(Kentucky) Energy Efficiency Tax Credits
In April 2008, Kentucky enacted legislation (H.B. 2) allowing a 30% state income tax credit for taxpayers who install certain energy efficiency measures on their principal residence or residential rental property.* These energy efficiency measures include:
- Qualified Energy Property Installation:** Water Heaters, Heat Pumps, Central Air Conditioners, Hot Water Boilers, Advanced Main Air Circulating Fans
- Weatherization Measures: Windows and Storm Doors, Added Insulation
The tax credit may not exceed $100 for insulation, and $250 for qualified energy property, windows and storm doors. The total tax credit may not exceed $500 for any combination of qualified energy property and weatherization measures.
Kentucky also allows an $800 tax credit for taxpayers who build a new Energy Star home for use as a principal residence, but this credit may not be taken in addition to the energy efficiency tax credits describe in this summary.
See guidance issued by the Kentucky Department of Revenue for additional information.
In addition, Kentucky allows a 30% state income tax credit for taxpayers that install certain energy efficiency measures on commercial property (click here for more information).
These credits may be applied during taxable years 2009-2015. To claim the tax credit, use Form 5695-K – Kentucky Energy Efficiency Products Tax Credit – Form 41A720-S7 available on the Kentucky Department of Revenue website.
*Note: HB 2 was enrolled after midnight on the last legislative day in 2008 and it was recodified in 2010 via HB240.
** “Qualified Energy Property” must meet the efficiency guidelines specified in the federal tax credit for residential energy property.
|Incentive Type:||Personal Tax Credit|
|Eligible Efficiency Technologies:||Water Heaters, Lighting, Furnaces , Boilers, Heat pumps, Central Air conditioners, Building Insulation, Windows, Doors|
|Applicable Sectors:||Residential, Installer/Contractor, Multi-Family Residential|
|Amount:||30% of installed cost|
|Maximum Incentive:||$500 maximum for all improvements. Technology caps are as follows: Insulation: $100; Windows and Storm Doors, Water Heater, Heat Pump, Air Conditioner, Advanced Main Air Circulating Fan: $250/unit|
|Equipment Requirements:||Attic Insulation: R-38 or higher
Exterior Wall, Crawl Space, Basement Exterior Wall Insulation: R-13 or higher
Floor Insulation: R-19 or higher
Electric Heat Pump Water Heater: Must yield an energy factor of at least 2.0 in the standard DOE test procedure
Split Central Air Conditioning System: SEER of 15, EER of 12.5
Packaged Central Air Conditioning Systems: SEER of 14, EER of 12
Natural Gas, Propane or Oil Water Heater: Energy factor of .80 or higher
Natural Gas, Propane or Oil Furnace or Hot Water Boiler: Annual fuel utilization efficiency rate of at least 95
|Carryover Provisions:||May be carried forward for one year|
|KRS § 141.435 et seq.