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Kentucky enacted the Incentives for Energy Independence Act to promote the development of renewable energy and alternative fuel facilities, energy efficient buildings, alternative fuel vehicles, and other energy initiatives.
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Kentucky
Tax Credit for Renewable Energy Facilities
In August 2007, Kentucky enacted the Incentives for Energy Independence Act to promote the development of renewable energy and alternative fuel facilities, energy efficient buildings, alternative fuel vehicles, and other energy initiatives. The Act provides tax credits to companies that build or renovate facilities that use renewable energy. To be eligible, a landfill gas energy facility needs to generate at least 1 MW of energy with the electricity sold to an unrelated party. To qualify for the tax credit, the minimum renewable energy facility investment is $1 million in capital expenditures. The Act’s incentives will be funded with the proceeds from $100 million in bonds.
The incentives include a reimbursement of up to 100 percent of the sales and use taxes on property, material, and equipment bought during construction; or a tax credit of up to 100 percent of the income tax and limited liability entity tax owed by the company. Under certain conditions, companies can also assess 4 percent of employee gross wages, which the employees can then take as a credit against their income tax. The maximum recovery for a single project from all incentives may not exceed 50 percent of the capital investment.
Prior to making any capital investments in a project, each eligible company must submit an application to the Kentucky Economic Development Finance Authority. Each incentive contract is negotiated on a case-by-case basis to determine the conditions and termination date of the project, not to exceed 25 years from the project’s activation date. The State requires a $1,000 non-refundable application fee payable upon submission of the application. Fees that the company may expect to incur as a result of final approval include an administrative fee equal to 0.25 percent with a maximum of $50,000.
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