Energy Efficiency Tax Credits (Corporate)

October 07, 2022

Summary

In April 2008, Kentucky enacted legislation establishing a 30% state income tax credit for taxpayers that install certain energy efficiency measures on commercial property. The 30% credit (up to $500) is allowable against individual, corporate income or limited liability income taxes for any of the following equipment:

Energy-Efficient Heating Ventilating and Air Conditioning (HVAC) or Hot Water System
Interior Lighting Systems

The total tax credit may not exceed $1,000 for any combination of HVAC, hot water, and lighting systems. It should be noted that there is a separate tax credit (up to $400) available for taxpayers who sell an Energy Star manufactured home, and $800 for an Energy Star home; however if a taxpayer takes that tax credit he/she is not eligible for the other efficiency tax credits described in this summary.

The legislation defines an energy efficient lighting system as an interior lighting system that meets the maximum reduction in lighting power density requirements for the federal energy efficient commercial building deduction under 26 U.S.C. sec. 179D, as in effect December 31, 2007; and it defines an energy-efficient heating, cooling, ventilation, or hot water system as a system that meets the requirements for the federal energy-efficient commercial building deduction under 26 U.S.C. sec. 179D, as in effect December 31, 2007.

See guidance issued by the Kentucky Department of Revenue (DOR) for additional information.

Kentucky also allows 30% personal tax credit for energy efficiency improvements made to the taxpayer's principal residence.

To claim the tax credit, use Form 5695-K - Kentucky Energy Efficiency Products Tax Credit - Form 41A720-S7 available on the Kentucky Department of Revenue website. Also available on the Kentucky DOR website is the 8908-K Kentucky Energy Star (Homes and Manufactured Homes) Tax Credit, Form 41A720-S11 for the Energy Star Home tax credit.

These credits may be applied during taxable years 2009-2015.

Program Overview

Implementing Sector:	State
Category:	Financial Incentive
State:	Kentucky
Incentive Type:	Corporate Tax Credit
Web Site:
Administrator:	Kentucky Department of Revenue
Start Date:	1/1/2009
Eligible Renewable/Other Technologies:	Water Heaters Lighting Lighting Controls/Sensors Furnaces Boilers Heat pumps Air conditioners Comprehensive Measures/Whole Building Other EE
Incentive Amount:	30% of installed cost
Maximum Incentive:	Energy Efficient Lighting System: $500 Energy Efficient HVAC System: $500 Energy Star Manufactured Home sold by the taxpayer: $400 Energy Star Home: $800
Carryover Provisions:	For all measures excluding the Energy Star homes tax credits, the tax credit may be carried forward for one year.

Authorities

Name:	KRS § 141.435 et seq.
Effective Date:	1/1/2009
Expiration Date:	12/31/2015

Contact

Name:	Taxpayer Services
Organization:	Kentucky Department of Revenue
Address:	501 High Street Frankfort KY 40620
Phone:	(502) 564-4581

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.