KentuckyHB 5772026 Regular SessionHouseWALLET

AN ACT relating to economic development.

Sponsored By: Josh Branscum (Republican)

Signed by Governor

Economic DevelopmentFundsInformation TechnologyScience And TechnologySmall BusinessState AgenciesTechnology

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 2 benefits, 0 costs, 2 mixed.

Statewide startup hubs and services

The law creates a statewide Entrepreneurship and Innovation Hub Program run by the Office of Entrepreneurship and Innovation. Hubs are local headquarters that connect startups to services. The program targets early‑stage, high‑growth, and knowledge‑based companies. Applications are accepted at least twice a year, with expert reviews done within 120 days. Applicants must submit a clear tech plan, finances, and partner details. A designated science and technology group, approved by the Cabinet, can review and certify companies using set criteria focused on real results and market potential. The executive director has broad powers and can contract with a science and technology organization to run the program.

More capital for the Enterprise Fund

The law moves money into the Enterprise Fund from three state funds: rural innovation, commercialization, and alternative fuel and renewable energy. The fund can also accept public or private contributions with Cabinet‑approved conditions. Unspent balances are invested and do not lapse; earnings stay in the fund. The law defines who can serve as the science and technology organization and what counts as seed funding, to guide early‑stage investments.

Angel investor tax credit rules

To qualify, an investor must be an individual (a single‑member LLC you own is allowed) and be SEC‑accredited. A qualified investment must be cash of at least $10,000 and give you equity or near‑equity (like stock, a SAFE, or convertible debt). You cannot own over 20% of the company, work there before investing, or be closely related to someone who does. Pass‑through entities set up for this credit can invest in only one company; your credit equals your pro rata share of the entity’s invested capital. Companies must meet small‑business tests: net worth ≤ $10 million or net income ≤ $3 million in each of the last two years, ≤ 100 employees, over 50% in Kentucky, be (or become) active in a qualified activity, and not have exceeded $1 million in past angel credits. The program authority can issue more rules.

Enterprise Fund awards and equity terms

The Enterprise Fund finances feasibility work (up to $50,000), concept development (up to $250,000), and advanced projects (up to $500,000). For new investments on or after July 1, 2021, one company can receive no more than $500,000 total. At least 20% of yearly funds go to rural or enhanced‑incentive counties and 20% to Opportunity Zones. Awards over $30,000 require the program’s equity or near‑equity stake, such as stock, a SAFE, or convertible debt. Before certification, companies handle IP and equity terms and, if applicable, a college partnership; the science and technology group can waive the college partner. Companies must be Kentucky‑based or become so within 180 days under the Kentucky‑based definition.

Sponsors & Cosponsors

Sponsor

Josh Branscum
Republican • House

Cosponsors

George Brown Jr.
Democrat • House
Vanessa Grossl
Republican • House

Roll Call Votes

All Roll Calls

Yes: 135 • No: 0

Senate vote • 3/31/2026

3rd reading, passed

Yes: 37 • No: 0

House vote • 2/18/2026