Kentucky's credit is refundable, which makes it simpler than most. You don't need a buyer or a Kentucky tax bill: the Department of Revenue calculates the credit from your audited cost report, and anything above your tax liability comes back as a refund. The tradeoff is paperwork. The 2026 guidelines ask for service-date logs, call sheets, and hotel records proving each person was physically in Kentucky on the days you claim.
Rates after SB 324
The General Assembly amended the program in 2026 with Senate Bill 324 (Acts Chapter 194, signed April 23, 2026). The rate structure in KRS 154.61-020 now reads:
| Where and what | Qualifying expenditures | Resident payroll | Nonresident payroll |
|---|---|---|---|
| Any county other than an enhanced incentive county, and all commercials | 30% | 35% | 30% |
| Filmed entirely in an enhanced incentive county | 35% | 35% | 35% |
| Continuous film production (Kentucky spend of $10M or more), any county | 35% | 35% | 35% |
Above-the-line payroll counts up to $1,000,000 per employee in every row. If you shoot partly in an enhanced county and partly elsewhere, you track expenditures by county and each dollar earns the rate for where it was spent.
The same bill raised the minimums. An out-of-state company making a feature, TV program, industrial film, video game, or music video now needs $400,000 in combined qualifying expenditures and payroll (it was $250,000). A Kentucky-based company needs $200,000 (up from $125,000). Commercials need $200,000 regardless, and documentaries need $20,000 ($10,000 for a Kentucky-based company). The bill also added video games, music videos, and commercials to the definition of an eligible production and required a certified audit within 180 days of wrapping in Kentucky.
Worked example: a $1,000,000 feature in Louisville
An out-of-state company shoots a $1,000,000 feature in Jefferson County (treat it as outside an enhanced incentive county for this example). Kentucky spend breaks down as:
- Kentucky vendor spend: $450,000
- Resident below-the-line crew payroll: $300,000
- Nonresident below-the-line payroll: $150,000
- Nonresident director, all Kentucky days: $100,000
Total Kentucky spend of $1,000,000 clears the $400,000 minimum.
- 30% x $450,000 = $135,000
- 30% x $150,000 = $45,000
- 30% x $100,000 = $30,000
- 35% x $300,000 = $105,000
- Credit: $315,000
If every shoot day were in an enhanced incentive county, the whole $1,000,000 would earn 35%, or $350,000.
Fees come out first: a $1,000 application fee (spend above $100,000), an administrative fee of 0.5% of the estimated incentive ($1,575 here, since that's more than $500), and a $2,000 legal fee for the agreement.
A $5,000,000 production runs the same percentages, so at the same mix the credit would be $1,575,000 outside an enhanced county. What changes at that size is competition for the $75 million calendar-year pool, which the council allocates as agreements are approved. Beginning with calendar year 2026, any unallocated balance from the prior year carries forward for high-impact motion pictures, continuous film productions, and entertainment productions. If Kentucky spend reaches $10 million, the show can qualify as a continuous film production, which earns 35% in any county and draws on $25 million set aside for that category until July 1 each year.
Application and audit
- Apply to the Kentucky Film Office before you incur any expenditure you want to count. The 2026 bill dropped the old 30-day lead time.
- The office has 30 days to tell you the application is complete or what's missing, then forwards it to the Cabinet and the Kentucky Film Leadership Council.
- The council authorizes a tax incentive agreement if the credit fits under the calendar-year cap.
- Start filming within 180 days of approval and finish within two years.
- Submit the certified audit within 180 days of completing Kentucky production. The Department of Revenue checks withholding and calculates the refundable credit.
Common disallowances
The guidelines exclude airfare, legal and accounting costs, the audit itself, contingency, wrap parties, bank and completion bond fees, insurance premiums beyond payroll-related benefits, gifts, alcohol, marketing, nonresident kit and box rentals, online purchases, Kentucky sales tax, and anything paid through a pass-through vendor. For salaried staff, only (annual salary / 365) x Kentucky production days counts. Related-party rentals need three competing bids, and you can't claim more than the lowest one. Equipment you buy and keep counts at no more than 20% of the purchase price.
How Kentucky compares
Indiana caps each project at $250,000, so Kentucky pays far more on anything mid-sized. Illinois pays 35% with no cap but you have to sell the credit. Missouri tops out at 42% with a smaller pool. Tennessee, Ohio, and West Virginia also border Kentucky. Compare splits in the incentive calculator, see how the refund step fits in how film tax credits work, and check what counts as qualified spend. The full state list is on the incentives hub, and Storiara's budgeting feature is one place to build the budget before you split spend by county.