For the 2011 tax year there are two notable changes of interest to the small business owner.  They are the Endow Kentucky Tax Credit[i] and the Kentucky Small Business Investment Credit. [ii]

The Endow Credit is aimed to encourage donations to community endowment funds in the bluegrass state.  An individual or business may take a 20% tax credit for such donations, which directly reduces your tax owed at the end of the tax return.  The credit is limited to $10,000 on your tax return, and is available for the 2011 and 2012 fiscal years.  There is a total of $500,000 available for Endow Credits, and taxpayers must apply to the State of Kentucky and be accepted before taking the credit on their tax returns.  The Kentucky Department of Revenue’s website shows $238,990 remaining for taxpayers with a fiscal year ending June 30, 2012. [iii]

The Small Business Investment Credit is aimed at spurring small business growth and job creation in Kentucky.  Eligible small businesses hiring one or more new employees and purchasing at least $5,000 in qualifying equipment may receive a credit of $1,000 per employee and 50% of the first $5,000 spent on the equipment.  The position filled must pay at least 150% of minimum wage and must be filled by a Kentucky taxpayer.  Furthermore, the new employee must hold the position for at least 12 months; after that time the company may apply to the state and take the credit in the year approved. 

[i] Internal Revenue Code section on the Endow KY Tax Credit.

[ii] KY Cabinet of Economic Development Website on The Small Business Investment Credit.

[iii] Dept of Revenue website with update on funds available for the Endowment Credit.