IEBA: Incentives for Energy-related Business Act (IEBA) Tax Credit (2025)

Who files this form

Use the 2025 IEBA package only if your business has received approval for the IEBA credit from the Kentucky Cabinet for Economic Development. Preliminary or final approval is required to determine the credit allowed.

• Businesses filing Form 720 or 720U must complete Schedule IEBA and Schedule IEBA-T.
• Businesses filing Form PTE or 725 must complete Schedule IEBA-SP and Schedule IEBA-T.

Use a separate package for each incentive project.

What you'll need

Have these records and schedules ready:

• Your financing or tax incentive agreement, including approved incentive amounts, the activation date, and project number.
• Your federal identification number, Kentucky Corporation/LLET account number, and project location.
• The applicable Kentucky return: Form 720, 720U, PTE, or 725.
• Project income, Kentucky gross receipts, and Kentucky gross profits records needed for the credit calculation.
• Schedule IEBA-T, updated with current-year information and prior-year balances where applicable.
• Schedule L-ECON for each project's LLET calculation, attached to the return when applicable. General partnerships do not complete the LLET lines on Schedule IEBA-SP.

Additional attachments may be required:

• If a pass-through entity has operations besides the IEBA project, attach a schedule showing how the project's net income or loss was calculated.
• If you use an alternative accounting method, attach the Department of Revenue letter approving that method.
• Corporations approved for STICA or MCC must attach the applicable Bluegrass State Skills Corporation certifications. Corporations approved for KSBTC or KSFTC must attach the Kentucky Economic Development Finance Authority certification.

How to file

1. Complete one IEBA package for each incentive project.
2. If you file Form 720 or 720U, complete Schedule IEBA. If you file Form PTE or 725, complete Schedule IEBA-SP. The pass-through instructions say to complete Form PTE first to determine income, losses, and deductions from the entity's entire operations.
3. Complete Schedule IEBA-T and attach a copy updated for the current year to Schedule IEBA or IEBA-SP.
4. Enter tax credits on Schedule TCS. For corporations, enter the allowable IEBA credit in Part I, Columns E and F.
5. Attach the package and required supporting schedules to Form 720, 720U, PTE, or 725, as applicable.

The package does not provide a mailing address or e-filing directions.

Common mistakes

• Using the package without approval. Only businesses approved for the IEBA credit may use it.
• Combining projects. Include only one incentive project per package and maintain a separate Schedule IEBA-T for each project.
• Claiming incentives outside the agreement term. First-year and last-year incentives must be prorated accordingly.
• Passing IEBA credits or project losses through to owners. These do not pass through to partners, members, or shareholders. Prior-year project net operating losses must be subtracted before calculating the credit.
• Completing both choices on Schedule IEBA-SP, line 9. Enter either the tax credit on line 9(a) or the estimated tax payment on line 9(b), never both.
• Completing LLET lines for a general partnership. General partnerships must leave Schedule IEBA-SP, lines 5 and 6, blank.
• Claiming more credit than can be used. Credits must follow the prescribed order and cannot reduce LLET below $175 or income tax liability below zero.
• Entering a short account number without leading zeros. The Kentucky Corporation/LLET account number must have nine digits. Add leading zeros if it has six digits.

Questions people ask

What taxes can the IEBA credit offset?

For corporations, the credit applies against Kentucky corporation income tax and/or LLET attributable to the project. Schedule IEBA-SP determines the credit against Kentucky income tax and/or LLET attributable to a pass-through entity's project.

Do IEBA credits pass through to business owners?

No. The credits do not pass through to members, partners, or shareholders. A pass-through entity must use Form PTE(K) to exclude IEBA project net income from owners' distributive share income.

Can a pass-through entity choose an estimated tax payment instead of the credit?

Yes. The approved company may make an annual election for an amount equal to the allowable credit. Enter the amount on Schedule IEBA-SP, line 9(b), and complete Part II. The payment must satisfy owners' tax liability and be paid on their behalf, but owners are not entitled to claim any portion of it against their Kentucky income tax liability.

How do I track a credit used against both income tax and LLET?

The amounts used against the two taxes may differ. Record the larger amount, not their sum, in Schedule IEBA-T, Column E, using the applicable Schedule TCS amounts.

What if separate accounting is not practical?

If the company can show that its operations make separate accounting impractical, it must use an alternative method approved by the Department of Revenue. Attach a copy of the approval letter to the schedule.

Official sources

• https://revenue.ky.gov/Forms/PKG%20IEBA%20(2025)%20(0003).pdf