Kentucky Industrial Development Act

Available in Henderson, Union & Webster Counties

Example

XYZ manufacturing company is locating a new facility in Northwest Kentucky.  The company plans to invest approximately $1,500,000.

• The assumptions regarding the company and the project are as follows:
• The land and building costs total $1,050,000.
• The company will employ 45 people.  (45 X $10,000 = $450,000 eligible equipment cost)
• The company has annual payroll of $1,200,000
• The total eligible investment under the program equals $1,500,000. ($1,050,000 for land and building and $450,000 eligible equipment)
• The company’s annual net income subject to Kentucky taxation is $1,000,000.
• The company chooses to use the KIDA tax credit option.

The benefits provided to the company through the program are calculated as follows:

• The $1,000,000 annual Kentucky taxable income produces $77,625 of Kentucky income tax liability annually.
• Assuming the Kentucky taxable income remains constant throughout the 10-year term, the company realizes $776,250 in income tax credits over the 10-year recovery period.

Or

The benefits provided to the company through the wage assessment are calculated as follows:

• The $1,200,000 payroll generates $72,000 in state personal income taxes.  Half of this (3%) would be retained by the company-$36,000.
• Assuming the payroll remains constants throughout the 10-year term, the company realizes $360,000 in wage assessments over the 10-year recovery period.