KentuckySets tax incentives for Kentucky development and alternative fuel projects
Businesses, developers, fuel producers, and airports would follow new or revised tax incentive rules, with several programs starting between 2026 and 2029.
What it does
Approved companies could claim a refundable Kentucky tax credit tied to economic development projects and employee wages, subject to approval and annual limits.
Owners or other eligible taxpayers could receive a transferable tax credit for rehabilitating large, mostly vacant urban buildings for mixed commercial, residential, or retail use from 2028 through 2031.
Kentucky fuel producers and feedstock suppliers could receive per-gallon tax credits beginning in 2029, while airports could receive rebates on qualifying jet fuel sales beginning August 1, 2026.
Argument forTax credits and airport rebates could help attract investment in Kentucky projects and support jobs tied to redevelopment and alternative fuel production.
Argument againstAnnual credit limits and approval requirements may leave eligible projects without the full incentive they expect, especially when applications exceed available funding.
More detail
Approved companies may claim a refundable economic development credit against certain Kentucky income and business taxes. The credit applies to approved companies, including certain pass-through businesses, and is based on amounts approved under the economic development incentive program. The credit is nontransferable and is subject to the program's approval rules. Total credits for all approved companies may not exceed $4 million per taxable year. No more than $1 million per year may be used for wages paid in counties that are not heritage counties. The credit applies to taxable years beginning on or after January 1, 2026.
Taxpayers may claim a refundable, transferable credit for approved rehabilitation expenses on certain large abandoned buildings. The building must have at least 225,000 square feet, be in an urban core, have been at least half vacant for six straight months, and serve at least two of three uses: commercial, residential, or retail. The credit equals 20% of eligible rehabilitation expenses incurred during the taxable year. The limit is $25 million per taxpayer and $50 million for all preliminary approvals in a calendar year. Applicants must receive preliminary approval and may not use the credit for a project receiving the certified rehabilitation credit under KRS 171.397. The credit applies to taxable years beginning on or after January 1, 2028, and before January 1, 2032; applications are due by December 31 of the year before the rehabilitation occurs.
Eligible fuel producers and feedstock suppliers may claim a per-gallon Kentucky tax credit, and commercial airports may receive a sales tax rebate on qualifying jet fuel sales. The fuel credit covers Kentucky alternative jet fuel producers and eligible feedstock providers; the rebate covers commercial airports in Kentucky selling alternative or agriculturally based alternative jet fuel. The alternative jet fuel must meet the bill's fuel, feedstock, and greenhouse-gas requirements. The producer credit cannot be carried forward and is subject to per-taxpayer and statewide annual caps. An airport must apply, use the rebate for airport facilities and operations, and submit quarterly requests with supporting records. The producer credit applies to taxable years beginning on or after January 1, 2029, and before January 1, 2035; the airport rebate takes effect August 1, 2026.
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Where it stands
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Apr 27signed by Governor Andy Beshear (Acts Ch. 198)Became Law
- Apr 16
- Vote recorded Final Passage. Result: pass.Lower
- Vote recorded FINAL PASSAGE OF HB 869. Result: pass.Upper
- Apr 15delivered to Governor
- Apr 15enrolled, signed by President of the SenateTo Governor
- Apr 15enrolled, signed by Speaker of the HouseMajor
- Apr 15passed 70-22Major
- Apr 15Free Conference Committee report adopted in House
- Apr 15taken from Rules
- Apr 15posted for passage for consideration of Free Conference Committee Report
- Apr 15to Rules (H)Minor
- Apr 15received in House
- Apr 15passed 37-0Major
- Apr 15posted for passage for consideration of Free Conference Committee Report
- Apr 15Free Conference Committee report adopted in Senate
- Apr 15Free Conference Committee report filed in House and Senate
- Apr 15Free Conference Committee appointed in House and Senate
- Apr 15Conference Committee report adopted in House and Senate
- Apr 15Conference Committee report filed in House and Senate
- Apr 1Conference Committee appointed in House and Senate
- Apr 1Senate refused to recede from Committee Substitute (1) and Committee Amendment (1-title)
- Apr 1posted for passage for receding from Senate Committee Substitute (1) and Committee Amendment (1-title)
- Apr 1to Rules (S)Minor
- Apr 1received in Senate
- Mar 31House refused to concur in Senate Committee Substitute (1) and Committee Amendment (1-title)
- Vote recorded CONSENT PASSAGE OF HB 869 w/ SCS 1, SCA 1 (T). Result: pass.Upper
- Mar 31posted for passage for concurrence in Senate Committee Substitute (1) and Committee Amendment (1-title)
- Mar 31to Rules (H)Minor
- Mar 31received in House
- Mar 313rd reading, passed 36-2 with Committee Substitute (1) and Committee Amendment (1-title)Passed Senate
- Mar 27posted for passage in the Consent Orders of the Day for Tuesday, March 31 2026
- Mar 272nd reading, to Rules as a consent billMinor
- Mar 26reported favorably, 1st reading, to Consent Calendar with Committee Substitute (1) and Committee Amendment (1-title)Minor
- Mar 16to Economic Development, Tourism, & Labor (S)Minor
- Mar 11to Committee on Committees (S)Minor
- Mar 11received in Senate
- Mar 103rd reading, passed 93-0 with Committee Substitute (1)Passed House
- Vote recorded Pass. Result: pass.Lower
- Mar 10placed in the Orders of the Day
- Mar 10taken from Rules
- Mar 10reported favorably, to Rules with Committee Substitute (1)Minor
- Mar 5returned to Appropriations & Revenue (H)
- Mar 52nd readingMinor
- Mar 5taken from Appropriations & Revenue (H)
- Mar 4to Appropriations & Revenue (H)Minor
- Mar 4returned to Committee on Committees (H)
- Mar 41st readingMinor
- Mar 4taken from Committee on Committees (H)
- Mar 3to Committee on Committees (H)Minor
- Mar 3introduced in HouseIntroduced
Taxes & BudgetEconomy & JobsEnvironment & Energy