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While Kentucky doesn't have a specific statute that mirrors IRC Section 41, the Qualified Research Facility Tax Credit is a nonrefundable credit equal to 5% of the qualified costs of construction of research facilities that may be applied against income taxes imposed by KRS 141.020 (individual income tax), KRS 141.040 (corporation income tax), or KRS 141.0401 (limited liability entity tax, or LLET). Kentucky statute KRS 141.0205 provides an ordering provision when utilizing credits. Any unused credit may be carried forward 10 years.
Construction of research facilities means expenses associated with the construction, remodeling, and equipping of facilities in Kentucky, or expanding existing facilities to conduct qualified research.
Qualified research is defined in a manner consistent with Section 41 of the Internal Revenue Code. Expenses must be attributed to tangible, depreciable property and cannot include any amounts paid or incurred for replacement property (e.g. raw materials or supplies).
Learn more about Kentucky's R&D Tax Credit here.
R&D Tax Credit Available:
Yes - Qualified Research Facility Tax Credit
Eligible Entities:
C-Corporations, S-Corporations, LLCs, Partnerships
Deadline for Tax Filing:
Schedule QR is due with Kentucky Form 720 filing
Data Required to Compute Credit:
Claim Period Kentucky Qualified R&D Construction Expenses
Credit Carryforward:
10 Years
To get an estimate of the potential value of your unclaimed R&D Tax Credits, try out our credit calculator.
Download our R&D Tax Credit Calculator for Android to see how much you can receive from your qualified R&D tax credit expenses.
Kentucky does not offer a general R&D tax credit for all businesses but provides a Qualified Research Facility Tax Credit equal to 5% of qualified costs for constructing, remodeling, or equipping research facilities, encouraging investment in research infrastructure. Businesses can also claim the federal R&D tax credit for broader activities. Contact Strike Tax to maximize your savings.
Qualifying activities must be technological in nature, intended to develop or improve a business component, eliminate uncertainty, and involve experimentation. Examples include product development, process improvement, or software creation in industries like manufacturing or technology. For the state facility credit, activities involve depreciable tangible property used for qualified research. Strike Tax can identify qualifying projects.
Yes, startups in Kentucky can claim the federal R&D credit, including a payroll tax offset of up to $500,000 per year for up to five years if they have less than $5 million in gross receipts and no gross receipts for more than five years. For the state facility credit, startups investing in research infrastructure may qualify. Strike Tax can guide eligibility.
Maintain contemporaneous records like project notes, lab results, employee time logs, and expense receipts for wages, supplies, and contract research. The IRS requires detailed substantiation, especially for 2025 claims on Form 6765 with new Section G for business component details if claiming over $10,000 or amending. For the state credit, document qualified construction costs. Strike Tax ensures audit-ready documentation.
File IRS Form 6765 with your federal tax return. In Kentucky, report any federal credit on your state return if it affects state taxes. For the state facility credit, file Schedule QR with your income tax return. Strike Tax streamlines the process.
No state-specific changes, but federally, Form 6765 requires new Section G for business component reporting on claims over $10,000 or amended returns, and Section 174 allows full immediate deduction of R&D costs. Strike Tax can help navigate these updates.
