KIDA: Kentucky Industrial Development Act (KIDA) Tax Credit (2025)
Kentucky · Kentucky DOR · Used for tax years 2025
This Kentucky package reports approved Kentucky Industrial Development Act (KIDA) tax incentives and calculates the allowable tax credit. It includes schedules to track project debt service payments or approved costs and tax credits.
Who files this form
Use the 2025 KIDA package to report incentives for a business approved for the Kentucky Industrial Development Act credit by the Cabinet for Economic Development. The package requires preliminary or final approval on or before June 26, 2009.
The schedules you complete depend on your Kentucky return:
- Form 720 or 720U: Complete Schedule KIDA and Schedule KIDA-T.
- Form PTE or 725: Complete Schedule KIDA-SP and Schedule KIDA-T.
Use a separate package for each incentive project.
When it's due
For the 2025 tax year, the package states that your business must have received preliminary or final KIDA approval on or before June 26, 2009. This is an eligibility cutoff, not a filing deadline.
The supplied text does not state a filing due date for the 2025 package.
What you'll need
Have these forms and records available:
- Your Kentucky return: Form 720, 720U, PTE, or 725, as applicable.
- The business name, federal identification number, Kentucky Corporation/LLET account number, project number, project location, and incentive agreement activation date.
- Project income records and, where applicable, Kentucky gross receipts and gross profits records.
- Debt service payment or approved cost records, prior-year credit balances, and credits claimed for Schedule KIDA-T.
- Records of prior-year project net operating losses, if applicable to Schedule KIDA-SP.
Required supporting attachments may include:
- Schedule L–ECON for each project's separate limited liability entity tax (LLET) calculation, where applicable.
- Schedules showing project income and applicable gross receipts or gross profits calculations when the business has other operations.
- A Department of Revenue approval letter if you use an approved allocation percentage for a facility expansion or an alternative accounting method.
Use Schedule TCS to report tax credits. Pass-through entities must also use Form PTE(K) to exclude KIDA project net income from owners' distributive share income.
How to file
- Complete one KIDA package for each project. Use Schedule KIDA for Form 720 or 720U, or Schedule KIDA-SP for Form PTE or 725. The pass-through instructions say to complete Form PTE first to determine income, losses, and deductions from the entire business.
- Update Schedule KIDA-T through the current year, using a separate line for each year of the agreement. Transfer its Column D credit limitation to Schedule KIDA, Part III, line 2, or Schedule KIDA-SP, Part I, line 8.
- Complete the applicable credit calculation and enter tax credits on Schedule TCS. Schedule KIDA directs corporations to enter the allowable credit in Part I, Columns E and F.
- Attach the updated Schedule KIDA-T to Schedule KIDA or KIDA-SP. Attach the package and required supporting schedules to Form 720, 720U, PTE, or 725.
- Also attach a copy of the updated Schedule KIDA-T to the Wage Assessment Report and Annual Reconciliation.
The supplied text does not give a mailing address or e-filing instructions.
Common mistakes
- Combining projects: Include only one incentive project per package and maintain a separate Schedule KIDA-T for each project.
- Claiming incentives outside the agreement term: First-year and last-year incentives must be prorated. Separate period accounting is recommended; a proration factor may be used if it is unavailable.
- Passing credits or losses through to owners: KIDA credits and project losses do not pass through to partners, members, or shareholders.
- Skipping prior-year project losses: On Schedule KIDA-SP, subtract the project's prior-year net operating loss before calculating the credit.
- Entering both choices on Schedule KIDA-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 should not complete Schedule KIDA-SP, lines 5 and 6.
- Claiming too much credit: Follow the required credit order. Total credits cannot reduce LLET below $175 or income tax below zero.
Questions people ask
What taxes can the corporate KIDA credit offset?
The credit applies against Kentucky corporation income tax and/or LLET attributable to the project.
How is the allowable corporate credit limited?
Schedule KIDA, Part III, uses the lesser of the tax liability attributable to the KIDA project or the credit limitation from Schedule KIDA-T, Column D.
Can a pass-through entity choose an estimated tax payment instead of a credit?
Yes. The approved company may make that election annually on Schedule KIDA-SP and must complete Part II. The instructions state that partners, members, or shareholders are not entitled to claim any portion of that estimated tax payment against their Kentucky income tax liability.
What amount goes in Schedule KIDA-T when the income tax and LLET credits differ?
For tracking purposes, record the greater of the credit claimed against LLET or income tax, not their sum. Column E uses the greater of Schedule TCS, Column E or Column F, for the project, if applicable; otherwise, enter zero.
Do debt service payments include interest?
Yes. For Schedule KIDA-T, debt service payments include both principal and interest paid under the financing agreement.