The Kentucky Entertainment Incentive (KEI) Program is designed to stimulate growth and opportunity within the Commonwealth’s film and entertainment sector. This initiative actively encourages motion picture and entertainment industries to select Kentucky as their prime location for filming and production. The core objectives of the KEI program are multifaceted, aiming to cultivate a thriving film and entertainment industry within Kentucky, generate increased employment prospects for its residents within this dynamic field, and foster the evolution of a cutting-edge production and post-production infrastructure, including facilities capable of hosting touring Broadway shows with state-of-the-art technology.
Key Guidelines for KEI Program Qualification
To be eligible for Kentucky tax incentives through the KEI Program, an Approved Company must meet specific financial benchmarks. A minimum combined total of Qualifying Expenditures and Qualifying Payroll Expenditures within Kentucky is required. The exact minimum threshold is dependent on the specific type of Motion Picture or Entertainment Production being undertaken. This ensures that the incentive program supports projects that make a significant economic contribution within the state.
Incentive amounts are geographically sensitive, recognizing and rewarding investment in different Kentucky counties. Projects that incur eligible costs within designated enhanced incentive counties may qualify for an increased tax credit, further encouraging development in specific areas. The level of incentive is directly linked to the Kentucky county where the Qualifying Expenditures and Qualifying Payroll Expenditures are made.
The KEI program offers substantial financial support, with projects potentially eligible for up to $10 million in tax credits. However, to ensure the program’s broad reach and impact, there is a cap of $75 million allocated for all approved projects within a single calendar year. This framework balances generous incentives with responsible fiscal management, allowing for multiple projects to benefit annually.
Qualifying Expenditures Under the KEI Program
The range of expenditures that qualify under the KEI program is designed to be comprehensive, covering key aspects of production. Qualifying expenditures include essential elements such as set construction and operational costs, the lease or rental of properties for set locations, and the procurement of audio and visual equipment and services. Crucially, these qualifying expenditures must be incurred with businesses that are physically located within the Commonwealth of Kentucky. Furthermore, these expenditures must be directly and exclusively utilized for the Motion Picture or Entertainment Production that is being filmed or produced within Kentucky. This ensures that the incentive program directly benefits Kentucky businesses and its economy.
Non-Qualifying Expenditures for KEI Incentives
It is equally important to understand what expenditures are explicitly excluded from KEI program eligibility. These non-qualifying expenditures include, but are not limited to, transactions with vendors located outside of Kentucky, standard employee benefits like fringes and per diem, payroll service fees, and travel costs such as airfare. Administrative and financial expenses such as KEI application and administrative fees, legal and accounting expenses, contingency funds, bank, financing and completion bond fees are also not eligible. Furthermore, costs associated with cast and crew amenities like screening and wrap-up parties, script publication and license fees, miscellaneous expenses, insurance premiums, loss/damage fees, gifts, alcohol and tobacco, publicity fees, non-resident kit/box rentals, and online purchases are all classified as non-qualifying expenditures under the KEI program. This detailed list provides clarity and prevents misinterpretations regarding eligible costs.
Tax Credit Details and Resources
Tax incentives awarded through the KEI program are structured as refundable and non-transferable tax credits. These credits can be claimed against the Approved Company’s Kentucky corporate income tax, limited liability entity tax, or individual income tax obligations. It’s important to note that any unused tax credits cannot be carried forward to subsequent tax years. For further information and to access additional resources, interested parties can refer to materials from previous years, which may offer valuable insights and historical context regarding the KEI program.
