Skip to main navigation Skip to main content

ETHANOL TAX CREDIT- KRS 141.422, 141.4242, 141.4246, 141.4248 & 141.425 – 103 KAR 15:110


  • The tax credit is one dollar ($1) per ethanol gallon produced.


  • Tax credit cap:
    • Calendar years beginning after December 31, 2007: $5,000,000


  • If the total approved credits exceed the tax credit cap, the credit must be prorated amongst the approved taxpayers. Proration is calculated as follows:


Tax Credit CapXT/P's Approved Credit
All T/Ps' Approved Credits


  • There is no carry forward provision.


  • The ethanol must be manufactured in Kentucky.


  • Standards:
    • Must meet the current American Society for Testing and Materials specification D4806


  • The credit is a nonrefundable credit against taxes imposed by KRS 141.020, KRS 141.040, and/or KRS 141.0401.


  • Must file the application by January 15 following the close of the preceding tax year. 
    • The DOR must notify taxpayers of the amount of their approved credit by April 15th following the close of the preceding calendar year.


Unused Ethanol and/or Cellulosic Ethanol Credit


  • Any unused tax credit cap balance may be transferred to the other credit to be used for that year.  For example, if only $3,000,000 of the $5,000,000 Ethanol Credit cap is approved, the remaining $2,000,000 balance can be transferred to the Cellulosic Ethanol tax credit cap.



Use form: Schedule ETH

The Kentucky Department of Revenue conducts work
under the authority of the Finance and Administration Cabinet.