. Unused credits may be carried forward up to five years. The application requires disclosure of the name, hire date, and average hourly wage of each eligible employee along with a description, invoice date, quantity and unit costs for qualifying equipment or technology purchases.
For additional information about qualification or the application process, please contact either John Rittichier, CPA at 800.880.7800 ext. 8484, jrittichier@hsccpa.com; or Jim Clark, CPA at 800.880.7800 ext. 8468, jclark@hsccpa.com.
