The Kentucky Small Business Tax Credit (KSBTC) is intended to serve as an incentive to employers by offering tax credits for hiring new employees and purchasing fixed assets.
This may provide further recovery assistance to small businesses in need in the wake of uncertainty and a variety of challenges presented by the pandemic in 2020.
Historically, the KSBTC provided employers with a Kentucky tax credit of $3,500 for each new hire, including those that joined the organization as part of a merger or talent acquisition. The credit also takes the purchase of new equipment, including technology for remote work, into consideration.
However, the state made a change to the application in November 2019. As a result, additional requirements must be met to apply for employees added as a result of a merger or acquisition.
A business can still apply for credits throughout the year, up to a maximum of $25,000 within a calendar year. To qualify for the credit, an eligible small business (business that has 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 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
In short, the KSBTC remains something that can be very beneficial to local employers looking for help with their staffing and technology needs. At Rudler, we specialize in helping small businesses with credits such as these. To date, we have successfully assisted around 20 clients in being awarded approximately $315,000 in KSBTC funds.
To see how we may be able to help you, contact one of our professionals 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 Kathy Pool, CPA.
If you would like to discuss your particular situation, contact Kathy at 859-331-1717.
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