Kentucky Entertainment Industry Tax Credit

​The Kentucky entertainment industry tax credit (KEI) is a credit that 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. The Kentucky entertainment industry tax credit is a tax credit calculated based upon varying percentages of qualified motion picture or entertainment production expenditures. Depending on the date the application is approved, this tax credit is either refundable or nonrefundable. The annual total tax incentive cap is provided under KRS 141.383 and varies by tax year. Specifics on the refundability and the annual credit cap are provided as follows:

Applications approved on or after April 27, 2018, but before January 1, 2022:

  • Nonrefundable and nontransferable tax credit
  • No carryforward or carryback of unused credit
  • Annual cap of $100,000,000

Applications approved on or after January 1, 2022:

  • Refundable tax credit
  • Annual cap of $75,000,000

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Application Proce​ss

For applications submitted on or after January 1, 2022: The KEI tax credit application process begins with the Kentucky Economic Development Finance Authority.


Who Can Claim the Credit?


Pass-through Entities 

For applications approved on or after January 1, 2022, a pass-through entity may apply the refundable film industry tax credit against the LLET on its Kentucky Income and LLET Return and have any unused credit refunded to the pass-through entity. 


Individuals

For applications approved on or after January 1, 2022, an individual filing as a sole proprietor reporting business income on Schedule C (federal Form 1040) may claim the KEI tax credit and may apply the refundable film industry tax credit against income tax on their Kentucky Income Tax Return and have any unused credit refunded to them. 


Corporations 

For applications approved on or after January 1, 2022, a corporation may apply the refundable film industry tax credit against income tax and LLET on its Kentucky Income and LLET Return and have any unused credit refunded to the corporation.​


Forms Required to Claim the Tax Credit

A copy of the approval letter from the authority is attached each year the credit is claimed on the filed income tax return. The Schedule TCS or Schedule ITC is required to be attached to any return on which the credit is claimed, along with a copy of the approval letter.

Production companies are required to complete and submit a separate loan-out affidavit, Form K-LOA, for every personal or loan-out company included on the Kentucky Entertainment Incentive Detailed Cost Report. The loan-out company will issue a 1099-NEC to the individual working on the production. The individual will file a Kentucky income tax return using Form 1099-NEC and enclose a copy of the K-LOA.


Statutory Authority: 


Applicable Forms

Schedule ITC (Individual Filers)

Schedule TCS (Corporate and Pass-Through Filers)

Form K-LOA (Loan-Out Affidavit/Allocation)

Business Tax Credits

  • Fax(502) 564-0058
  • Address
    Kentucky Department of Revenue
    Tax Credits Section
    501 High Street
    Frankfort, KY 40602-0491
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