KRS 141.391 — Nonrefundable tax credit for expansion of broadband services

(1) As used in this section:
(a) "Eligible equipment or services" means the equipment used in the expansion
of broadband services in Kentucky and includes:
1. Wires, cables, fiber, conduits, antennas, poles, switches, routers,
amplifiers, rectifiers, repeaters, receivers, multiplexers, transmitters,
circuit cards, insulating and protective materials and cases, power
equipment, backup power equipment, diagnostic equipment, storage
devices, and modems;
2. General central office or headend equipment, including:
a. Channel cards;
b. Frames; and
c. Cabinets;
3. Equipment used in successor technologies, including items used to
monitor, test, maintain, enable, or facilitate:
a. Eligible equipment or services;
b. Machinery;
c. Software;
d. Ancillary components;
e. Appurtenances; and
f. Accessories; and
4. Any other infrastructure that is used in whole or in part to provide or
expand broadband communications services; and
(b) "Qualified broadband investment":
1. Means the purchase or lease of any eligible equipment or services by
any provider that Kentucky sales and use tax has been paid under KRS
Chapter 139; and
2. Does not include the purchase or lease of personal consumer electronics,
including:
a. Smartphones;
b. Computers;
c. Tablets;
d. Consumer-grade modems; and
e. Routers.
(2) For taxable years beginning on or after January 1, 2025, but before January 1, 2029,
there is hereby created a qualified broadband investment tax cred it to provide for
the expansion of broadband services in this state.
(3) (a) The credit in subsection (2) of this section shall be nonrefundable,
nontransferable, and allowed against the tax imposed under KRS 141.020 or
141.040 and 141.0401 with the orderi ng of the credit as provided in KRS
141.0205.
(b) The tax credit shall be equal to the amount of sales tax actually paid on the
qualified broadband investment:
1. Reduced by the amount of seller reimbursement allowed under KRS
139.570; and
2. Limited to:
a. Fifty percent (50%) of the amount determined under subparagraph
1. of this paragraph for a taxpayer; and
b. A total of five million dollars ($5,000,000) for all tax credits in
each taxable year in which the credit is available.
(4) (a) Beginning with cal endar year 2025, any taxpayer who intends to take the
credit for a qualified broadband investment tax credit shall:
1. Submit an application for approval to the department on a form
prescribed by the department prior to December 31, 2025, and each
December 31 thereafter as long as the credit is available; and
2. Provide:
a. The taxpayer's identification number;
b. The amount of sales and use tax that the taxpayer remitted or
intends to remit for the qualified broadband investment; and
c. A statement of how approval of this tax credit will result in greater
investment in this state by:
i. Expansion of broadband services;
ii. An upgrade to existing broadband infrastructure; or
iii. An increase of access to broadband for the residents in this
state.
(b) The department shall:
1. Review all submitted applications no later than January 15, 2026, and
each January 15 thereafter as long as the credit is available; and
2. By February 1 following the end of the calendar year, provide a letter to
the taxpayer indicating approval and amount of tax credit to be awarded.
(5) A taxpayer approved for credit under subsection (4) of thi s section shall submit
with their return, verification of the sales and use tax remitted on the qualified
broadband investment, which may include:
(a) Receipt of eligible equipment or services purchased; or
(b) Lease agreement for eligible equipment or services.
(6) If the total amount of credits granted approval under subsection (4) of this section
exceeds five million dollars ($5,000,000), each taxpayer shall receive no more than
its applicable pro rata share of the five million dollar ($5,000,000) limit.
(7) (a) In order for the General Assembly to evaluate the effectiveness of the
qualified broadband investment tax credit, the department shall submit the
following information to the Legislative Research Commission for referral to
the Interim Joint Commit tee on Appropriations and Revenue on or before
November 1, 2026, and on or before each November 1 thereafter as long as
the credit may be claimed on a return:
1. The location of the taxpayer, by county, as reflected on the return filed
for the taxable year;
2. The amount of qualified broadband investment tax credit claimed by the
taxpayer for the taxable year;
3. The total cumulative amount of all qualified broadband investment tax
credits claimed for the taxable year; and
4. a. In the case of all taxpayers other than corporations, based on
ranges of adjusted gross income of no larger than five thousand
dollars ($5,000) for the taxable year, the total amount of qualified
broadband investment tax credit claimed and the total number of
returns claiming this tax credit for each income range; and
b. In the case of all corporations, based on ranges of net income no
larger than fifty thousand dollars ($50,000) for the taxable year,
the total amount of tax credit claimed and the number of returns
claiming a tax credit for each net income range.
(b) The information required to be reported under this section shall not be
considered confidential taxpayer information and shall not be subject to KRS
Chapter 131 or any other provisions of the Kentucky Revised Statutes
prohibiting disclosure or reporting of information.