The Kentucky Small Business Tax Credit (KSBTC) is designed to reward small businesses for doing what successful companies do — grow. The program provides state income tax credits to eligible employers who hire new employees and invest in equipment or technology.
For 2026, Kentucky is requesting that applications be submitted by November 1, 2026 to be considered for a 2026 credit.
Businesses interested in claiming the credit for 2026 should plan accordingly and submit their application by this deadline.
A business can apply for credits throughout the year, up to a maximum of $25,000 within a calendar year. To qualify, an eligible small business (one with 50 or fewer full-time employees) must do the following:
Create one or more eligible positions
- Full-time position — average 35+ hours per week
- Fill the position(s) for 12 months
- Increase base employment (number of full-time employees subject to Kentucky income tax the day prior to the hire date of the first employee filling a new eligible position) of the business
- Pay at least $10.88 per hour (150% of federal minimum wage)
- Subject to Kentucky individual income tax (in other words, employees live in Kentucky)
Invest $5,000 or more in qualifying equipment or technology
- Tangible property with a useful life of one year or more
- Purchased and used in the business in Kentucky
- Purchased within 24 months prior to the application date
- Own the equipment/technology at the date of application
Apply for the credit within 24 months of meeting the first program requirement
- Hire date of the eligible position or purchase of initial qualifying equipment or technology
Since its inception, the KSBTC program has helped create over 5,000 new Kentucky jobs and allocated more than $17 million in tax credits statewide — making it one of the most impactful small business incentive programs in the Commonwealth.
At Rudler, we specialize in helping small businesses take advantage of credits like these. To date, we have successfully assisted 25 clients in being awarded approximately $448,000 in KSBTC funds.
To see how we may be able to help you, contact your Rudler, PSC advisor to discuss applying for this credit by calling 859-331-1717 or visiting www.rudler.cpa today.
RUDLER, PSC CPAs and Business Advisors
This e-Tip is presented by The Team at Rudler, PSC.
If you would like to discuss your particular situation, contact us at 859-331-1717.
Kathy Pool, CPA
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