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Read. Follow. Verify.Kentucky doubles New Markets tax credit cap to $20 million and revises investment rules
Last action · March 10, 2026: to Appropriations & Revenue (H)Sponsor: J.T. Payne
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What This Bill Proposed
Kentucky increases the annual cap on New Markets Development Program tax credits from $10 million to $20 million per and updates certification, fee, and investment maintenance rules for qualified community development entities.
Expands state-backed tax incentives for community development investments by doubling the annual credit ceiling to $20 million and adjusting the compliance requirements and fee forfeiture conditions for participating entities.
- The General Assembly of Kentucky is the state legislature responsible for enacting and amending state tax and economic development laws. context
- HB 835 was introduced in the 2026 Regular Session and assigned to the House Appropriations & Revenue committee. context
Who It Would Have Affected
Groups the bill's text would have affected, as described in the record. Being affected is not a position for or against it.
Qualified community development entities
Entities must submit detailed applications, pay refundable performance fees, maintain specific investment percentages in low-income community businesses, and adhere to updated certification rules.
Taxpayers claiming the New Markets Development Program tax credit
Taxpayers earn a vested right to a tax credit equal to 39% of the purchase price of a qualified equity investment, subject to annual state caps and potential credit recapture rules.
Insurance companies
Insurance companies claiming the tax credit against the insurance premium tax are explicitly exempted from paying additional retaliatory tax under KRS 304.3-270.
Key Facts
- The total amount of tax credits that may be awarded by the department is increased from ten million dollars ($10,000,000) to twenty million dollars ($20,000,000) in each fiscal year.
- Qualified community development entities seeking certification must submit an application including an allocation agreement with the Community Development Financial Institutions Fund.
- Applications received on the same day are deemed received simultaneously and certified in proportionate percentages based on requested amounts if requests exceed remaining capacity.
- For qualified equity investments issued on or after January 1, 2014, entities must invest at least one hundred percent (100%) of the purchase price in qualified low-income community businesses within twelve months.
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- The department may recapture tax credits if federal tax credits under 26 U.S.C. sec. 45D are recaptured, if principal is repaid prematurely, or if investment thresholds are not met.
- Entities must pay a refundable performance fee equal to one-half of one percent (0.5%) of the requested equity investment, capped at five hundred thousand dollars ($500,000).
- Forfeited performance fees are transferred from the performance guarantee account and deposited into the general fund.
- Tax credits earned under the program equal thirty-nine percent (39%) of the purchase price of the qualified equity investment.
- Insurance companies claiming the tax credit against the insurance premium tax are exempt from paying additional retaliatory tax under KRS 304.3-270.
Frequently Asked Questions
What is the new annual limit for New Markets Development Program tax credits?
What percentage of the equity investment is the tax credit worth?
What happens to the performance fee if a community development entity fails to meet investment requirements?
What else do you want to know?
News Coverage
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Votes, people, money & the original sourceWhere This Stands
This bill did not become law - Died at adjournment · in House committee.
Procedural history
2 actions- Mar 10, 2026HouseCommitteeto Appropriations & Revenue (H)
- Mar 3, 2026HouseIntroducedintroduced in House to Committee on Committees (H)
Version history
Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.
View official text →Lobbying Activity
No state lobbying filings in our records match this bill. Federal lobbying reports (LDA) cover Congress, so they are not listed on state bills.
Full breakdown
Who this bill affects and the strongest case for and against it, written only from the bill’s own text.
Sponsors
Discoveries
Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.
Doubling of Program Cap
The legislation formally doubles the annual fiscal year tax credit capacity from $10 million to $20 million.
Connected Entities
Sources
apps.legislature.ky.gov
Analysis Score
0–100- Significance20Lowered because this bill did not pass (its text scored 75)
- Controversy20Intensity of disagreement among stakeholders
- Entertainment5Compellingness for a non-policy-wonk reader
- Buzz35Current news / social attention level
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