Kentucky Angel Investment Tax Credit (KAITC)

Kentucky Angel Investment Tax Credit (KAITC)

Offers investors in Kentucky small businesses transferable tax credits for cash equity investments.

The Kentucky Angel Investment Tax Credit (KAITC) is a state-administered tax incentive program operated by the Kentucky Economic Development Finance Authority (KEDFA) under the Cabinet for Economic Development. Established under KRS 154.20-230 to 154.20-240, the program encourages cash equity investment in early-stage Kentucky small businesses by offering transferable tax credits to qualified investors. The program is focused entirely on stimulating private capital formation within the Commonwealth, not on direct government grant-making.

The credit equals 40% of a qualifying cash investment made in a county with a high unemployment rate (an "enhanced" county) or 25% in all other Kentucky counties. The minimum qualifying investment is $10,000, and individual credits are capped at $25,000 per investor per calendar year. The program carries an annual statewide cap of $3,000,000 in credits awarded by KEDFA. Credits are transferable to other individual taxpayers and carry forward for up to 15 years. Annual re-certification is required for both investors and businesses; 2026 applications opened December 12, 2025. Contact: ced.angel@ky.gov.

To participate, both the investor and the target business must apply separately and obtain advance certification from KEDFA each calendar year — even if they were certified in a prior year. The business must qualify as a Kentucky small business under the program's statutory definition, and the investment must be a cash equity transaction. Because credits are transferable, recipients who cannot use the credit against their own Kentucky tax liability can sell or transfer it to another individual. This transferability makes the incentive attractive to investors regardless of their personal Kentucky tax exposure.