{"data":{"id":"us-ky/krs-141.390","jurisdiction":"us-ky","citation":"KRS 141.390","heading":"Tax credit for recycling or composting equipment -- Report.","body":"(1) As used in this section:\n(a) \"Postconsumer waste\" means any product generated by a business or\nconsumer which has served its intended end use, and which has been\nseparated from solid waste for the purposes of collection, recycling,\ncomposting, and disposit ion and which does not include secondary waste\nmaterial or demolition waste;\n(b) \"Recycling equipment\" means any machinery or apparatus used exclusively to\nprocess postconsumer waste material and manufacturing machinery used\nexclusively to produce finished  products composed of substantial\npostconsumer waste materials;\n(c) \"Composting equipment\" means equipment used in a process by which\nbiological decomposition of organic solid waste is carried out under controlled\naerobic conditions, and which stabilizes t he organic fraction into a material\nwhich can easily and safely be stored, handled, and used in an\nenvironmentally acceptable manner;\n(d) \"Recapture period\" means:\n1. For qualified equipment with a useful life of five (5) or more years, the\nperiod from the  date the equipment is purchased to five (5) full years\nfrom that date; or\n2. For qualified equipment with a useful life of less than five (5) years, the\nperiod from the date the equipment is purchased to three (3) full years\nfrom that date;\n(e) \"Useful life\" means the period determined under Section 168 of the Internal\nRevenue Code; and\n(f) \"Major recycling project\" means a project location where the taxpayer:\n1. Invests more than ten million dollars ($10,000,000) in recycling or\ncomposting equipment to be used exclusively in this state;\n2. Has at least four hundred (400) full -time employees with an average\nhourly wage of more than three hundred percent (300%) of the federal\nminimum wage; and\n3. Has plant and equipment with a total cost of more than five hu ndred\nmillion dollars ($500,000,000).\n(2) (a) 1. A taxpayer that purchases recycling or composting equipment to be used\nexclusively within this state for recycling or composting postconsumer\nwaste materials shall be entitled to a credit against the:\na. Income taxes under KRS 141.020 or 141.040; and\nb. Limited liability entity tax under KRS 141.0401;\nwith the ordering of the credits under KRS 141.0205.\n2. The total tax credit shall be an amount equal to fifty percent (50%) of\nthe installed cost of the recycling or composting equipment.\n3. The amount of credit claimed in the taxable year during which the\nrecycling equipment is purchased shall not exceed:\na. Ten percent (10%) of the amount of the total credit allowable; or\nb. Twenty-five percent (25%) of th e total of each tax liability which\nwould be otherwise due for that taxable year.\n4. The amount of credit claimed in a taxable year subsequent to the taxable\nyear during which the recycling equipment is purchased shall not exceed\ntwenty-five percent (25%) of the total of each tax liability, which would\nbe otherwise due for that taxable year.\n(b) 1. For taxable years beginning after December 31, 2019, a taxpayer that has\na major recycling project containing recycling or composting equipment\nto be used exclus ively within this state for recycling or composting\npostconsumer waste material shall be entitled to a credit against the:\na. Income taxes under KRS 141.020 or 141.040; and\nb. Limited liability entity tax under KRS 141.0401;\nwith the ordering of the credits under KRS 141.0205.\n2. The total tax credit shall be an amount equal to twenty -five percent\n(25%) of the installed cost of the recycling or composting equipment.\n3. The credit described in this paragraph shall be limited to a period of\nthirty (30) years  commencing with the approval of the recycling credit\napplication.\n4. The amount of credit claimed in the taxable year during which the\nrecycling equipment is purchased shall not exceed seventy -five percent\n(75%) of the total of each tax liability which wo uld be otherwise due for\nthat taxable year.\n5. The amount of credit claimed in a taxable year subsequent to the taxable\nyear during which the recycling equipment is purchased shall not exceed\nseventy-five percent (75%) of the total of each tax liability, which would\nbe otherwise due for that taxable year.\n(c) A taxpayer with one (1) or more major recycling projects shall be entitled to a\ntotal credit including the amount computed in paragraph (a) of this subsection\nplus the amount of credit computed in paragraph (b) of this subsection, except\nthat the total amount of credits under paragraphs (a) and (b) of this subsection\nclaimed in a taxable year shall not exceed seventy -five percent (75%) of the\ntotal of each tax liability which would be otherwise due for that taxable year.\n(d) A taxpayer shall not be permitted to utilize a credit computed under paragraph\n(a) of this subsection and a credit computed under paragraph (b) of this\nsubsection on the same recycling or composting equipment.\n(3) (a) 1. Except as provided in subparagraph 2. of this paragraph, application for\na tax credit shall be made to the department on or before the first day of\nthe seventh month following the close of the taxable year in which the\nrecycling or composting equipment is purchased or placed in service.\n2. For taxable years beginning on or after January 1, 2020, but before\nJanuary 1, 2024, application for a tax credit related to a major recycling\nproject may be made to the department on or before the first day of the\nseventh month following either:\na. The close of the taxable year in which the recycling or composting\nequipment is purchased or placed in service; or\nb. The close of the taxable year immediately following the taxable\nyear in which the recycling or composting equipment is pu rchased\nor placed in service.\n(b) The application shall include a description of each item of recycling\nequipment purchased, the date of purchase and the installed cost of the\nrecycling equipment, a statement of where the recycling equipment is to be\nused, and any other information as the department may require to fulfill the\nreporting requirements under subsection (8) of this section.\n(c) The department shall review all applications received to determine whether\nexpenditures for which credits are required meet the requirements of this\nsection and shall advise the taxpayer of the amount of credit for which the\ntaxpayer is eligible under this section.\n(4) (a) Except as provided in subsection (6) of this section, if a taxpayer that receives\na tax credit under this section sells, transfers, or otherwise disposes of the\nqualifying recycling or composting equipment before the end of the recapture\nperiod, the tax credit shall be redetermined under subsection (5) of this\nsection.\n(b) If the total credit taken in prior taxable years exceeds the redetermined credit,\nthe difference shall be added to the taxpayer's tax liability under this chapter\nfor the taxable year in which the sale, transfer, or disposition occurs.\n(c) If the redetermined credit exceeds the total credit already taken in prior\ntaxable years, the taxpayer shall be entitled to use the difference to reduce the\ntaxpayer's tax liability under this chapter for the taxable year in which the sale,\ntransfer, or disposition occurs.\n(5) The total tax credit allowable under subsection (2) of this section for equipment that\nis sold, transferred, or otherwise disposed of before the end of the recaptu re period\nshall be adjusted as follows:\n(a) For equipment with a useful life of five (5) or more years that is sold,\ntransferred, or otherwise disposed of:\n1. One (1) year or less after the purchase, no credit shall be allowed.\n2. Between one (1) year and two (2) years after the purchase, twenty\npercent (20%) of the total allowable credit shall be allowed.\n3. Between two (2) and three (3) years after the purchase, forty percent\n(40%) of the total allowable credit shall be allowed.\n4. Between three (3) and f our (4) years after the purchase, sixty percent\n(60%) of the total allowable credit shall be allowed.\n5. Between four (4) and five (5) years after the purchase, eighty percent\n(80%) of the total allowable credit shall be allowed.\n(b) For equipment with a u seful life of less than five (5) years that is sold,\ntransferred, or otherwise disposed of:\n1. One (1) year or less after the purchase, no credit shall be allowed.\n2. Between one (1) year and two (2) years after the purchase, thirty -three\npercent (33%) of the total allowable credit shall be allowed.\n3. Between two (2) and three (3) years after the purchase, sixty -seven\npercent (67%) of the total allowable credit shall be allowed.\n(6) Subsections (4) and (5) of this section shall not apply to transfers due t o death, or\ntransfers due merely to a change in business ownership or organization as long as\nthe equipment continues to be used exclusively in recycling or composting, or\ntransactions to which Section 381(a) of the Internal Revenue Code applies.\n(7) The d epartment may promulgate administrative regulations to carry out the\nprovisions of this section.\n(8) (a) The purpose of expanding the tax credit for a major recycling project is to\nencourage more recycling and composting by businesses within the\nCommonwealth.\n(b) In order for the General Assembly to evaluate the fulfillment of the purpose\nstated in paragraph (a) of this subsection, the department shall provide the\nfollowing information on a cumulative basis for each taxable year to provide a\nhistorical impact of the tax credit to the Commonwealth:\n1. A narrative for each major recycling project approved for a tax credit,\ndescribing:\na. The taxpayer claiming the tax credit;\nb. The industry sector within which the taxpayer operates in this\nstate, including the NAICS code for the taxpayer; and\nc. The type of recycling or composting equipment purchased by the\ntaxpayer;\n2. The location, by county, of the major recycling project;\n3. The installed cost of the recycling or composting equipment;\n4. The total amount of tax credit approved for the major recycling project;\n5. The amount of tax credit allowed for the major recycling project for\neach taxable year; and\n6. a. In the case of all taxpayers other than corporations, based on\nranges of adjusted gross income of no larger than five thousand\ndollars ($5,000) for the taxable year, the total amount of tax credits\nclaimed and the number of returns claiming a tax credit for each\nadjusted gross income range; and\nb. In the case of all corporations, based on ranges of net income no\nlarger than fifty thousand dollars ($50,000) for the taxable year, the\ntotal amount of tax credit claimed and the number of returns\nclaiming a tax credit for each net income range.\n(c) The report required by paragraph (b) of this  subsection shall be submitted to\nthe Interim Joint Committee on Appropriations and Revenue beginning no\nlater than November 1, 2021, and no later than each November 1 thereafter, as\nlong as the credit is claimed on any return processed by the department.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=51372","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:35Z","sha256":"82e6a6a15f435cc5d942537f1c48cb5d6fdee153e55a5e4361f831dda870054f","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.389","next":"us-ky/krs-141.391"},"notice":"GroundRules: Original legal text. Not legal advice."}