Kentucky Reinvestment Act (KRA)
Funds existing Kentucky businesses with tax credits for equipment investments that preserve and expand local manufacturing.
The Kentucky Reinvestment Act (KRA), authorized under KRS 154.34, provides job-retention tax credits to existing Kentucky businesses that invest in eligible equipment and related costs to maintain or upgrade their in-state operations. Unlike new-investment programs such as KBI, KRA specifically targets companies with established Kentucky operations that need incentives to reinvest rather than relocate. Eligible sectors include manufacturing, agribusiness, non-retail service or technology, headquarters operations, hospital operations, coal severing and processing, alternative fuel, gasification, renewable energy, and CO2 transmission pipelines.
Minimum investment thresholds are $2,500,000 for companies investing in owned facilities and $1,000,000 for leased facilities (rent excluded from the calculation). The tax credit applies against Kentucky corporation income tax (KRS 141.040) and/or the Limited Liability Entity Tax (LLET, KRS 141.0401), and may be used for eligible equipment and employee skills-upgrade training costs. The incentive is available for up to 10 years from the final approval date. Claims are filed via Kentucky Department of Revenue Form 41A720-S35 KRA (PKG) on the annual corporate tax return.
KEDFA approves KRA applications at its last-Thursday-of-month board meetings; complete applications must be submitted by the last Friday of the prior month for consideration. KEDFA authorization is required before KEDFA and DOR coordinate on the incentive mechanics. For manufacturers and industrial operators facing competitive pressure to modernize equipment, KRA represents a structured mechanism to recover a portion of reinvestment cost through multi-year state tax offsets rather than upfront cash. The program is designed to reduce the incentive gap between retaining Kentucky operations and relocating to states that offer new-facility incentives.
Provides job-retention tax credits against Kentucky corporate income tax and LLET for existing manufacturers and industrial operators that invest a minimum of $1,000,000–$2,500,000 in eligible equipment, with credits available for up to 10 years.
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