Kentucky Enterprise Initiative Act (KEIA)
Provides Kentucky companies with sales and use tax relief for new facility builds and qualifying research technology.
The Kentucky Enterprise Initiative Act (KEIA), authorized under KRS 154.31, provides a refund of Kentucky sales and use tax for companies making qualifying investments in new or expanded facilities in the state. KEIA is administered by the Kentucky Economic Development Finance Authority (KEDFA) with the refund check issued by the Kentucky Department of Revenue via Form 51A200. The minimum investment threshold is $500,000 in an economic development project.
Refundable sales and use tax covers two categories of expenditure. The first category is building and construction materials permanently incorporated as real-property improvements; the program-level annual cap for this category is $20,000,000 across all approved projects in a fiscal year. The second category covers eligible research and development equipment, data-processing equipment, and flight simulation equipment; the annual program cap for this category is $5,000,000. Eligible sectors include manufacturing, non-retail service or technology, agribusiness, headquarters operations, coal severing and processing, hospital operations, alternative fuel, gasification, renewable energy, CO2 pipelines, and tourism attraction projects. A non-refundable $500 application fee is due at submission.
Applications are submitted to KEDFA through the Cabinet for Economic Development's Business Development division; KEDFA approves at its last-Thursday-of-month meetings. Because KEIA reduces upfront construction and equipment costs rather than creating a future credit position, it improves early cash flow for capital projects — making it particularly valuable for manufacturing facility build-outs, technology equipment installations, and R&D lab construction in Kentucky. KEIA can be combined with other KEDFA programs such as KBI for projects meeting dual eligibility criteria.
Refunds Kentucky sales and use tax paid on building and construction materials permanently incorporated into qualifying new or expanded facilities, as well as on eligible R&D, data-processing, and flight simulation equipment, subject to a minimum $500,000 investment.
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