Schedule ETH: Application and Credit Certificate of Income/LLET Credit- Ethanol (2025)

Who files this form

Ethanol producers seeking the Kentucky income tax/LLET ethanol credit use Schedule ETH to report ethanol produced in Kentucky that meets current ASTM standards and to obtain credit certification from the Department of Revenue.

Ethanol produced in another state does not qualify. Pass-through entities with approved credits also have Schedule K-1 reporting and electronic notification requirements.

When it's due

• 2025 application: Submit Schedule ETH no later than January 15 following the close of the 2025 calendar year. Schedules postmarked or sent after January 15 are void.
• 2025 testing records: Attach laboratory results for July 1 and December 31 of the 2025 calendar year.
• 2025 credit certification: The Department of Revenue will issue the credit certificate by April 15 following the close of the 2025 calendar year.

The department will confirm receipt of the application. If you do not receive confirmation within two weeks after submitting it, contact the Division of Corporation Tax at 502-564-8139 or DORTaxCredits@ky.gov.

What you'll need

Have these records and details ready:

• Laboratory results for July 1 and December 31 showing that the ethanol meets ASTM standards.
• The number of qualifying gallons produced in Kentucky during the calendar year.
• Dates when the ethanol failed to meet ASTM standards, if any.
• Entity name, mailing and location addresses, entity type, and contact information.
• Your Social Security number if filing as an individual, or FEIN for other entities.
• Kentucky Corporation/LLET account number, if applicable, and Kentucky Special Fuels Dealer’s License account number.

To claim the credit on a tax return, attach the credit certificate issued by the Department of Revenue.

Pass-through entities must also prepare Schedule K-1 credit allocations and an electronic attachment listing each potential claimant’s name, address, telephone number, identification number, and distributive share of the credit.

How to file

1. Check the appropriate entity type. If it is not listed, check “Other” and enter the entity type. Complete the identification and contact information, answer the ASTM question, and sign and date the application.
2. Enter the gallons produced in Kentucky that meet ASTM standards in Part I. Attach the required laboratory results. Leave Parts II and III for the Department of Revenue.
3. Fax Schedule ETH to 502-564-0058 or email it to DORTaxCredits@ky.gov. The instructions warn that credit certification cannot be guaranteed for schedules sent by regular mail.
4. After certification, complete Part IV for the credit used. Report LLET credit on Schedule TCS, Part II, Column E; corporation income tax credit on Schedule TCS, Part II, Column F; or individual income tax credit on Form 740, 740-NP, or 741.
5. Attach the credit certificate to the return claiming the credit. Schedule ETH lists Forms 720, 720U, PTE, 725, 740, 740-NP, and 741 as attachment destinations.

A pass-through entity must report each recipient’s pro rata share of approved credit on Schedule K-1. It must also email DORTaxCredits@ky.gov a separate attachment in plain text or plain ASCII format containing the required information for every partner, member, shareholder, or beneficiary who may claim the credit.

Common mistakes

• Submitting late: Schedules postmarked or sent after January 15 are void.
• Relying on regular mail: Credit certification cannot be guaranteed for mailed schedules. The instructions direct applicants to fax or email.
• Omitting testing proof: Missing proof of ASTM compliance on July 1 or December 31 results in denial of credit for gallons back to the previous July 1 or December 31 testing date.
• Skipping pass-through notification: Failure to provide the required electronic recipient information in the specified manner forfeits available credits for all partners, members, shareholders, or beneficiaries.
• Carrying unused credit forward: No carryforward is allowed.
• Reducing LLET too far: The credit cannot reduce LLET below the $175 minimum.
• Forgetting the certificate: Attach the credit certificate to the tax return claiming the credit.

Questions people ask

How much is the ethanol credit?

The rate is $1 per qualifying gallon. The annual cap for all taxpayers is $5,000,000. If approved applications exceed that cap, unused cellulosic ethanol credit capacity increases the cap, but only as needed for applicants to receive the $1-per-gallon credit. The department determines each taxpayer’s approved amount.

Is the credit refundable or available to carry forward?

No. The credit is nonrefundable, and unused credit cannot be carried forward.

Can ethanol produced outside Kentucky qualify?

No. The taxpayer is not entitled to this credit for ethanol produced in another state.

Must the amounts claimed against corporation income tax and LLET be the same?

No. The amounts can be different. The LLET credit cannot reduce LLET below the $175 minimum.

Official sources

• https://revenue.ky.gov/Forms/Schedule%20ETH%20(10-25).pdf