Kentucky companies are once again being encouraged to apply for the state’s Renewable Chemical Production Program, which is administered by the Kentucky Department of Agriculture (KDA).
The program incentivizes the production of more than 30 specified chemicals derived from biomass feedstocks by giving eligible companies tax credits for their capital investment, job creation and renewable chemical production.
The program will share tax credits previously established for renewable diesel or bio-diesel production in the state. The total amount of tax credit shall be five cents per molecular pound of weight of renewable chemicals produced in Kentucky by an eligible business, unless the total amount of approved credits for all taxpayers exceeds the annual cap of $10 million for the program.
Kentucky developed the program to capitalize on its resources and infrastructure and to support the growth of the renewable chemical manufacturing industry. It addresses the unique opportunity to advance the state’s economy by utilizing biomass feedstocks for the production of environmentally sustainable products.
For the renewable chemical production tax credit, the bill, which was passed by the Kentucky legislature in 2020, states eligible renewable chemicals are limited to building block chemicals with a bio-based content percentage of at least 50 percent, except for chemicals sold or used for the production of food, feed, or fuel
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The KDA will coordinate with the Kentucky Department of Revenue in awarding the tax credits to eligible companies producing renewable chemicals.
To be eligible for the renewable chemical production tax credit, a business must:
• Be physically located in Kentucky.
• Operate for profit.
• Organize, expand or locate in this state on or after July 1, 2020.
• Create new jobs and retain those jobs for at least four years or invest a substantial amount of new capital in the commonwealth and maintain that capital for at least four years.
• Cannot provide professional services, health care services, medical treatments, or engage in retail operations and cannot relocate operations from another area of Kentucky or reduce operations in another area of the state while seeking this incentive.
To find out more about Kentucky’s Renewable Chemical Production Program or to request an application, contact the Kentucky Department of Agriculture at ag.web@ky.gov.
Complete applications along with the required $500 compliance fee must be filed with the Kentucky Department of Agriculture by Jan. 15, 2024.
Kentucky Department of Agriculture