Employer GED Incentive Tax Credit
The Employer General Educational Development (GED) Incentive tax credit is a nonrefundable income tax credit for employers who assist employees in completing a learning contract in which the employee agrees to obtain their high school equivalency diploma. The credit may be applied against income taxes imposed by KRS 141.020 (individual income tax) or KRS 141.040 (corporation income tax) and the limited liability entity tax (LLET) imposed by KRS 141.0401 with the ordering of credits as provided in KRS 141.0205.
This credit is calculated by multiplying 50% of the hours an employee is released from work to study for the GED test by the employee's hourly salary. The credit shall not exceed $1,250. The credit is claimed only in the year in which the learning contract was completed. Any unused portion of the credit may not be carried forward or back.
Please contact the Office of Adult Education within the Department of Workforce Development in the Education and Labor Cabinet for details regarding the application process.
Who Can Claim the Credit?
The credit is passed through to the partners, members, or shareholders of a pass-through entity that are the partners, members, or shareholders at the time of the application and subsequent approval of the credit. The income is reported on the Kentucky Schedule K-1 and any credit that is passed through to the partners, members, or shareholders may be used against individual income tax or corporate income tax and LLET.
A sole proprietor reporting business income on Schedule C (federal Form 1040) may claim the credit. An individual may also claim the credit if it is passed through to them from a pass-through entity on a Kentucky Schedule K-1.
An individual may also claim the credit on their individual income tax return. For a husband and a wife filing separate returns or filing separately on a joint return, the credit may be taken by either or divided equally. If the application lists only one of the spouse's names, the listed spouse is entitled to claim the full credit.
A corporation may apply the tax credit against income tax and LLET on its Kentucky Corporation Income Tax and LLET Return. A corporation may also claim the credit if it is passed through to them from a pass-through entity on a Kentucky Schedule K-1.
Business Tax Credits