KentuckySB 3242026 Regular SessionSenateWALLET

AN ACT relating to the entertainment industry.

Sponsored By: Robert Stivers (Republican)

Signed by Governor

Economic DevelopmentState AgenciesTaxationTaxation, Income--CorporateTaxation, Income--IndividualTourism

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Bill Overview

Analyzed Economic Effects

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

Annual cap and set-aside rules

Total film and entertainment credits are capped at $75 million each calendar year starting 2022. Beginning 2024, $25 million of that cap is reserved each year for continuous productions. On April 1 of each year starting 2025, any unused reserve opens to all approved productions. Starting in 2026, any unallocated balance carries into the next year for high‑impact or continuous projects, as defined by regulation.

How and when refunds are paid

The credit can be used against Kentucky income tax and the limited liability entity tax and is refundable. To receive payment, you must start Kentucky production within 180 days of approval, finish within two years, and submit a certified audit and cost report within 180 days of completion. Spending must occur after the agreement is signed, and required payroll withholding must be made and certified. The Film Office reviews filings and the Department of Revenue verifies withholding before telling the Council the refundable amount. No interest is paid on delayed refundable credits.

Who qualifies and credit rates

The law expands eligible productions to include video games, music videos, commercials, and national touring Broadway made in Kentucky. Minimum Kentucky spend to be eligible varies by type, for example: $200,000 for commercials and Kentucky‑based features/TV/games/music videos; $400,000 for non‑Kentucky‑based features/TV/games/music videos; $20,000 for documentaries or touring Broadway in some cases; and $10,000 for Kentucky‑based documentaries. Credit rates are 35% of qualifying costs and payroll in enhanced counties or for continuous productions. In other areas, the credit is 30% of qualifying costs and nonresident payroll plus 35% of resident payroll. Above‑the‑line pay counts only up to $1,000,000 per employee. To be a continuous production, you must plan at least $10 million in Kentucky qualifying spend, have at least 50% of funds in place, show a distribution deal, and keep an apprenticeship or Kentucky film‑studies partnership.

New Film Office and approvals

The law creates the Kentucky Film Office in the state’s economic development cabinet. The office reviews applications, gives a completeness notice within 30 days, and sends supported projects for economic review. The Film Leadership Council makes the final decision, and the cabinet negotiates and signs the agreements. From July 1, 2025 to June 30, 2028, up to 2.5% of the transient room tax (max $500,000 a year) funds office operations. The executive director’s salary is capped at $225,000 a year.

What payroll and costs count

Employer‑paid payroll taxes, union and guild benefits, workers’ comp premiums, payroll service fees, and qualifying per diem count toward qualifying payroll when incurred in Kentucky. Per diem counts up to federal GSA limits; any extra counts only if added to taxable pay and withheld. Qualifying spending includes many in‑state costs like set building, rentals, food, and lodging. Kentucky sales and use tax you paid and distribution costs do not count as qualifying spending.

Study of musicians and venues

The Film Leadership Council studies needs, barriers, and opportunities for Kentucky musicians and music venues. The Film Office director and two cabinet secretaries lead the work. Findings are due to the Legislative Research Commission by November 1, 2026.

Fees to apply for film credits

Each application has a nonrefundable fee based on reported qualifying costs: $250 (<$50,000), $500 ($50,000–$100,000), or $1,000 (>$100,000). The Council may also charge an administrative fee up to 0.5% of the incentive you seek or $500, whichever is higher. A $2,000 fee may be charged to prepare the tax incentive agreement.

Loan-out companies must register and pay taxes

A loan‑out company that supplies talent to a production must register and stay in good standing with the Kentucky Secretary of State. The loan‑out and people working through it are subject to Kentucky personal income tax and applicable payroll taxes.

Sponsors & Cosponsors

Sponsor

Robert Stivers
Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 153 • No: 15

House vote • 4/15/2026

3rd reading, passed

Yes: 80 • No: 15

Senate vote • 4/15/2026

passed

Yes: 37 • No: 0

Senate vote • 3/17/2026