UNOFFICIAL COPY 25 RS HB 775/EN
Page 1 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
AN ACT relating to fiscal matters. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 65.490 is amended to read as follows: 3
As used in KRS 65.490 to 65.499, unless the context otherwise requires: 4
(1) "Agency" means an urban renewal and community development agency of a taxing 5
district located within a county containing a consolidated local government or a city 6
of the first class, established under KRS Chapter 99; a development authority 7
located within a county containing a consolidated local government or a city of the 8
first class established under KRS Chapter 99; a nonprofit corporation located within 9
a county containing a consolidated local government or a city of the first class; or a 10
designated department, division, or office of a county containing a consolidated 11
local government or of a city of the first class; 12
(2) "Development area" means an area no[ less than one (1) square mile, nor] more 13
than six (6) square miles, designated in need of public improvements by a local or 14
state government in a county containing a consolidated local government or a city 15
of the first class, a project area as defined in KRS 99.615, or a public project as 16
defined in KRS 58.010 in a county containing a consolidated local government or a 17
city of the first class. "Development area" includes an existing economic 18
development asset; 19
(3) "Increment" means that amount of money received by any taxing district or the 20
state that is determined by subtracting the amount of old revenues from the amount 21
of new revenues in any year for which a taxing district or the state and an agency 22
have agreed upon under the terms of a contract of release or a grant contract; 23
(4) "Local government" means a county containing a consolidated local government or 24
a city of the first class; 25
(5) "New revenues" means the revenues received by any taxing district or the state 26
from a development area in any year after the establishment of the development 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 2 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
area; 1
(6) "Old revenues" means the amount of revenues received by any taxing district or the 2
state from a development area in the last year prior to the establishment of the 3
development area; 4
(7) "Project" means any urban renewal, redevelopment, or public project undertaken in 5
accordance with the provisions of KRS 65.490 to 65.497, any project undertaken in 6
accordance with KRS 99.610 to 99.680, any project undertaken in accordance with 7
the provisions of KRS Chapter 58, or any "public project" as that term is defined in 8
KRS 58.010 undertaken by a nonprofit corporation located within a county 9
containing a consolidated local government or a city of the first class; 10
(8) "Release" or "contract of release" or "grant contract" means that agreement by 11
which a taxing district or the state permits the payment to an agency of a portion of 12
increments or an amount equal to a portion of increments received by it in return for 13
the benefits accrued to the taxing district or the state by reason of a project 14
undertaken by an agency in a development area; 15
(9) "Taxing district" means a consolidated local government, a county containing a city 16
of the first class, a city of the first class that encompasses all or part of a 17
development area, or the state, but does not mean a school district; and 18
(10) "Pilot program" means a tax increment financing program or a grant program 19
created by an agency within a consolidated local government or a county containing 20
a city of the first class which shall exist for a period of twenty (20) years, and may 21
be extended for a period not to exceed an additional twenty-five (25) years as 22
provided in KRS 65.4931. 23
Section 2. KRS 65.494 is amended to read as follows: 24
(1) As used in this section: 25
(a) "Existing development area" means a development area established by a 26
county containing a city of the first class or by a city of the first class prior 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 3 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
to March 23, 2007, that is subject to the provisions of a grant contract, 1
Interlocal Cooperation Agreement, or Master Agreement executed prior to 2
March 23, 2007; and 3
(b) "New development area" means a development area that is created within 4
an existing development area. 5
(2) [Effective on March 23, 2007, ]The provisions of KRS 65.490 to 65.499 shall apply 6
only to: 7
(a) Existing development areas; and[ which were established by a county 8
containing a city of the first class or a city of the first class prior to March 23, 9
2007, and that are subject to the provisions of a grant contract, Interlocal 10
Cooperation Agreement or Master Agreement executed prior to March 23, 11
2007] 12
(b) New development areas, provided that: 13
1. The project for the existing development area is amended to remove 14
the new development area from the existing development area; 15
2. All contracts regarding the application of increment derived from the 16
new development area require not less than ten percent (10%) of the 17
increment be paid to the agency for which the existing development 18
area was established; 19
3. Notwithstanding KRS 65.495 to the contrary, the payment to the 20
agency under subparagraph 2. of this paragraph shall not be taken 21
into account in determining whether thresholds within the contract 22
have been met; and 23
4. The amendment of the project for an existing development area is 24
approved by: 25
a. i. The county containing a city of the first class; or 26
ii. The city of the first class; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 4 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
in which the existing development area is located; 1
b. The state; 2
c. The agency for which the existing development area was 3
established; and 4
d. If applicable, the insurer of any bonds issued for the benefit of 5
the agency for which the existing development area was 6
established. 7
Section 3. KRS 131.250 is amended to read as follows: 8
(1) For the purpose of facilitating the administration of the taxes it administers, the 9
department may require any tax return, report, or statement to be electronically 10
filed. 11
(2) (a) A person required to electronically file a return, report, or statement may 12
apply for a waiver from the requirement by submitting the request on a form 13
prescribed by the department. 14
(b) The request shall indicate the lack of one (1) or more of the following: 15
1. Compatible computer hardware; 16
2. Internet access; or 17
3. Other technological capabilities determined relevant by the department. 18
(3) Beginning July 1, 2026, a licensee: 19
(a) Holding a microbrewery license and authorized to sell malt beverages under 20
KRS 243.157; and 21
(b) Required to pay the: 22
1. Wholesale sales tax under Section 24 of this Act; and 23
2. Excise tax on malt beverages under subsection (3) of Section 20 of this 24
Act; 25
shall electronically submit any payment and tax return, report, or statement to the 26
department. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 5 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
Section 4. KRS 132.010 is amended to read as follows: 1
As used in this chapter, unless the context otherwise requires: 2
(1) "Department" means the Department of Revenue; 3
(2) "Taxpayer" means any person made liable by law to file a return or pay a tax; 4
(3) "Real property": 5
(a) Means all lands within this state and improvements thereon; and 6
(b) [For property assessed on January 1, 2024, and on January 1, 2025, ]Includes 7
but is not limited to mains, pipes, pipelines, and conduits that are: 8
1. Authorized to be installed in, upon, or under any public or private street 9
or place; and 10
2. Used or to be used for or in connection with the collection, transmission, 11
distribution, conducting, sale, or furnishing of heat, steam, water, 12
sewage, natural or manufactured gas, or electricity to or for the public; 13
(4) "Personal property" means every species and character of property, tangible and 14
intangible, other than real property; 15
(5) "Resident" means any person who has taken up a place of abode within this state 16
with the intention of continuing to abide in this state; any person who has had his or 17
her actual or habitual place of abode in this state for the larger portion of the twelve 18
(12) months next preceding the date as of which an assessment is due to be made 19
shall be deemed to have intended to become a resident of this state; 20
(6) "Compensating tax rate" means that rate which, rounded to the next higher one-21
tenth of one cent ($0.001) per one hundred dollars ($100) of assessed value and 22
applied to the current year's assessment of the property subject to taxation by a 23
taxing district, excluding new property and personal property, produces an amount 24
of revenue approximately equal to that produced in the preceding year from real 25
property. However, in no event shall the compensating tax rate be a rate which, 26
when applied to the total current year assessment of all classes of taxable property, 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 6 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
produces an amount of revenue less than was produced in the preceding year from 1
all classes of taxable property. For purposes of this subsection, "property subject to 2
taxation" means the total fair cash value of all property subject to full local rates, 3
less the total valuation exempted from taxation by the homestead exemption 4
provision of the Constitution and the difference between the fair cash value and 5
agricultural or horticultural value of agricultural or horticultural land; 6
(7) "Net assessment growth" means the difference between: 7
(a) The total valuation of property subject to taxation by the county, city, school 8
district, or special district in the preceding year, less the total valuation 9
exempted from taxation by the homestead exemption provision of the 10
Constitution in the current year over that exempted in the preceding year; and 11
(b) The total valuation of property subject to taxation by the county, city, school 12
district, or special district for the current year; 13
(8) "New property" means the net difference in taxable value between real property 14
additions and deletions to the property tax roll for the current year. "Real property 15
additions" shall mean: 16
(a) Property annexed or incorporated by a municipal corporation, or any other 17
taxing jurisdiction; however, this definition shall not apply to property 18
acquired through the merger or consolidation of school districts, or the 19
transfer of property from one (1) school district to another; 20
(b) Property, the ownership of which has been transferred from a tax-exempt 21
entity to a nontax-exempt entity; 22
(c) The value of improvements to existing nonresidential property; 23
(d) The value of new residential improvements to property; 24
(e) The value of improvements to existing residential property when the 25
improvement increases the assessed value of the property by fifty percent 26
(50%) or more; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 7 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(f) Property created by the subdivision of unimproved property, provided, that 1
when the property is reclassified from farm to subdivision by the property 2
valuation administrator, the value of the property as a farm shall be a deletion 3
from that category; 4
(g) Property exempt from taxation, as an inducement for industrial or business 5
use, at the expiration of its tax exempt status; 6
(h) Property, the tax rate of which will change, according to the provisions of 7
KRS 82.085, to reflect additional urban services to be provided by the taxing 8
jurisdiction, provided, however, that the property shall be considered "real 9
property additions" only in proportion to the additional urban services to be 10
provided to the property over the urban services previously provided; and 11
(i) The value of improvements to real property previously under assessment 12
moratorium. 13
"Real property deletions" shall be limited to the value of real property removed 14
from, or reduced over the preceding year on, the property tax roll for the current 15
year; 16
(9) "Agricultural land" means: 17
(a) Any tract of land, including all income-producing improvements, of at least 18
ten (10) contiguous acres in area used for the production of livestock, 19
livestock products, poultry, poultry products and/or the growing of tobacco 20
and/or other crops including timber; 21
(b) Any tract of land, including all income-producing improvements, of at least 22
five (5) contiguous acres in area commercially used for aquaculture; or 23
(c) Any tract of land devoted to and meeting the requirements and qualifications 24
for payments pursuant to agriculture programs under an agreement with the 25
state or federal government; 26
(10) "Horticultural land" means any tract of land, including all income-producing 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 8 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
improvements, of at least five (5) contiguous acres in area commercially used for 1
the cultivation of a garden, orchard, or the raising of fruits or nuts, vegetables, 2
flowers, or ornamental plants; 3
(11) "Agricultural or horticultural value" means the use value of "agricultural or 4
horticultural land" based upon income-producing capability and comparable sales 5
of farmland purchased for farm purposes where the price is indicative of farm use 6
value, excluding sales representing purchases for farm expansion, better 7
accessibility, and other factors which inflate the purchase price beyond farm use 8
value, if any, considering the following factors as they affect a taxable unit: 9
(a) Relative percentages of tillable land, pasture land, and woodland; 10
(b) Degree of productivity of the soil; 11
(c) Risk of flooding; 12
(d) Improvements to and on the land that relate to the production of income; 13
(e) Row crop capability including allotted crops other than tobacco; 14
(f) Accessibility to all-weather roads and markets; and 15
(g) Factors which affect the general agricultural or horticultural economy, such 16
as: interest, price of farm products, cost of farm materials and supplies, labor, 17
or any economic factor which would affect net farm income; 18
(12) "Deferred tax" means the difference in the tax based on agricultural or horticultural 19
value and the tax based on fair cash value; 20
(13) "Homestead" means real property maintained as the permanent residence of the 21
owner with all land and improvements adjoining and contiguous thereto including 22
but not limited to lawns, drives, flower or vegetable gardens, outbuildings, and all 23
other land connected thereto; 24
(14) "Residential unit" means all or that part of real property occupied as the permanent 25
residence of the owner; 26
(15) "Special benefits" are those which are provided by public works not financed 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 9 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
through the general tax levy but through special assessments against the benefited 1
property; 2
(16) "Manufactured home" means a structure manufactured after June 15, 1976, in 3
accordance with the National Manufactured Housing Construction and Safety 4
Standards Act, transportable in one (1) or more sections, which when erected on 5
site measures eight (8) body feet or more in width and thirty-two (32) body feet or 6
more in length, and which is built on a permanent chassis and designed to be used 7
as a dwelling, with or without a permanent foundation, when connected to the 8
required utilities, and includes the plumbing, heating, air-conditioning, and 9
electrical systems contained therein. It may be used as a place of residence, 10
business, profession, or trade by the owner, lessee, or their assignees and may 11
consist of one (1) or more units that can be attached or joined together to comprise 12
an integral unit or condominium structure; 13
(17) "Mobile home" means a structure manufactured on or before June 15, 1976, that 14
was not required to be constructed in accordance with the National Manufactured 15
Housing Construction and Safety Standards Act, transportable in one (1) or more 16
sections, which when erected on site measures eight (8) body feet or more in width 17
and thirty-two (32) body feet or more in length, and which is built on a permanent 18
chassis and designed to be used as a dwelling, with or without a permanent 19
foundation, when connected to the required utilities, and includes the plumbing, 20
heating, air-conditioning, and electrical systems contained therein. It may be used 21
as a place of residence, business, profession, or trade by the owner, lessee, or their 22
assigns and may consist of one (1) or more units that can be attached or joined 23
together to comprise an integral unit or condominium structure; 24
(18) "Modular home" means a structure which is certified by its manufacturer as being 25
constructed in accordance with all applicable provisions of the Kentucky Building 26
Code and standards adopted by the local authority which has jurisdiction, 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 10 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
transportable in one (1) or more sections, and designed to be used as a dwelling on 1
a permanent foundation when connected to the required utilities, and includes the 2
plumbing, heating, air-conditioning, and electrical systems contained therein; 3
(19) "Prefabricated home" means a manufactured home, a mobile home, or a modular 4
home; 5
(20) "Recreational vehicle" means a vehicular type unit primarily designed as temporary 6
living quarters for recreational, camping, or travel use, which either has its own 7
motive power or is mounted on or drawn by another vehicle. The basic entities are: 8
travel trailer, camping trailer, truck camper, and motor home. As used in this 9
subsection: 10
(a) "Travel trailer" means a vehicular unit, mounted on wheels, designed to 11
provide temporary living quarters for recreational, camping, or travel use, and 12
of a size or weight that does not require special highway movement permits 13
when drawn by a motorized vehicle, and with a living area of less than two 14
hundred twenty (220) square feet, excluding built-in equipment (such as 15
wardrobes, closets, cabinets, kitchen units or fixtures) and bath and toilet 16
rooms; 17
(b) "Camping trailer" means a vehicular portable unit mounted on wheels and 18
constructed with collapsible partial side walls which fold for towing by 19
another vehicle and unfold at the camp site to provide temporary living 20
quarters for recreational, camping, or travel use; 21
(c) "Truck camper" means a portable unit constructed to provide temporary living 22
quarters for recreational, travel, or camping use, consisting of a roof, floor, 23
and sides, designed to be loaded onto and unloaded from the bed of a pick-up 24
truck; and 25
(d) "Motor home" means a vehicular unit designed to provide temporary living 26
quarters for recreational, camping, or travel use built on or permanently 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 11 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
attached to a self-propelled motor vehicle chassis or on a chassis cab or van 1
which is an integral part of the completed vehicle; 2
(21) "Hazardous substances" shall have the meaning provided in KRS 224.1-400; 3
(22) "Pollutant or contaminant" shall have the meaning provided in KRS 224.1-400; 4
(23) "Release" shall have the meaning as provided in either or both KRS 224.1-400 and 5
KRS 224.60-115; 6
(24) "Qualifying voluntary environmental remediation property" means real property 7
subject to the provisions of KRS 224.1-400 and 224.1-405, or 224.60-135 where the 8
Energy and Environment Cabinet has made a determination that: 9
(a) All releases of hazardous substances, pollutants, contaminants, petroleum, or 10
petroleum products at the property occurred prior to the property owner's 11
acquisition of the property; 12
(b) The property owner has made all appropriate inquiry into previous ownership 13
and uses of the property in accordance with generally accepted practices prior 14
to the acquisition of the property; 15
(c) The property owner or a responsible party has provided all legally required 16
notices with respect to hazardous substances, pollutants, contaminants, 17
petroleum, or petroleum products found at the property; 18
(d) The property owner is in compliance with all land use restrictions and does 19
not impede the effectiveness or integrity of any institutional control; 20
(e) The property owner complied with any information request or administrative 21
subpoena under KRS Chapter 224; and 22
(f) The property owner is not affiliated with any person who is potentially liable 23
for the release of hazardous substances, pollutants, contaminants, petroleum, 24
or petroleum products on the property pursuant to KRS 224.1-400, 224.1-405, 25
or 224.60-135, through: 26
1. Direct or indirect familial relationship; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 12 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
2. Any contractual, corporate, or financial relationship, excluding 1
relationships created by instruments conveying or financing title or by 2
contracts for sale of goods or services; or 3
3. Reorganization of a business entity that was potentially liable; 4
(25) "Intangible personal property" means stocks, mutual funds, money market funds, 5
bonds, loans, notes, mortgages, accounts receivable, land contracts, cash, credits, 6
patents, trademarks, copyrights, tobacco base, allotments, annuities, deferred 7
compensation, retirement plans, and any other type of personal property that is not 8
tangible personal property; 9
(26) (a) "County" means any county, consolidated local government, urban-county 10
government, unified local government, or charter county government; 11
(b) "Fiscal court" means the legislative body of any county, consolidated local 12
government, urban-county government, unified local government, or charter 13
county government; and 14
(c) "County judge/executive" means the chief executive officer of any county, 15
consolidated local government, urban-county government, unified local 16
government, or charter county government; 17
(27) "Taxing district" means any entity with the authority to levy a local ad valorem tax, 18
including special purpose governmental entities; 19
(28) "Special purpose governmental entity" shall have the same meaning as in KRS 20
65A.010, and as used in this chapter shall include only those special purpose 21
governmental entities with the authority to levy ad valorem taxes, and that are not 22
specifically exempt from the provisions of this chapter by another provision of the 23
Kentucky Revised Statutes; 24
(29) (a) "Broadcast" means the transmission of audio, video, or other signals, through 25
any electronic, radio, light, or similar medium or method now in existence or 26
later devised over the airwaves to the public in general. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 13 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(b) "Broadcast" shall not apply to operations performed by multichannel video 1
programming service providers as defined in KRS 136.602 or any other 2
operations that transmit audio, video, or other signals, exclusively to persons 3
for a fee; 4
(30) "Livestock" means cattle, sheep, swine, goats, horses, alpacas, llamas, buffaloes, 5
and any other animals of the bovine, ovine, porcine, caprine, equine, or camelid 6
species; 7
(31) "Heavy equipment rental agreement" means the short-term rental contract under 8
which qualified heavy equipment is rented without an operator for a period: 9
(a) Not to exceed three hundred sixty-five (365) days; or 10
(b) That is open-ended under the terms of the contract with no specified end date; 11
(32) "Heavy equipment rental company" means an entity that is primarily engaged in a 12
line of business described in Code 532412 or 532310 of the North American 13
Industry Classification System Manual in effect on January 1, 2019; 14
(33) "Qualified heavy equipment" means machinery and equipment, including ancillary 15
equipment and any attachments used in conjunction with the machinery and 16
equipment, that is: 17
(a) Primarily used and designed for construction, mining, forestry, or industrial 18
purposes, including but not limited to cranes, earthmoving equipment, well-19
drilling machinery and equipment, lifts, material handling equipment, pumps, 20
generators, and pollution-reducing equipment; and 21
(b) Held in a heavy equipment rental company's inventory for: 22
1. Rental under a heavy equipment rental agreement; or 23
2. Sale in the regular course of business; 24
(34) "Veteran service organization" means an organization wholly dedicated to 25
advocating on behalf of military veterans and providing charitable programs in 26
honor and on behalf of military veterans; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 14 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(35) "Government restriction on use" means a limitation on the use of at least fifty 1
percent (50%) of the individual dwelling units of a multi-unit rental housing in 2
order to receive a federal or state government incentive based on low-income renter 3
restrictions, including the following government incentives: 4
(a) A tax credit under Section 42 of the Internal Revenue Code; 5
(b) Financing derived from exempt facility bonds for qualified residential rental 6
projects under Section 142 of the Internal Revenue Code; 7
(c) A low-interest loan under Section 235 or 236 of the National Housing Act or 8
Section 515 of the Housing Act of 1949; 9
(d) A rent subsidy; 10
(e) A guaranteed loan; 11
(f) A grant; or 12
(g) A guarantee; 13
(36) "Low income" means earning at or below eighty percent (80%) of the area median 14
income as defined by the United States Department of Housing and Urban 15
Development for the location of the multi-unit rental housing; and 16
(37) "Multi-unit rental housing" means residential property or project consisting of four 17
(4) or more individual dwelling units and does not include: 18
(a) Assisted living facilities; or 19
(b) Duplexes or single-family units unless they are included as part of a larger 20
property that is subject to government restriction on use. 21
Section 5. KRS 136.010 is amended to read as follows: 22
As used in this chapter, except for KRS 136.500 to 136.575, unless the context requires 23
otherwise: 24
(1) "Out-of-state business property" means all real and personal property having a 25
taxable situs outside this state owned by a corporation for use in the active conduct 26
of a trade or business; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 15 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(2) "Personal property" means every species and character of property, tangible and 1
intangible, other than real property; 2
(3) "Real property": 3
(a) Means all lands within this state and improvements thereon; and 4
(b) [For property assessed on January 1, 2024, and on January 1, 2025, ]Includes 5
but is not limited to mains, pipes, pipelines, and conduits that are: 6
1. Authorized to be installed in, upon, or under any public or private street 7
or place; and 8
2. Used or to be used for or in connection with the collection, transmission, 9
distribution, conducting, sale, or furnishing of heat, steam, water, 10
sewage, natural or manufactured gas, or electricity to or for the public; 11
and 12
(4) "Tax exempt United States obligations" means all obligations of the United States 13
exempt from taxation under 31 U.S.C. sec. 3124(a) or exempt under the United 14
States Constitution or any federal statute including the obligations of any 15
instrumentality or agency of the United States which are exempt from state or local 16
taxation under the United States Constitution or any statute of the United States. 17
Section 6. KRS 132.140 is amended to read as follows: 18
(1) The department shall fix the value of the distilled spirits for the purpose of taxation, 19
assess the same at its fair cash value, estimated at the price it would bring at a fair 20
voluntary sale, calculate the exempt portion of the property taxes, and keep a record 21
of the valuations and assessments. The department shall immediately notify the 22
owner or proprietor of the bonded warehouse or premises of the amount fixed, 23
including the portion of the property tax exemption as calculated in subsection (3) 24
of this section. 25
(2) (a) For purposes of this subsection only, "revenue bond-financed warehouse"[: 26
1. "Premises"] means a bonded warehouse or premises containing distilled 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 16 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
spirits: 1
1. Owned by a tax-exempt governmental unit or tax-exempt statutory 2
authority under KRS Chapter 103; 3
2.[a.] The costs of which are financed by one (1) or more series of industrial 4
revenue bonds under KRS Chapter 103 issued prior to January 1, 2024; 5
and 6
3.[b.] Any portion of the costs of which remains financed by those industrial 7
revenue bonds during any portion of the calendar year[; and 8
2. "Taxpayer" means the owner, proprietor, or custodian of one (1) or more 9
premises]. 10
(b) Notwithstanding subsection (3) of this section, for the taxation of distilled 11
spirits stored or aging in barrels in a revenue bond-financed warehouse: 12
1. One hundred percent (100%) of the assessed value of the distilled 13
spirits shall be subject to the applicable state and local ad valorem 14
taxes; and 15
2. The state and local tax rate that may be levied on the distilled spirits[ for 16
a taxpayer of a premises] shall be the state and local tax rate for tax 17
assessments made on January 1, 2023. 18
(c) Distilled spirits stored or aging in barrels in a revenue bond-financed[located 19
in a bonded] warehouse[ or premises] shall be exempt from state and local ad 20
valorem taxes for tax assessments made on or after January 1, 2043. 21
(3) For[The maximum state and local tax rate that may be levied on] distilled spirits 22
stored or aging in barrels located in a bonded warehouse or premises, the portion of 23
the assessed value that is subject to state and local ad valorem taxes shall be as 24
follows: 25
(a) Ninety-six percent (96%) of the assessed value[otherwise applicable tax rate] 26
for tax assessments made on January 1, 2026; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 17 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(b) Ninety-two percent (92%) of the assessed value[otherwise applicable tax rate] 1
for tax assessments made on January 1, 2027; 2
(c) Eighty-eight percent (88%) of the assessed value[otherwise applicable tax 3
rate] for tax assessments made on January 1, 2028; 4
(d) Eighty-four percent (84%) of the assessed value[otherwise applicable tax 5
rate] for tax assessments made on January 1, 2029; 6
(e) Eighty percent (80%) of the assessed value[otherwise applicable tax rate] for 7
tax assessments made on January 1, 2030; 8
(f) Seventy-six percent (76%) of the assessed value[otherwise applicable tax 9
rate] for tax assessments made on January 1, 2031; 10
(g) Seventy-two percent (72%) of the assessed value[otherwise applicable tax 11
rate] for tax assessments made on January 1, 2032; 12
(h) Sixty-eight percent (68%) of the assessed value[otherwise applicable tax rate] 13
for tax assessments made on January 1, 2033; 14
(i) Sixty-one percent (61%) of the assessed value[otherwise applicable tax rate] 15
for tax assessments made on January 1, 2034; 16
(j) Fifty-four percent (54%) of the assessed value[otherwise applicable tax rate] 17
for tax assessments made on January 1, 2035; 18
(k) Forty-four percent (44%) of the assessed value[otherwise applicable tax rate] 19
for tax assessments made on January 1, 2036; 20
(l) Thirty-eight percent (38%) of the assessed value[otherwise applicable tax 21
rate] for tax assessments made on January 1, 2037; 22
(m) Thirty-two percent (32%) of the assessed value[otherwise applicable tax rate] 23
for tax assessments made on January 1, 2038; 24
(n) Twenty-four percent (24%) of the assessed value[otherwise applicable tax 25
rate] for tax assessments made on January 1, 2039; 26
(o) Twenty percent (20%) of the assessed value[otherwise applicable tax rate] for 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 18 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
tax assessments made on January 1, 2040; 1
(p) Fifteen percent (15%) of the assessed value[otherwise applicable tax rate] for 2
tax assessments made on January 1, 2041; and 3
(q) Eight percent (8%) of the assessed value[otherwise applicable tax rate] for tax 4
assessments made on January 1, 2042. 5
(4) Distilled spirits stored or aging in barrels located in a bonded warehouse or 6
premises shall be exempt from state and local ad valorem taxes for tax assessments 7
made on or after January 1, 2043. 8
(5) If any owner, proprietor, or custodian of a bonded warehouse or premises fails to 9
make the report required by KRS 132.130, the department shall ascertain the 10
necessary facts required to be reported. For that purpose the department shall have 11
access to the records of the owner, proprietor, or custodian; and the assessment 12
shall be made and taxes collected thereon, with interest and penalties, as though 13
regularly reported. 14
(6) The assessment made under (1) of this section shall be reviewed according to KRS 15
131.110. 16
Section 7. KRS 138.208 is amended to read as follows: 17
(1) As used in this section: 18
(a) "Bonded warehouse or premises" does not include a revenue bond-19
financed warehouse as defined in Section 6 of this Act for periods prior to 20
the 2043 calendar year; 21
(b) "Local jurisdiction" means: 22
1. A school district; 23
2. A fire protection district or subdistrict authorized to levy the ad valorem 24
tax permitted by KRS 75.015 and 75.040 and that provides fire or other 25
emergency services; and 26
3. An area served by an emergency services board that levies the ad 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 19 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
valorem tax permitted by KRS 75A.050 and provides fire or other 1
emergency services[; 2
(b) "Premises" means a bonded warehouse containing distilled spirits]; and 3
(c) "Taxpayer" means the owner, proprietor, or custodian of one (1) or[of] more 4
bonded warehouses or premises. 5
(2) Beginning with the 2026 calendar year and for each subsequent calendar year 6
thereafter, in addition to any ad valorem taxes collected under KRS 132.150, there 7
is imposed a replacement tax on every taxpayer with a bonded warehouse or 8
premises located in a local jurisdiction that collected ad valorem tax during calendar 9
year 2025. 10
(3) The total replacement tax for each school district shall be: 11
(a) An amount that is not less than zero; and 12
(b) The result from the following calculation: 13
1. The ad valorem tax under KRS 132.150 on distilled spirits stored or 14
aging in a bonded warehouse or premises collected by or on behalf of 15
the school district during calendar year 2023; 16
2. Minus the amount of the ad valorem tax under KRS 132.150 on distilled 17
spirits stored or aging in a bonded warehouse or premises collected by 18
or on behalf of the school district for the applicable calendar year; and 19
3. Minus the amount by which the Support Education Excellence in 20
Kentucky program under KRS 157.310 to 157.440 final calculation for 21
the school year ending during the applicable calendar year exceeds the 22
Support Education Excellence in Kentucky program final calculation for 23
the 2022-2023 school year, as determined by the Department of 24
Education under KRS 157.410(3). For purposes of the Support 25
Education Excellence in Kentucky final calculation under this 26
subparagraph, the average daily attendance and equalization ratio for the 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 20 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
school year ending during the applicable calendar year shall not be less 1
than those for the 2022-2023 school year final calculation. 2
(4) The total replacement tax for each fire district or emergency services board shall be: 3
(a) An amount that is not less than zero; and 4
(b) The result from the following calculation: 5
1. The ad valorem tax under KRS 132.150 on distilled spirits stored or 6
aging in a bonded warehouse or premises collected by or on behalf of 7
the fire district or emergency services board during calendar year 2025; 8
2. Minus the amount of the ad valorem tax under KRS 132.150 on distilled 9
spirits stored or aging in a bonded warehouse or premises collected by 10
or on behalf of the district or board for the applicable calendar year. 11
(5) (a) Each year the department shall assess taxpayers the replacement tax for the 12
preceding calendar year in proportion to the number of barrels of distilled 13
spirits stored and aging at their bonded warehouse or premises in the local 14
jurisdiction on January 1 of that preceding calendar year. 15
(b) If a business-wide reduction or extraordinary event occurs, any taxpayer may 16
apply to the secretary of the Finance and Administration Cabinet for a 17
reduction in the taxpayer's replacement tax assessment. 18
(c) For purposes of this subsection: 19
1. "Business-wide reduction" means that the volume of distilled spirits 20
distilled and barreled[produced] by all taxpayers at all business 21
locations in this state during the applicable calendar year is less than the 22
volume of distilled spirits distilled and barreled at all business locations 23
in this state in calendar year 2025; and 24
2. "Extraordinary event" means a pandemic, epidemic, restrictive 25
governmental laws or regulations enacted after March 31, 2023, riots, 26
insurrection, war, acts of a government authority imposed after March 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 21 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
31, 2023, court orders issued after March 31, 2023, a natural disaster, a 1
decrease in sales in excess of ten percent (10%), or other reason of a like 2
nature determined by the secretary not to be the fault of the taxpayer and 3
any other items determined by the secretary to be beyond the taxpayer's 4
reasonable control, which prevents the taxpayer from distilling or 5
barreling[producing] distilled spirits. 6
(6) All revenues received by the department from the tax imposed by this section shall 7
be distributed to the local jurisdiction for which the tax was levied within sixty (60) 8
days from the date received. 9
(7) The department shall administer the replacement tax levied by this section and, in 10
conjunction or consultation with any agency representing a local jurisdiction, may 11
promulgate administrative regulations to implement this section. 12
Section 8. KRS 157.362 is amended to read as follows: 13
The portion of the assessed value of distilled spirits exempted from ad valorem taxes 14
under Section 6 of this Act[which equates to the percentage of the otherwise applicable 15
tax rate that does not apply under KRS 132.140(3)] shall not be included in the 16
calculation of the local effort required for Support Education Excellence in Kentucky or 17
the tax rate-setting process in KRS Chapter 160. 18
Section 9. KRS 141.020 is amended to read as follows: 19
(1) An annual tax shall be paid for each taxable year by every resident individual of 20
this state upon his or her entire net income as defined in this chapter. The tax shall 21
be determined by applying the rates in subsection (2) of this section to net income 22
and subtracting allowable tax credits provided in subsection (3) of this section. 23
(2) (a) As used in this subsection: 24
1. "Balance in the BRTF at the end of a fiscal year" means the budget 25
reserve trust fund account established in KRS 48.705 and includes the 26
following amounts and actions resulting from the final close of the fiscal 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 22 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
year: 1
a. The amount of moneys in the fund at the end of a fiscal year; 2
b. All close-out actions related to a budget reduction plan under KRS 3
48.130 or as modified in a branch budget bill; and 4
c. All close-out actions related to the surplus expenditure plan under 5
KRS 48.140 or as modified in a branch budget bill; 6
2. "GF appropriations" means the authorization by the General Assembly 7
to expend GF moneys, excluding: 8
a. Continuing appropriations; 9
b. Any appropriation to the budget reserve trust fund; 10
c. Any lump-sum appropriation to a state-administered retirement 11
system, as defined in KRS 7A.210, that is in excess of the 12
appropriations specifically budgeted to meet the recurring 13
statutorily required contributions or recurring actuarially 14
determined contributions for a state-administered retirement 15
system under KRS 21.525, 61.565, 61.702, 78.635, 78.5536, or 16
161.550, as applicable; and 17
d. Any appropriation from the budget reserve trust fund account 18
established in KRS 48.705 that is: 19
i. Solely supported by moneys from the budget reserve trust 20
fund account; and 21
ii. Specifically identified in the appropriation language as not 22
being a GF appropriation for the purposes of this section; 23
3. "GF moneys" means receipts deposited in the general fund defined in 24
KRS 48.010, excluding tobacco moneys deposited in the fund 25
established in KRS 248.654; 26
4. "IIT equivalent" means the amount of reduction in GF moneys resulting 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 23 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
from a one (1) percentage point reduction to the individual income tax 1
rate and shall be calculated by dividing the actual individual income tax 2
receipts for the fiscal year under consideration by: 3
a. The sum of: 4
i. The individual income tax rate, expressed as a percentage, 5
for the first six (6) months of the fiscal year; and 6
ii. The individual income tax rate, expressed as a percentage, 7
for the second six (6) months of the fiscal year; and 8
b. Dividing the sum determined in subdivision a. of this 9
subparagraph by two (2); and 10
5. For analysis through fiscal year 2024-2025 and for reporting through 11
September 5, 2025: 12
a. "Reduction conditions" means: 13
i.[a.] The balance in the BRTF at the end of a fiscal year shall be 14
equal to or greater than ten percent (10%) of the GF moneys 15
for that fiscal year; and 16
ii.[b.] GF moneys at the end of a fiscal year shall be equal to or 17
greater than GF appropriations for that fiscal year plus the 18
IIT equivalent for that fiscal year; and 19
b.[6.] "Tax rate reduction" means the current tax rate minus five-tenths 20
of one percent (0.5%). 21
(b) 1. For the analysis for fiscal year 2025-2026 and fiscal year 2026-2027, 22
and for reporting on or before September 5, 2026, and September 5, 23
2027, "tax rate reduction conditions" means the greatest reduction 24
achieved under subparagraphs 2. and 3. of this paragraph. 25
2. If: 26
a. The balance in the BRTF at the end of a fiscal year is equal to or 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 24 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
greater than ten percent (10%) of the GF moneys for that fiscal 1
year; and 2
b. GF moneys at the end of a fiscal year are equal to or greater 3
than GF appropriations for that fiscal year plus an amount that 4
falls within a range of greater than fifty percent (50%) but less 5
than one hundred percent (100%) of the IIT equivalent for that 6
fiscal year; 7
then the tax rate reduction may be the current tax rate minus twenty-8
five one-hundredths of one percent (0.25%). 9
3. If: 10
a. The balance in the BRTF at the end of a fiscal year is equal to or 11
greater than ten percent (10%) of the GF moneys for that fiscal 12
year; and 13
b. GF moneys at the end of a fiscal year are equal to or greater 14
than GF appropriations for that fiscal year plus the IIT 15
equivalent for that fiscal year; 16
then the tax rate reduction may be the current tax rate minus five-17
tenths of one percent (0.5%). 18
(c) 1. For the analysis for fiscal year 2027-2028 and each fiscal year 19
thereafter and for reporting on or before September 5, 2028, and each 20
September 5 thereafter, "tax rate reduction conditions" means the 21
greatest reduction achieved under subparagraphs 2. to 6. of this 22
paragraph. 23
2. If: 24
a. The balance in the BRTF at the end of a fiscal year is equal to or 25
greater than ten percent (10%) of the GF moneys for that fiscal 26
year; and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 25 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
b. GF moneys at the end of a fiscal year are equal to or greater 1
than GF appropriations for that fiscal year plus an amount that 2
falls within a range of equal to or greater than twenty percent 3
(20%) but not greater than thirty-nine percent (39%) of the IIT 4
equivalent for that fiscal year; 5
then the tax rate reduction may be the current tax rate minus one-6
tenth of one percent (0.1%). 7
3. If: 8
a. The balance in the BRTF at the end of a fiscal year is equal to or 9
greater than ten percent (10%) of the GF moneys for that fiscal 10
year; and 11
b. GF moneys at the end of a fiscal year are equal to or greater 12
than GF appropriations for that fiscal year plus an amount that 13
falls within a range of equal to or greater than forty percent 14
(40%) but not greater than fifty-nine percent (59%) of the IIT 15
equivalent for that fiscal year; 16
then the tax rate reduction may be the current tax rate minus two-17
tenths of one percent (0.2%). 18
4. If: 19
a. The balance in the BRTF at the end of a fiscal year is equal to or 20
greater than ten percent (10%) of the GF moneys for that fiscal 21
year; and 22
b. GF moneys at the end of a fiscal year are equal to or greater 23
than GF appropriations for that fiscal year plus an amount that 24
falls within a range of equal to or greater than sixty percent 25
(60%) but not greater than seventy-nine percent (79%) of the IIT 26
equivalent for that fiscal year; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 26 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
then the tax rate reduction may be the current tax rate minus three-1
tenths of one percent (0.3%). 2
5. If: 3
a. The balance in the BRTF at the end of a fiscal year is equal to or 4
greater than ten percent (10%) of the GF moneys for that fiscal 5
year; and 6
b. GF moneys at the end of a fiscal year are equal to or greater 7
than GF appropriations for that fiscal year plus an amount that 8
falls within a range of equal to or greater than eighty percent 9
(80%) but not greater than ninety-nine percent (99%) of the IIT 10
equivalent for that fiscal year; 11
then the tax rate reduction may be the current tax rate minus four-12
tenths of one percent (0.4%). 13
6. If: 14
a. The balance in the BRTF at the end of a fiscal year is equal to or 15
greater than ten percent (10%) of the GF moneys for that fiscal 16
year; and 17
b. GF moneys at the end of a fiscal year are equal to or greater 18
than GF appropriations for that fiscal year plus the IIT 19
equivalent for that fiscal year; 20
then the tax rate reduction may be the current tax rate minus five-21
tenths of one percent (0.5%). 22
(d)[(b)] For taxable years beginning on or after January 1, 2023, but prior to 23
January 1, 2024, the tax shall be four and one-half percent (4.5%) of net 24
income. 25
(e)[(c)] For taxable years beginning on or after January 1, 2024, but before 26
January 1, 2026, the tax shall be four percent (4%) of net income. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 27 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(f) For taxable years beginning on or after January 1, 2026, the tax shall be 1
three and one-half percent (3.5%) of net income. 2
(g)[(d)] 1. For taxable years beginning on or after January 1, 2027[2025], the 3
income tax rate may be reduced according to the annual process 4
established in: 5
a. Subparagraph[subparagraphs] 2. or 3. of this paragraph; and 6
b. Subparagraph 4.[to 5.] of this paragraph. 7
2. a. The Office of State Budget Director shall review the reduction 8
conditions for the fiscal year 2024-2025[2022-2023] no later than 9
September 1, 2025[2023]. 10
b.[3.] After reviewing the reduction conditions under subdivision a. of 11
this subparagraph[ 2. of this paragraph], the Office of State Budget 12
Director shall, no later than September 5, 2025[2023], report to the 13
Interim Joint Committee on Appropriations and Revenue: 14
i.[a.] Whether the reduction conditions for the fiscal year 2024-15
2025[2022-2023] have been met; and 16
ii.[b.] The amounts associated with each item within the reduction 17
conditions used for making that determination. 18
c. i.[4. a.] If the reduction conditions have been met for fiscal 19
year 2024-2025[2022-2023], the General Assembly may take 20
action to reduce the rate in paragraph (f)[(c)] of this 21
subsection for the taxable year beginning January 1, 22
2027[2025]. 23
ii.[b.] If the reduction conditions have not been met for fiscal year 24
2024-2025[2022-2023] or the General Assembly does not 25
take action to reduce the rate in paragraph (f)[(c)] of this 26
subsection, the department shall maintain the rate in 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 28 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
paragraph (f)[(c)] of this subsection for the taxable year 1
beginning January 1, 2027[2025]. 2
3. a. The Office of State Budget Director shall review the tax rate 3
reduction conditions for the fiscal year 2025-2026 no later than 4
September 1, 2026. 5
b. After reviewing the tax rate reduction conditions under 6
subdivision a. of this subparagraph, the Office of State Budget 7
Director shall, no later than September 5, 2026, report to the 8
Interim Joint Committee on Appropriations and Revenue: 9
i. Whether the tax rate reduction conditions for the fiscal 10
year 2025-2026 have been met; and 11
ii. The amounts associated with each item within the tax rate 12
reduction conditions used for making that determination. 13
c. i. If the tax rate reduction conditions have been met for fiscal 14
year 2025-2026, the General Assembly may take action to 15
reduce the rate in paragraph (f) of this subsection for the 16
taxable year beginning January 1, 2028. 17
ii. If the tax rate reduction conditions have not been met for 18
fiscal year 2025-2026 or the General Assembly does not 19
take action to reduce the rate in paragraph (f) of this 20
subsection, the department shall maintain the rate in 21
paragraph (f) of this subsection for the taxable year 22
beginning January 1, 2028. 23
4.[5.] a. The Office of State Budget Director shall implement an annual 24
process to review and report future reduction conditions or tax 25
rate reduction conditions at the same time and in the same manner 26
for each fiscal year subsequent to the fiscal year 2024-2025[2022-27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 29 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
2023] and each taxable year subsequent to the taxable year 1
beginning January 1, 2027[2025]. 2
b. The department shall not implement an income tax rate reduction 3
without an action by the General Assembly. 4
c. The annual process shall continue until the income tax rate is zero. 5
(h)[(e)] For taxable years beginning on or after January 1, 2018, but before 6
January 1, 2023, the tax shall be five percent (5%) of net income. 7
(i)[(f)] For taxable years beginning after December 31, 2004, and before 8
January 1, 2018, the tax shall be determined by applying the following rates to 9
net income: 10
1. Two percent (2%) of the amount of net income up to three thousand 11
dollars ($3,000); 12
2. Three percent (3%) of the amount of net income over three thousand 13
dollars ($3,000) and up to four thousand dollars ($4,000); 14
3. Four percent (4%) of the amount of net income over four thousand 15
dollars ($4,000) and up to five thousand dollars ($5,000); 16
4. Five percent (5%) of the amount of net income over five thousand 17
dollars ($5,000) and up to eight thousand dollars ($8,000); 18
5. Five and eight-tenths percent (5.8%) of the amount of net income over 19
eight thousand dollars ($8,000) and up to seventy-five thousand dollars 20
($75,000); and 21
6. Six percent (6%) of the amount of net income over seventy-five 22
thousand dollars ($75,000). 23
(3) (a) The following tax credits, when applicable, shall be deducted from the result 24
obtained under subsection (2) of this section to arrive at the annual tax: 25
1. a. For taxable years beginning before January 1, 2014, twenty dollars 26
($20) for an unmarried individual; and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 30 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
b. For taxable years beginning on or after January 1, 2014, and 1
before January 1, 2018, ten dollars ($10) for an unmarried 2
individual; 3
2. a. For taxable years beginning before January 1, 2014, twenty dollars 4
($20) for a married individual filing a separate return and an 5
additional twenty dollars ($20) for the spouse of taxpayer if a 6
separate return is made by the taxpayer and if the spouse, for the 7
calendar year in which the taxable year of the taxpayer begins, had 8
no Kentucky gross income and is not the dependent of another 9
taxpayer; or forty dollars ($40) for married persons filing a joint 10
return, provided neither spouse is the dependent of another 11
taxpayer. The determination of marital status for the purpose of 12
this section shall be made in the manner prescribed in Section 153 13
of the Internal Revenue Code; and 14
b. For taxable years beginning on or after January 1, 2014, and 15
before January 1, 2018, ten dollars ($10) for a married individual 16
filing a separate return and an additional ten dollars ($10) for the 17
spouse of a taxpayer if a separate return is made by the taxpayer 18
and if the spouse, for the calendar year in which the taxable year of 19
the taxpayer begins, had no Kentucky gross income and is not the 20
dependent of another taxpayer; or twenty dollars ($20) for married 21
persons filing a joint return, provided neither spouse is the 22
dependent of another taxpayer. The determination of marital status 23
for the purpose of this section shall be made in the manner 24
prescribed in Section 153 of the Internal Revenue Code; 25
3. a. For taxable years beginning before January 1, 2014, twenty dollars 26
($20) credit for each dependent. No credit shall be allowed for any 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 31 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
dependent who has made a joint return with his or her spouse; and 1
b. For taxable years beginning on or after January 1, 2014, and 2
before January 1, 2018, ten dollars ($10) credit for each 3
dependent. No credit shall be allowed for any dependent who has 4
made a joint return with his or her spouse; 5
4. An additional forty dollars ($40) credit if the taxpayer has attained the 6
age of sixty-five (65) before the close of the taxable year; 7
5. An additional forty dollars ($40) credit for taxpayer's spouse if a 8
separate return is made by the taxpayer and if the taxpayer's spouse has 9
attained the age of sixty-five (65) before the close of the taxable year, 10
and, for the calendar year in which the taxable year of the taxpayer 11
begins, has no Kentucky gross income and is not the dependent of 12
another taxpayer; 13
6. An additional forty dollars ($40) credit if the taxpayer is blind at the 14
close of the taxable year; 15
7. An additional forty dollars ($40) credit for taxpayer's spouse if a 16
separate return is made by the taxpayer and if the taxpayer's spouse is 17
blind, and, for the calendar year in which the taxable year of the 18
taxpayer begins, has no Kentucky gross income and is not the dependent 19
of another taxpayer; and 20
8. An additional twenty dollars ($20) credit shall be allowed if the taxpayer 21
is a member of the Kentucky National Guard at the close of the taxable 22
year. 23
(b) In the case of nonresidents, the tax credits allowable under this subsection 24
shall be the portion of the credits that are represented by the ratio of the 25
taxpayer's Kentucky adjusted gross income as determined by KRS 141.019 to 26
the taxpayer's adjusted gross income as defined in Section 62 of the Internal 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 32 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
Revenue Code. However, in the case of a married nonresident taxpayer with 1
income from Kentucky sources, whose spouse has no income from Kentucky 2
sources, the taxpayer shall determine allowable tax credit(s) by either: 3
1. The method contained above applied to the taxpayer's tax credit(s), 4
excluding credits for a spouse and dependents; or 5
2. Prorating the taxpayer's tax credit(s) plus the tax credits for the 6
taxpayer's spouse and dependents by the ratio of the taxpayer's 7
Kentucky adjusted gross income as determined by KRS 141.019 to the 8
total joint federal adjusted gross income of the taxpayer and the 9
taxpayer's spouse. 10
(c) In the case of a part-year resident, the tax credits allowable under this 11
subsection shall be the portion of the credits represented by the ratio of the 12
taxpayer's Kentucky adjusted gross income as determined by KRS 141.019 to 13
the taxpayer's adjusted gross income as defined in Section 62 of the Internal 14
Revenue Code. 15
(4) An annual tax shall be paid for each taxable year as specified in this section upon 16
the entire net income except as herein provided, from all tangible property located 17
in this state, from all intangible property that has acquired a business situs in this 18
state, and from business, trade, profession, occupation, or other activities carried on 19
in this state, by natural persons not residents of this state. A nonresident individual 20
shall be taxable only upon the amount of income received by the individual from 21
labor performed, business done, or from other activities in this state, from tangible 22
property located in this state, and from intangible property which has acquired a 23
business situs in this state; provided, however, that the situs of intangible personal 24
property shall be at the residence of the real or beneficial owner and not at the 25
residence of a trustee having custody or possession thereof. For taxable years 26
beginning on or after January 1, 2021, but before January 1, 2027, the tax imposed 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 33 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
by this section shall not apply to a disaster response employee or to a disaster 1
response business. The remainder of the income received by the[such] nonresident 2
shall be deemed nontaxable by this state. 3
(5) Subject to the provisions of KRS 141.081, any individual may elect to pay the 4
annual tax imposed by KRS 141.023 in lieu of the tax levied under this section. 5
(6) A part-year resident is subject to taxation, as prescribed in subsection (1) of this 6
section, during that portion of the taxable year that the individual is a resident and, 7
as prescribed in subsection (4) of this section, during that portion of the taxable year 8
when the individual is a nonresident. 9
Section 10. KRS 141.381 is amended to read as follows: 10
(1) As used in this section: 11
(a) "Corporation" means the Bluegrass State Skills Corporation established by 12
KRS 154.12-205; 13
(b) "Educational institution" means a regionally accredited college, university, or 14
technical school; 15
(c) "Metropolitan College" means a nonprofit consortium that includes 16
educational institutions located within the Commonwealth and the qualified 17
taxpayer as members. The purpose of Metropolitan College shall be to 18
provide postsecondary educational opportunities to employees of the qualified 19
taxpayer as part of a combined work and postsecondary education program; 20
(d) "Other educational expenses" means the same kinds of educational expenses 21
that were permitted under the Metropolitan College Consortium Agreement 22
approved November 5, 2005; and 23
(e) "Qualified taxpayer" means any taxpayer who, on June 26, 2009, is a party to 24
the Metropolitan College Consortium Agreement approved November 5, 25
2005. 26
(2) To be eligible for the tax credit provided by this section, a qualified taxpayer shall 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 34 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
be a partner in Metropolitan College. 1
(3) A qualified taxpayer shall be allowed a nonrefundable credit against the tax 2
imposed by KRS 141.020 or 141.040, and KRS 141.0401, for each taxable year 3
beginning on or after July 1, 2010, in the amount of fifty percent (50%) of the 4
actual costs incurred by the qualified taxpayer for: 5
(a) Tuition paid to an educational institution for a student participating in the 6
Metropolitan College; and 7
(b) Other educational expenses paid on behalf of a student participating in the 8
Metropolitan College; 9
on behalf of employees of the qualified corporation, for up to two thousand eight 10
hundred (2,800) employees each year. 11
(4) To claim the credit each year, the qualified taxpayer shall, on an annual basis, 12
submit to the corporation information listing each employee of the qualified 13
taxpayer for whom tuition or other educational expenses were paid, the amount paid 14
on behalf of each employee, and the amount of credit the qualified company is 15
eligible to claim. The corporation shall review the information provided by the 16
qualified company, and shall notify the department and the qualified company of 17
the amount of credit the qualified company is eligible to claim. 18
(5) The credit allowed by this section for any taxable year shall not exceed the tax 19
liability of the taxpayer for the taxable year. Any credit not used may be carried 20
forward to subsequent years. 21
(6) The qualified company shall provide to the corporation and the department any 22
information and documentation requested for the purpose of monitoring the credit 23
established by this section. 24
(7) The approved company shall maintain records and submit information as required 25
by the corporation and the department. The corporation may share information 26
provided by the approved company with the department for the purpose of 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 35 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
monitoring the credit established by this section. 1
(8) The corporation may, through the promulgation of administrative regulations in 2
accordance with KRS Chapter 13A, establish additional standards or requirements 3
for the administration of this section. 4
(9) The credit established by this section shall expire on April 15, 2037[2027], unless 5
extended by the General Assembly. 6
Section 11. KRS 148.851 is amended to read as follows: 7
As used in 148.851 to 148.860, unless the context clearly indicates otherwise: 8
(1) "Agreement" means the tourism development agreement entered into between the 9
authority and an approved company; 10
(2) "Approved company" means any eligible company that has received final approval 11
to receive incentives provided under KRS 148.853; 12
(3) "Approved costs" means the amount of eligible costs approved by the authority 13
upon completion of the project; 14
(4) "Authority" means the Kentucky Tourism Development Finance Authority as set 15
forth in KRS 148.850; 16
(5) "Cabinet" means the Tourism, Arts and Heritage Cabinet; 17
(6) "Crafts and products center" means a facility primarily devoted to the display, 18
promotion, and sale of Kentucky products, and at which a minimum of eighty 19
percent (80%) of the sales occurring at the facility are of Kentucky arts, crafts, or 20
agricultural products; 21
(7) "Eligible company" means any corporation, limited liability company, partnership, 22
limited partnership, sole proprietorship, business trust, or any other entity operating 23
or intending to operate a tourism development project; 24
(8) "Eligible costs" means: 25
(a) Obligations incurred for labor and amounts paid to vendors, contractors, 26
subcontractors, builders, suppliers, deliverymen, and materialmen in 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 36 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
connection with the acquisition, construction, equipping, and installation of a 1
tourism development project; 2
(b) The costs of acquiring real property or rights include the acquisition of real 3
property by a leasehold interest with a minimum term of ten (10) years, and 4
any costs incidental thereto; 5
(c) The cost of contract bonds and of insurance of all kinds that may be required 6
or necessary during the course of the acquisition, construction, equipping, and 7
installation of a tourism development project which is not paid by the vendor, 8
supplier, deliveryman, contractor, or otherwise provided; 9
(d) All costs of architectural and engineering services, including but not limited to 10
estimates, plans and specifications, preliminary investigations, and 11
supervision of construction and installation, as well as for the performance of 12
all the duties required by or consequent to the acquisition, construction, 13
equipping, and installation of a tourism development project; 14
(e) All costs required to be paid under the terms of any contract for the 15
acquisition, construction, equipping, and installation of a tourism 16
development project; 17
(f) All costs required for the installation of utilities, including but not limited to 18
water, sewer, sewer treatment, gas, electricity and communications, and 19
including off-site construction of the facilities paid for by the approved 20
company; and 21
(g) All other costs comparable with those described in this subsection, excluding 22
costs subject to refund under KRS 154.20-202, 154.20-204, 154.20-206, 23
154.20-208, and 154.20-210 or Subchapter 31 of KRS Chapter 154; 24
(9) "Enhanced incentive county" has the same meaning as in KRS 154.32-010; 25
(10) "Entertainment destination center project" means a facility that meets the 26
requirements of KRS 148.853(2)(b); 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 37 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(11) "Final approval" means the action taken by the authority authorizing the eligible 1
company to receive incentives under KRS 139.536 and 148.851 to 148.860; 2
(12) "Full-service lodging facility" means a facility that provides overnight sleeping 3
accommodations, including private bathrooms and all of the following: 4
(a) On-site dining facilities; 5
(b) Room service; 6
(c) Catering: and 7
(d) Meeting space; 8
(13) "Incentives" means the Kentucky sales tax refund as prescribed in KRS 139.536; 9
(14) "Kentucky sales tax" means the sales tax imposed by KRS 139.200; 10
(15) "Lodging facility project" means a full-service lodging facility that: 11
(a) 1. Is located on recreational property owned or leased by the 12
Commonwealth or the federal government; 13
2.[(b)] Involves the restoration or rehabilitation of a structure that: 14
a.[1.] Is listed individually on the National Register of Historic Places; 15
or 16
b.[2.] Is located in the National Register Historic District; and 17
is certified by the Kentucky Heritage Council as contributing to the 18
historic significance of the district, and the rehabilitation or restoration 19
of the structure has been approved in advance by the Kentucky Heritage 20
Council; 21
3.[(c)] Is an integral part of a major convention or sports facility; 22
4.[(d)] Is located: 23
a.[1.] Within a fifty (50) mile radius of a property listed on the National 24
Register of Historic Places with a current function of recreation 25
and culture; and 26
b.[2.] In any of the one hundred (100) least-populated counties in the 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 38 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
Commonwealth, in terms of population density, according to the 1
most recent census; 2
5.[(e)] Is located on property: 3
a.[1.] Owned by the Commonwealth, or leased by the Commonwealth 4
from the federal government; 5
b.[2.] Acquired for use in the state park system pursuant to KRS 6
148.028; and 7
c.[3.] Operated by the Kentucky Department of Parks pursuant to KRS 8
148.021 or the Kentucky Horse Park Commission pursuant to 9
KRS 148.258 to 148.320; 10
6.[(f)] Is located on property: 11
a.[1.] Owned or leased by the federal government and under the control 12
of the Department of the Interior; or 13
b.[2.] Owned by the Commonwealth and in the custody of the State Fair 14
Board as provided in KRS 247.140; 15
7.[(g)] Is part of a tourism attraction project, entertainment destination 16
center project, or theme restaurant destination attraction project and the 17
full-service lodging facility represents less than fifty percent (50%) of 18
the total eligible costs; or 19
8.[(h)] Has not less than five hundred (500) guest rooms; or[:] 20
(b) 1. Is located: 21
a. In any of the one hundred (100) least-populated counties in the 22
Commonwealth, in terms of population density, according to the 23
most recent decennial census; 24
b. In a county, the boundaries of which: 25
i. Include, in part, the boundaries of a designated national 26
forest; or 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 39 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
ii. Are adjacent to or include a portion of parallel reservoirs 1
of water surrounding a national recreation area; 2
c. Within an enhanced incentive county and will create at least fifty 3
(50) new full-time jobs within that county; and 4
d. Within one-half (1/2) mile of a state resort park; 5
2. Has a capital investment of at least one hundred million dollars 6
($100,000,000); and 7
3. Contains accommodations for: 8
a. Lodging, with a minimum of one hundred (100) guest rooms, 9
cabins, or rental units; 10
b. Relaxation, including a spa; 11
c. More than one (1) on-site dining facility; and 12
d. More than one (1) meeting or event space; 13
(16) "Net positive fiscal impact" means the amount by which increased state tax 14
revenues will exceed the incentives given; 15
(17) "Preliminary approval" means the action taken by the authority conditionally 16
approving an eligible company for the incentives under KRS 139.536 and 148.851 17
to 148.860; 18
(18) "Recreational facility" means a structure or outdoor area that: 19
(a) Provides visitors recreational opportunities, including but not limited to 20
amusement parks, boating, hiking, horseback riding, hunting, fishing, 21
camping, wildlife viewing, live theater, rock climbing, and all-terrain vehicle 22
trails; and 23
(b) Serves as a likely destination where individuals who are not residents of the 24
Commonwealth would remain overnight in commercial lodging at or near the 25
recreational facility; 26
(19) "Theme restaurant destination attraction project" means a restaurant facility that 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 40 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
meets the requirements for incentives under KRS 148.853(2)(c); 1
(20) (a) "Tourism attraction project" means: 2
1. A cultural or historical site; 3
2. A recreational facility; 4
3. An entertainment facility; 5
4. An area of natural phenomenon or scenic beauty; or 6
5. A Kentucky crafts and products center; 7
(b) "Tourism attraction project" does not include facilities that are primarily 8
devoted to the retail sale of goods, other than a Kentucky crafts and products 9
center, or a tourism attraction where the sale of goods is a secondary and 10
subordinate component of the attraction; and 11
(21) "Tourism development project" means: 12
(a) A tourism attraction project; 13
(b) A theme restaurant destination attraction project; 14
(c) An entertainment destination center project; or 15
(d) A lodging facility project. 16
Section 12. KRS 148.853 is amended to read as follows: 17
(1) The General Assembly finds and declares that: 18
(a) The general welfare and material well-being of the citizens of the 19
Commonwealth depend in large measure upon the development of tourism in 20
the Commonwealth; 21
(b) It is in the best interest of the Commonwealth to provide incentives for the 22
creation of new tourism attractions and the expansion of existing tourism 23
attractions within the Commonwealth in order to advance the public purposes 24
of relieving unemployment by preserving and creating jobs that would not 25
exist if not for the incentives offered by the authority to approved companies, 26
and by preserving and creating sources of tax revenues for the support of 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 41 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
public services provided by the Commonwealth; 1
(c) The authorities granted by KRS 148.851 to 148.860 are proper governmental 2
and public purposes for which public moneys may be expended; and 3
(d) That the creation or expansion of tourism development projects is of 4
paramount importance mandating that the provisions of KRS 139.536 and 5
KRS 148.851 to 148.860 be liberally construed and applied in order to 6
advance public purposes. 7
(2) To qualify for incentives provided in KRS 139.536 and 148.851 to 148.860, the 8
following requirements shall be met: 9
(a) For a tourism attraction project: 10
1. The total eligible costs shall exceed one million dollars ($1,000,000), 11
except for a tourism attraction project located in a county designated as 12
an enhanced incentive county at the time the eligible company becomes 13
an approved company as provided in KRS 148.857(6), the total eligible 14
costs shall exceed five hundred thousand dollars ($500,000); 15
2. In any year, including the first year of operation, the tourism attraction 16
project shall be open to the public at least one hundred (100) days; and 17
3. In any year following the third year of operation, the tourism attraction 18
project shall attract at least twenty-five percent (25%) of its visitors 19
from among persons who are not residents of the Commonwealth; 20
(b) For an entertainment destination center project: 21
1. The total eligible costs shall exceed five million dollars ($5,000,000); 22
2. The facility shall contain a minimum of two hundred thousand 23
(200,000) square feet of building space adjacent or complementary to an 24
existing tourism attraction project or a major convention facility; 25
3. The incentives shall be dedicated to a public infrastructure purpose that 26
shall relate to the entertainment destination center project; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 42 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
4. In any year, including the first year of operation, the entertainment 1
destination center project shall: 2
a. Be open to the public at least one hundred (100) days per year; 3
b. Maintain at least one (1) major theme restaurant and at least three 4
(3) additional entertainment venues, including but not limited to 5
live entertainment, multiplex theaters, large-format theater, motion 6
simulators, family entertainment centers, concert halls, virtual 7
reality or other interactive games, museums, exhibitions, or other 8
cultural and leisure-time activities; and 9
c. Maintain a minimum occupancy of sixty percent (60%) of the total 10
gross area available for lease with entertainment and food and 11
drink options not including the retail sale of tangible personal 12
property; and 13
5. In any year following the third year of operation, the entertainment 14
destination center project shall attract at least twenty-five percent (25%) 15
of its visitors from among persons who are not residents of the 16
Commonwealth; 17
(c) For a theme restaurant destination attraction project: 18
1. The total eligible costs shall exceed five million dollars ($5,000,000); 19
2. In any year, including the first year of operation, the attraction shall: 20
a. Be open to the public at least three hundred (300) days per year 21
and for at least eight (8) hours per day; and 22
b. Generate no more than fifty percent (50%) of its revenue through 23
the sale of alcoholic beverages; 24
3. In any year following the third year of operation, the theme restaurant 25
destination attraction project shall attract a minimum of fifty percent 26
(50%) of its visitors from among persons who are not residents of the 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 43 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
Commonwealth; and 1
4. The theme restaurant destination attraction project shall: 2
a. At the time of final approval, offer a unique dining experience that 3
is not available in the Commonwealth within a one hundred (100) 4
mile radius of the attraction; 5
b. In any year, including the first year of operation, maintain seating 6
capacity of four hundred fifty (450) guests and offer live music or 7
live musical and theatrical entertainment during the peak business 8
hours that the facility is in operation and open to the public; or 9
c. Within three (3) years of the completion date, the attraction shall 10
obtain a top two (2) tier rating by a nationally accredited service 11
and shall maintain a top two (2) tier rating through the term of the 12
agreement; 13
(d) For a lodging facility project defined in subsection (15)(a) of Section 11 of 14
this Act: 15
1. a. The eligible costs shall exceed five million dollars ($5,000,000) 16
unless the provisions of subdivision b. of this subparagraph apply. 17
b. i. If the lodging facility is an integral part of a major 18
convention or sports facility, the eligible costs shall exceed 19
six million dollars ($6,000,000); and 20
ii. If the lodging facility includes five hundred (500) or more 21
guest rooms, the eligible costs shall exceed ten million 22
dollars ($10,000,000); and 23
2. In any year, including the first year of operation, the lodging facility 24
shall: 25
a. Be open to the public at least one hundred (100) days; and 26
b. Attract at least twenty-five percent (25%) of its visitors from 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 44 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
among persons who are not residents of the Commonwealth; 1
(e) For a lodging facility project defined in subsection (15)(b) of Section 11 of 2
this Act: 3
1. The eligible costs shall exceed one hundred million dollars 4
($100,000,000); and 5
2. The lodging facility shall: 6
a. Be open to the public at least one hundred (100) days each year, 7
including the first year of operation; and 8
b. In any year following the third year of operation, attract a 9
minimum of twenty-five percent (25%) of its overnight visitors 10
from among persons who are not residents of the 11
Commonwealth. 12
(f) Any tourism development project shall not be eligible for incentives if it 13
includes material determined to be lewd, offensive, or deemed to have a 14
negative impact on the tourism industry in the Commonwealth; and 15
(g)[(f)] An expansion of any tourism development project shall in all cases be 16
treated as a new stand-alone project. 17
(3) (a) The incentives offered to an approved company under the Kentucky Tourism 18
Development Act may include[shall be as follows: 19
(a) An approved company may be granted] a sales tax incentive based on 20
the Kentucky sales tax imposed on sales generated by or arising at the 21
tourism development project.[; and] 22
(b) 1. For a tourism development project other than a lodging facility project 23
described in subparagraph 4. or 5. of this paragraph[KRS 24
148.851(14)(e) or (f), or a tourism attraction project described in 25
subparagraph 2. of this paragraph]: 26
a. A sales tax incentive shall be allowed to an approved company 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 45 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
over a period of ten (10) years, except as provided in 1
subparagraphs 7.[5.] and 8.[6.] of this paragraph; and 2
b. The sales tax incentive shall not exceed the lesser of the total 3
amount of the sales tax liability of the approved company and its 4
lessees or a percentage of the approved costs as specified by the 5
agreement, not to exceed twenty-five percent (25%); 6
2. For projects approved according to the application period established 7
under KRS 148.8531, a tourism attraction project located in an 8
enhanced incentive county at the time the eligible company becomes an 9
approved company as provided in KRS 148.857(6): 10
a. A sales tax incentive shall be allowed to the approved company 11
over a period of ten (10) years; and 12
b. The sales tax incentive shall not exceed the lesser of the total 13
amount of the sales tax liability of the approved company and its 14
lessees or a percentage of the approved costs as specified by the 15
agreement, not to exceed thirty percent (30%); 16
3. For applications considered after the effective date of this Act, 17
including projects related to property to which the title passed from a 18
seller to a buyer on or after March 1, 2025, a tourism attraction 19
project located in an enhanced incentive county with a population 20
equal to or less than twenty thousand (20,000) based on the most 21
recent decennial census at the time the eligible company becomes an 22
approved company as provided in KRS 148.857(6): 23
a. A sales tax incentive shall be allowed to the approved company 24
over a period of twenty (20) years; and 25
b. The sales tax incentive shall not exceed the lesser of the total 26
amount of the sales tax liability of the approved company and its 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 46 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
lessees or a percentage of the approved costs as specified by the 1
agreement, not to exceed fifty percent (50%); 2
4. For a lodging facility project described in subsection (15)(a)5. or 6. of 3
Section 11 of this Act[KRS 148.851(14)(e) or (f)]: 4
a. A sales tax incentive shall be allowed to the approved company 5
over a period of twenty (20) years; and 6
b. The sales tax incentive shall not exceed the lesser of total amount 7
of the sales tax liability of the approved company and its lessees or 8
a percentage of the approved costs as specified by the agreement, 9
not to exceed fifty percent (50%); 10
5. For a lodging facility project described in subsection (15)(b) of Section 11
11 of this Act, a sales tax incentive that shall: 12
a. Be allowed to the approved company over a period of twenty (20) 13
years; and 14
b. Not exceed the lesser of the total amount of sales tax liability of 15
the approved company and its lessees or a percentage of the 16
approved costs as specified by the agreement, not to exceed fifty 17
percent (50%); 18
6.[4.] Any unused incentives from a previous year may be carried forward to 19
any succeeding year during the term of the agreement until the entire 20
specified percentage of the approved costs has been received through 21
sales tax incentives; 22
7.[5.] If the approved company is an entertainment destination center that has 23
dedicated at least thirty million dollars ($30,000,000) of the incentives 24
provided under the agreement to a public infrastructure purpose, the 25
agreement may be amended to extend the term of the agreement up to 26
two (2) additional years if the approved company agrees to: 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 47 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
a. Reinvest in the original entertainment destination project one 1
hundred percent (100%) of any incentives received during the 2
extension that were outstanding at the end of the original term of 3
the agreement; and 4
b. Report to the authority at the end of each fiscal year the amount of 5
incentives received during the extension and how the incentives 6
were reinvested in the original entertainment destination project; 7
and 8
8.[6.] The term of a tourism development agreement entered into with a 9
tourism attraction project that was in effect on January 1, 2020, shall be 10
extended for one (1) year if the tourism attraction project: 11
a. Has historically been open to the public on a seasonal basis 12
consisting of less than six (6) months; 13
b. Has previously met the requirement of being open to the public at 14
least one hundred (100) days during the entire term of the tourism 15
development agreement as required under subsection (2)(a)2. of 16
this section; 17
c. Failed to be open to the public at least one hundred (100) days 18
during the calendar year 2020 solely as a result of complying with 19
one (1) or more executive orders issued by the Governor under the 20
authority of KRS 39A.090 that prevented the tourism attraction 21
project from being open to the public for at least one hundred 22
(100) days during its normal operating season; and 23
d. Applied for a sales tax incentive related to the calendar year 2020 24
operating season and was denied the sales tax incentive solely on 25
the basis that the tourism attraction project was not open to the 26
public for at least one hundred (100) days in calendar year 2020. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 48 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
Section 13. KRS 148.855 is amended to read as follows: 1
(1) The cabinet shall promulgate administrative regulations in accordance with KRS 2
Chapter 13A to establish standards for the making of applications for incentives and 3
the recommendation of eligible companies and their tourism development projects 4
to the authority. 5
(2) The cabinet shall consult with the authority when establishing standards to ensure 6
that standards established pursuant to subsection (1) of this section and KRS 7
148.857(1) do not conflict. 8
(3) (a) The application for incentives shall be filed with the cabinet and shall include: 9
1. The name of the applicant; 10
2. Marketing plans for the tourism development project that target 11
individuals who are not residents of the Commonwealth; 12
3. A description and location of the tourism development project; 13
4. Capital and other anticipated expenditures for the tourism development 14
project that indicate that the total cost of the project shall exceed the 15
minimum required costs as provided in KRS 148.853, and the 16
anticipated sources of funding therefor; 17
5. The anticipated employment and wages to be paid at the tourism 18
development project; 19
6. Business plans which indicate the average number of days in a year in 20
which the tourism development project will be in operation and open to 21
the public; 22
7. The anticipated revenues and expenses generated by the tourism 23
development project; 24
8. If the tourism development project is an entertainment destination center 25
project, the application shall include the public infrastructure purpose; 26
and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 49 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
9. Any other information as required by the cabinet. 1
(b) Based upon a review of these materials, if the cabinet determines that the 2
eligible company and the proposed tourism development project appears to 3
meet the requirements established by KRS 148.853, and that the proposed 4
tourism development project may reasonably satisfy the criteria for final 5
approval in subsection (4) of this section, the secretary of the cabinet may 6
submit a written request to the authority for a preliminary approval of the 7
eligible company and the tourism development project. 8
(4) The authority may review the request submitted by the secretary, including all 9
relevant materials, and may, based upon that review, grant preliminary approval to 10
an eligible company. Upon a preliminary approval by the authority, the cabinet 11
shall engage the services of a competent consulting firm to analyze the data made 12
available by the eligible company and to collect and analyze additional information 13
necessary to determine that, in the independent judgment of the consultant, the 14
proposed tourism development project: 15
(a) Will attract, in all years following the third year of operation, at least twenty-16
five percent (25%) of its visitors from among persons who are not residents of 17
the Commonwealth, except for a theme restaurant destination attraction 18
project, which shall attract, in all years following the third year of operation, a 19
minimum of fifty percent (50%) of its visitors from among persons who are 20
not residents of the Commonwealth; 21
(b) Will have costs in excess of the minimum amount required by KRS 148.853; 22
(c) 1. Will have a net positive fiscal impact on the Commonwealth 23
considering, among other factors, the extent to which the proposed 24
tourism development project will compete directly with existing tourism 25
attractions or previously approved tourism development projects in the 26
Commonwealth and the amount by which increased tax revenues from 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 50 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
the tourism development project will exceed the incentives given to the 1
approved company at the maximum level of recovery of approved costs 2
as provided in KRS 148.853; or 3
2. If the independent consultant determines that the proposed tourism 4
development project cannot produce a net positive fiscal impact to the 5
Commonwealth at the maximum level of recovery of approved costs as 6
provided in KRS 148.853, the independent consultant shall determine 7
the level of recovery, if any, at which the proposed tourism development 8
project can meet those standards; 9
(d) Will produce sufficient revenues and public demand to be operating and open 10
to the public for a minimum of one hundred (100) days per year, except for a 11
theme restaurant destination attraction, which shall be operating and open to 12
the public for a minimum of three hundred (300) days per year; 13
(e) Will not adversely affect existing employment in the Commonwealth;[ and] 14
(f) Meets all other requirements of KRS 148.851 and 148.853; and 15
(g) For a lodging facility project defined in subsection (15)(b) of Section 11 of 16
this Act: 17
1. Will have an occupancy study conducted by an independent consultant 18
to determine the percentage of rooms occupied by other lodging 19
facilities: 20
a. With comparable accommodations as described in subsection 21
(15)(b)3. of Section 11 of this Act; and 22
b. Within a fifty (50) mile radius of the proposed lodging facility 23
project; 24
for the most recent calendar year for data collected; and 25
2. Will have a net positive impact statement that will exclude from 26
consideration any impact related to state-funded infrastructure that 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 51 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
was approved prior to the application of the eligible company. 1
(5) The independent consultant, in determining the amount of net positive fiscal impact 2
to the Commonwealth for a new proposed tourism development project that is an 3
expansion of an existing tourism development project shall not consider positive 4
fiscal impacts from the following sources: 5
(a) Increased operations at the previously approved tourism development project 6
that is being expanded by the proposed tourism development project; 7
(b) Increased operations at any other tourism development project approved for 8
incentives provided under KRS 148.853; or 9
(c) Increased operations at any project approved for tax increment financing that 10
includes state revenues approved pursuant to Subchapter 30 of KRS Chapter 11
154. 12
(6) (a) The independent consultant shall consult with the authority, the Office of the 13
State Budget Director and the Finance and Administration Cabinet in the 14
development of a report on the proposed tourism development project. 15
(b) The Office of the State Budget Director and the Finance and Administration 16
Cabinet shall agree as to the methodology to be used and assumptions to be 17
made by the independent consultant in preparing its report. 18
(c) On the basis of the independent consultant's report and prior to any final 19
approval of a project by the authority, the Office of the State Budget Director 20
and the Finance and Administration Cabinet shall certify to the authority 21
whether there is a projected net positive fiscal impact to the Commonwealth 22
and the expected amount of incremental state revenues from the tourism 23
development project. A final approval shall not be granted if it is determined 24
that there is no projected net positive fiscal impact to the Commonwealth. 25
(7) The eligible company shall pay for the cost of the consultant's report and shall 26
cooperate with the consultant and provide all of the data that the consultant deems 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 52 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
necessary to make its determination under subsection (4) of this section. 1
(8) In lieu of the independent consultant analysis required in subsection (4) of this 2
section, if the eligible company is exempt from income tax under Section 501(c)(3) 3
of the Internal Revenue Code and the estimated approved costs are less than ten 4
million dollars ($10,000,000), the cabinet shall have the option of performing an 5
interagency review to analyze the data made available by the eligible company and 6
to collect and analyze additional information necessary to determine that the 7
proposed tourism development project meets the requirements set forth in 8
subsection (4)(a) of this section. The cabinet shall comply with the same consulting 9
and reporting requirements as an independent consultant. 10
(9) After a review of relevant materials, the consultant's report, and completion of other 11
inquiries, the secretary shall, by written notification to the authority, provide a 12
recommendation to the authority regarding final approval of the tourism 13
development project. 14
Section 14. KRS 148.859 is amended to read as follows: 15
(1) The authority, upon adoption of its final approval, may enter into a tourism 16
development agreement with any approved company. The terms of the agreement 17
shall be negotiated between the authority and the approved company and shall 18
include but not be limited to: 19
(a) The amount of approved costs; 20
(b) That any increase in approved costs incurred by the approved company and 21
agreed to by the authority shall apply retroactively for purposes of calculating 22
the carry forward for unused incentives; 23
(c) A date certain by which the approved company shall have completed the 24
tourism development project; 25
(d) That the authority may grant an extension or change, which in no event shall 26
exceed three (3) years from the date of final approval, to the completion date 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 53 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
as specified in the agreement of an approved company; 1
(e) That within three (3) months of the completion date, the approved company 2
shall document the actual cost of the tourism development project through a 3
certification of the costs to be provided by an independent certified public 4
accountant acceptable to the authority; 5
(f) The term of the tourism development agreement and the maximum amount of 6
recovery; 7
(g) That within forty-five (45) days after the end of each fiscal year of the 8
approved company, during the term of the agreement, the approved company 9
shall supply the authority with reports and certifications as the authority may 10
request demonstrating to the satisfaction of the authority that the approved 11
company is in compliance with the provisions of KRS 139.536 and KRS 12
148.851 to 148.860; 13
(h) That the approved company shall notify the authority if any change in 14
ownership of the tourism attraction is contemplated. The authority shall 15
reserve the option to renegotiate the terms of the agreement or, if the change 16
in ownership is detrimental to the Commonwealth, the authority may 17
terminate the agreement; 18
(i) That the approved company shall not receive a sales tax incentive as 19
prescribed by KRS 139.536 with respect to any fiscal year if the requirements 20
of KRS 148.853(2) have not been met; 21
(j) That the authority may grant an extension of up to three (3) years to the 22
completion date in addition to the extension provided for in paragraph (d) of 23
this subsection, to an approved company that has completed at least fifty 24
percent (50%) of an entertainment destination center project; 25
(k) That in no event shall the completion date be more than six (6) years from the 26
date of final approval; and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 54 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(l) That the extension provided for in paragraph (j) of this subsection shall be 1
subject to the following conditions: 2
1. The approved company shall have spent or have contractually obligated 3
to spend an amount equal to or greater than the amount of approved 4
costs set forth in the initial agreement; 5
2. The term of the agreement shall not be extended, except as provided in 6
KRS 148.853(3)(b)7. and 8.[4.]; and 7
3. The scope of the entertainment destination center project, as set forth in 8
the initial agreement, shall not be altered to include new or additional 9
entertainment and leisure options. 10
(2) The agreement, including the incentives provided under KRS 148.853, shall not be 11
transferable or assignable by the approved company without the written consent of 12
the authority and a passage of a resolution approving the proposed assignee of the 13
incentives as an approved company. 14
Section 15. KRS 154.30-050 is amended to read as follows: 15
(1) The Signature Project Program is hereby established. The purpose of this program 16
is to encourage private investment in the development of major projects that will 17
have a significant impact on the Commonwealth of Kentucky and are judged to be 18
of such a magnitude that the effect upon the location of the[such] project warrants 19
extraordinary public support. 20
(2) (a) There shall be two (2) separate initiatives under this program. The first 21
initiative, the criteria and details of which are set forth in subsection (3)(a) of 22
this section[paragraph (a) of this subsection], shall apply to; 23
1. Qualifying projects that are not the subject of a contract under KRS 24
65.495 in effect on or before the March 23, 2007, but that have a project 25
grant agreement executed pursuant to KRS 154.30-070 prior to January 26
1, 2008; or 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 55 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
2. Revised projects if the original project was not the subject of a 1
contract under KRS 65.495 on or before March 23, 2007, and had a 2
project grant agreement executed pursuant to KRS 154.30-070 prior to 3
January 1, 2008, but the agreement was withdrawn voluntarily before 4
the project was completed. 5
(b) The second initiative, the criteria and details of which are set forth in 6
subsection (3)(b) of this section[paragraph (b) of this subsection], shall apply 7
to projects that meet the specified requirements on or after January 1, 2008. 8
(3) (a) [For projects that are not the subject of a contract under KRS 65.495 in effect 9
on or before March 23, 2007, but that have a project grant agreement executed 10
pursuant to the provisions of KRS 154.30-070 prior to January 1, 2008:] 11
1. The criteria for qualification shall be as follows: 12
a. The project shall represent new economic activity in the 13
Commonwealth; and 14
b. The project shall result in a minimum capital investment of two 15
hundred million dollars ($200,000,000). 16
2. The following provisions shall apply to projects that meet the criteria 17
established in subparagraph 1. of this paragraph: 18
a. KRS 65.7051 shall not apply to the establishment of a 19
development area; 20
b. The city or county in which the project is located shall adopt an 21
ordinance establishing the development area. The ordinance shall 22
be adopted in accordance with KRS 65.7053(1)(a), (b), (c), (d), 23
(e), (h), (i), (j), (k), (l), and (m); 24
c. KRS 65.7049, 65.7053(2) and (3), 65.7057, 65.7059, 65.7061, 25
65.7063, 65.7065, and 65.7067, relating to local development 26
areas, shall apply; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 56 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
d. An application for state participation shall have been submitted as 1
provided in KRS 154.30-030. The application shall include the 2
information required by KRS 154.30-030(2)(a) 1.a. and b.; 3
e. The report provided for in KRS 154.30-030(2)(a) 3.b. shall not be 4
required, and the certification required by KRS 154.30-030(6)(b) 5
shall not be required; 6
f. A project grant agreement shall be executed in accordance with 7
KRS 154.30-070; and 8
g. KRS 154.30-080 and 154.30-090 shall apply. 9
3. Projects that meet the criteria established in subparagraph 1. of this 10
paragraph shall be eligible for the following: 11
a. Up to one hundred percent (100%) of approved public 12
infrastructure costs, excluding any sales and use tax paid, may be 13
recovered; 14
b. Up to one hundred percent (100%) of the financing costs 15
associated with approved public infrastructure costs may be 16
recovered; 17
c. In a county containing a city of the first class, the local 18
participation agreement may provide for the release of up to eighty 19
percent (80%) of the increment from the tax levied under KRS 20
91A.390 derived by the governing body within the project 21
development area. The amount released shall not exceed a base 22
amount of four hundred thousand dollars ($400,000) in the first 23
year of the local participation agreement, which base amount shall 24
be increased in each subsequent year of the grant agreement by 25
four percent (4%); and 26
d. Up to one hundred percent (100%) of approved signature project 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 57 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
costs, excluding any sales and use taxes paid, subject to the 1
following: 2
i. The authority shall review proposed [ ]expenditures for [3
]inclusion in the tax incentive [ ]agreement. The 4
authority may approve the type [ ]of expenditures it 5
determines are [ ]necessary for completion of the private 6
development; and 7
ii. Approved signature project costs shall be detailed in the tax 8
incentive agreement. 9
(b) Beginning January 1, 2008: 10
1. A project shall meet all of the following criteria to be considered for 11
state participation under this program: 12
a. The project shall represent new economic activity in the 13
Commonwealth; 14
b. The project shall result in a minimum capital investment of two 15
hundred million dollars ($200,000,000); 16
c. The project shall result in a net positive economic impact to the 17
Commonwealth, taking into consideration any substantial adverse 18
impact on existing Commonwealth businesses. The net positive 19
impact shall be certified to the commission as required by KRS 20
154.30-030(6)(b); and 21
d. Not more than twenty percent (20%) of the capital investment or 22
twenty percent (20%) of the finished square footage shall be 23
devoted to the support or development of assets that will be 24
utilized for the retail sale of tangible personal property. 25
2. Projects that meet the criteria established by subparagraph 1. of this 26
paragraph shall comply with all relevant provisions of this subchapter. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 58 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
3. Projects that meet the criteria established by subparagraphs 1. and 2. of 1
this paragraph shall be eligible to recover: 2
a. Up to one hundred percent (100%) of approved public 3
infrastructure costs, excluding any sales and use taxes paid; 4
b. Up to one hundred percent (100%) of the financing costs 5
associated with approved public infrastructure costs; and 6
c. Up to one hundred percent (100%) of approved signature project 7
costs, excluding sales and use taxes paid subject to the following: 8
i. The authority shall review proposed expenditures for 9
inclusion in the tax incentive agreement. The authority may 10
approve the type of expenditures it determines are necessary 11
for completion of the private development; and 12
ii. Approved signature project costs shall be detailed in the tax 13
incentive agreement. 14
(4)[(3)] The authority shall review the application, the certification required by KRS 15
154.30-030, if applicable, and supporting information as provided in KRS 154.30-16
030. 17
(5)[(4)] The authority shall specifically identify the state taxes from which 18
incremental revenues will be pledged. The authority may pledge up to eighty 19
percent (80%) of the incremental revenues from the identified state tax revenues 20
from the footprint, provided that the maximum amount of incremental revenues that 21
may be pledged for a project during the term of the tax incentive agreement from all 22
approved state taxes shall not exceed one hundred percent (100%) of approved 23
public infrastructure costs, approved signature project costs, and financing costs. 24
(6)[(5)] As part of the approval process, the authority shall determine the following: 25
(a) The footprint of the project; 26
(b) The maximum amount of approved public infrastructure costs, approved 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 59 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
signature project costs, and financing costs; 1
(c) That the local revenues pledged to support the public infrastructure of the 2
project, and local revenues pledged to support the overall project are of a 3
sufficient amount to warrant participation of the Commonwealth in the 4
project; 5
(d) The termination date of the tax incentive agreement, not to exceed thirty (30) 6
years from the activation date; 7
(e) Any adjustments to be made to old revenues, in determining incremental 8
revenues during each year of the term of the project grant agreement; and 9
(f) Any approved signature project costs; 10
(7)[(6)] For the purpose of making the determination required by KRS 139.515(2), the 11
authority shall review the projected expenditures for tangible personal property 12
used in the construction of a signature project, as defined in KRS 139.515(1), and 13
shall establish an approximate percentage of the total anticipated expenditures that 14
are not included in the tax incentive agreement as approved public infrastructure 15
costs or approved signature project costs. This percentage shall be communicated 16
by the authority to the Department of Revenue, which shall use the information in 17
administering the sales tax refund permitted by KRS 139.515. 18
(8)[(7)] If state income taxes or local occupational license taxes are included for a 19
project that includes office space, the authority shall consider the impact of 20
pledging theses taxes on the ability to utilize other economic development projects 21
at a later date. 22
(9)[(8)] The pledge of state incremental tax revenues of the Commonwealth by the 23
authority shall be implemented through the execution of a tax incentive agreement 24
between the Commonwealth and the agency, city, or county in accordance with 25
KRS 154.30-070. 26
(10)[(9)] Notwithstanding the minimum capital investment of two hundred million 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 60 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
dollars ($200,000,000) required by subsection (3)[(2)](b)1.b. of this section, the 1
authority may, upon application of an agency that: 2
(a) Was approved to proceed with a project after January 1, 2008, but before 3
January 1, 2013, that, at the time of approval pledged to make the two 4
hundred million dollars ($200,000,000) investment requirement; and 5
(b) Had a consultant report prepared pursuant to KRS 154.30-030(6); 6
approve a reduction in the required minimum capital investment to an amount not 7
less than one hundred fifty million dollars ($150,000,000), subject to a 8
corresponding adjustment of the maximum incremental revenue available for 9
recovery as appropriate, based upon the recommendation of the consultant who 10
prepared the report pursuant to KRS 154.30-030(6). 11
(11) Notwithstanding any statute to the contrary, if a project had a project grant 12
agreement executed pursuant to KRS 154.30-070 prior to January 1, 2008, but 13
the agreement was withdrawn voluntarily before the project was completed, the 14
project may be revised and resubmitted under subsection (3)(a) of this section. 15
Section 16. KRS 91A.390 is amended to read as follows: 16
(1) (a) The commission shall annually submit to the local governing body or bodies 17
which established it a request for funds for the operation of the commission. 18
(b) The local governing body or bodies shall include the commission in the 19
annual budget and shall provide funds for the operation of the commission by 20
imposing a transient room tax on the rent for every occupancy of a suite, 21
room, rooms, cabins, lodgings, campsites, or other accommodations charged 22
by any hotel, motel, inn, tourist camp, tourist cabin, campgrounds, 23
recreational vehicle parks, or any other place in which accommodations are 24
regularly furnished to transients for consideration or by any person that 25
facilitates the rental of the accommodations by brokering, coordinating, or in 26
any other way arranging for the rental of the accommodations as follows: 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 61 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
1. For a local governing body or bodies, other than an urban-county 1
government, the tax rate shall not exceed three percent (3%); and 2
2. For an urban-county government, the tax rate shall not exceed four 3
percent (4%). 4
(c) In addition to the three percent (3%) levy authorized by paragraph (b)1. of this 5
subsection, the local governing body other than an urban-county government 6
may impose a special transient room tax not to exceed one percent (1%) for 7
the purposes of: 8
1. Meeting the operating expenses of a convention center; and 9
2. In the case of a consolidated local government, financing the renovation 10
or expansion of a convention center that is government-owned and 11
located in the central business district of the consolidated local 12
government, except that if a consolidated local government imposes the 13
special transient room tax authorized under this paragraph on or after 14
August 1, 2014, revenue derived from the levy shall not be used to meet 15
the operating expenses of a convention center until any debt issued for 16
financing the renovation or expansion of a government-owned 17
convention center located in the central business district of the 18
consolidated local government is retired. 19
(d) Transient room taxes shall not apply to rooms, lodgings, campsites, or 20
accommodations supplied for a continuous period of thirty (30) days or more 21
to a person. 22
(e) The local governing body or bodies that have established a commission by 23
joint or separate action shall enact an ordinance for the enforcement of the tax 24
measure enacted pursuant to this section and the collection of the proceeds of 25
this tax measure on a monthly basis. 26
(2) All moneys collected pursuant to this section and KRS 91A.400 shall be maintained 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 62 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
in an account separate and unique from all other funds and revenues collected, and 1
shall be considered tax revenue for the purposes of KRS 68.100 and KRS 92.330. 2
(3) A portion of the money collected from the imposition of this tax, as determined by 3
the tax levying body, upon the advice and consent of the tourist and convention 4
commission, may be used to finance the cost of acquisition, construction, operation, 5
and maintenance of facilities useful in the attraction and promotion of tourist and 6
convention business, including projects described in KRS 154.30-050(3)[(2)](a). 7
The balance of the money collected from the imposition of this tax shall be used for 8
the purposes set forth in KRS 91A.350. Proceeds of the tax shall not be used as a 9
subsidy in any form to any hotel, motel, inn, motor court, tourist camp, tourist 10
cabin, campgrounds, recreational vehicle parks, or any other person furnishing 11
accommodations, or restaurant, except as provided in KRS 154.30-12
050(3)[(2)](a)3.c. Money not expended by the commission during any fiscal year 13
shall be used to make up a part of the commission's budget for its next fiscal year. 14
(4) A county with a city of the first class may impose an additional tax, not to exceed 15
one and one-half percent (1.5%) of the rent. This additional tax, if approved by the 16
local governing body, shall be collected and administered in the same manner as the 17
tax authorized by subsection (1)(b) of this section and shall be used for the purpose 18
of funding additional promotion of tourist and convention business. 19
(5) An urban-county government may impose an additional tax, not to exceed one 20
percent (1%) of the rents included in this subsection. This additional tax shall be 21
collected and administered in the same manner as the tax authorized by subsection 22
(1)(b) of this section with the exception that this additional tax shall be used for the 23
purpose of funding the purchase of development rights program provided for under 24
KRS 67A.845. 25
(6) Local governing bodies which have formed multicounty tourist and convention 26
commissions as provided by KRS 91A.350(3) may impose an additional tax, not to 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 63 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
exceed one percent (1%) of the rents. This additional tax, if approved by each 1
governing body, shall be collected and administered in the same manner as the tax 2
authorized by subsection (1)(b) of this section, with the exception that this 3
additional tax shall be used for the purpose of funding regional efforts relating to 4
the promotion of tourist and convention business and convention centers. In no 5
event shall any revenues collected as provided for under KRS 91A.350(3) be 6
utilized for the construction, renovation, maintenance, or additions to any 7
convention center that is located outside the boundaries of the Commonwealth of 8
Kentucky. 9
(7) The commission, with the approval of the tax levying body, may borrow money to 10
pay its obligations that cannot be paid at maturity out of current revenue from the 11
transient room tax, but shall not borrow a sum greater than can be repaid out of the 12
revenue anticipated from the transient room tax during the year the money is 13
borrowed. The commission may pledge its securities for the repayment of any sum 14
borrowed. 15
(8) The fiscal court or legislative body of a consolidated local government or city 16
establishing a commission pursuant to KRS 91A.350(1) or (2) and, in its own name, 17
a commission established pursuant to of KRS 91A.350(1) is authorized and 18
empowered to issue revenue bonds pursuant to KRS Chapter 58 for public projects. 19
Bonds issued for the purposes of KRS 91A.345 to 91A.394, may be used to pay any 20
cost for the acquisition of real estate, the construction of buildings and 21
appurtenances, the preparation of plans and specifications, and legal and other 22
services incidental to the project or to the issuance of the bonds. The payment of the 23
bonds, with interest, may be secured by a pledge of and a first lien on all of the 24
receipts and revenue derived, or to be derived, from the rental or operation of the 25
property involved. Bond and interest obligations issued pursuant to this section 26
shall not constitute an indebtedness of the county, consolidated local government, 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 64 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
or city. All bonds sold under the authority of this section shall be subject to 1
competitive bidding as provided by law, and shall bear interest at a rate not to 2
exceed that established for bonds issued for public projects under KRS Chapter 58. 3
(9) A commission established pursuant to KRS 91A.350(3) is authorized and 4
empowered to issue revenue bonds in its own name, payable solely from its income 5
and revenue, pursuant to KRS Chapter 58 for revenue bonds for public projects. 6
Bonds issued for the purposes of KRS 91A.345 to 91A.394, may be used to pay any 7
cost for the acquisition of real estate, the construction of buildings and 8
appurtenances, the preparation of plans and specifications, and legal and other 9
services incidental to the project or to the issuance of the bonds. The payment of the 10
bonds, with interest, may be secured by a pledge of and a first lien on all of the 11
receipts and revenue derived, or to be derived, from the rental or operation of the 12
property involved. Bond and interest obligations issued pursuant to this section 13
shall not constitute an indebtedness of the county. All bonds sold pursuant to this 14
section shall be subject to competitive bidding as provided by law, and shall not 15
bear interest at rates exceeding those for bonds issued for public projects under 16
KRS Chapter 58. 17
Section 17. KRS 154.30-010 is amended to read as follows: 18
As used in this subchapter: 19
(1) "Activation date" means: 20
(a) For all projects except those described in paragraph (b) of this subsection, the 21
date established any time within a two (2) year period after the 22
commencement date. The Commonwealth may extend the two (2) year period 23
to no more than four (4) years upon written application by the agency 24
requesting the extension; and 25
(b) For signature projects approved under KRS 154.30-050(3)[(2)](a), the date 26
established any time within a ten (10) year period after the commencement 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 65 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
date. 1
For all projects established after July 14, 2018, the activation date is the date on 2
which the time period for the pledge of incremental revenues shall commence. To 3
implement the activation date, the minimum capital investment must be met and the 4
agency that is a party to the tax incentive agreement shall notify the office; 5
(2) "Agency" means: 6
(a) An urban renewal and community development agency established under 7
KRS Chapter 99; 8
(b) A development authority established under KRS Chapter 99; 9
(c) A nonprofit corporation; 10
(d) A housing authority established under KRS Chapter 80; 11
(e) An air board established under KRS 183.132 to 183.160; 12
(f) A local industrial development authority established under KRS 154.50-301 13
to 154.50-346; 14
(g) A riverport authority established under KRS 65.510 to 65.650; or 15
(h) A designated department, division, or office of a city or county; 16
(3) (a) "Approved public infrastructure costs" means costs associated with the 17
acquisition, installation, construction, or reconstruction of public works, 18
public improvements, and public buildings, including planning and design 19
costs associated with the development of the[such] public amenities. 20
(b) "Approved public infrastructure costs" includes but is not limited to costs 21
incurred for the following: 22
1.[(a)] Land preparation, including demolition and clearance work; 23
2.[(b)] Buildings; 24
3.[(c)] Sewers and storm drainage; 25
4.[(d)] Curbs, sidewalks, promenades, and pedways; 26
5.[(e)] Roads; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 66 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
6.[(f)] Street lighting; 1
7.[(g)] The provision of utilities; 2
8.[(h)] Environmental remediation; 3
9.[(i)] Floodwalls and floodgates; 4
10.[(j)] Public spaces or parks; 5
11.[(k)] Parking; 6
12.[(l)] Easements and rights-of-way; 7
13.[(m)] Transportation facilities; 8
14.[(n)] Public landings; 9
15.[(o)] Amenities, including[such as] fountains, benches, and sculptures; 10
and 11
16.[(p)] Riverbank modifications and improvements; 12
(4) "Approved signature project costs" means: 13
(a) The acquisition of land for portions of the project that are for infrastructure; 14
and 15
(b) Costs associated with the acquisition, installation, development, construction, 16
improvement, or reconstruction of infrastructure, including planning and 17
design costs associated with the development of infrastructure, including but 18
not limited to parking structures, including portions of parking structures that 19
serve as platforms to support development above; 20
that have been determined by the commission to represent a unique challenge in the 21
financing of a project such that the project could not be developed without 22
incentives intended by this chapter to foster economic development; 23
(5) "Authority" means the Kentucky Economic Development Finance Authority 24
established by KRS 154.20-010; 25
(6) "Capital investment" means: 26
(a) Obligations incurred for labor and to contractors, subcontractors, builders, and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 67 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
materialmen in connection with the acquisition, construction, installation, 1
equipping, and rehabilitation of a project; 2
(b) The cost of acquiring land or rights in land within the development area on the 3
footprint of the project, and any cost incident thereto, including recording 4
fees; 5
(c) The cost of contract bonds and of insurance of all kinds that may be required 6
or necessary during the course of acquisition, construction, installation, 7
equipping, and rehabilitation of a project which is not paid by the contractor 8
or contractors or otherwise provided; 9
(d) All costs of architectural and engineering services, including test borings, 10
surveys, estimates, plans, specifications, preliminary investigations, 11
supervision of construction, and the performance of all the duties required by 12
or consequent upon the acquisition, construction, installation, equipping, and 13
rehabilitation of a project; 14
(e) All costs that are required to be paid under the terms of any contract for the 15
acquisition, construction, installation, equipping, and rehabilitation of a 16
project; and 17
(f) All other costs of a nature comparable to those described in this subsection 18
that occur after preliminary approval; 19
(7) "City" means any city, consolidated local government, or urban-county 20
government; 21
(8) "Commencement date" means the final approval date or the date on which a tax 22
incentive agreement is executed; 23
(9) "Commonwealth" means the Commonwealth of Kentucky; 24
(10) "County" means any county, consolidated local government, charter county, unified 25
local government, or urban-county government; 26
(11) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 68 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
consumers, all items, base year computed for 1982 to 1984 equals one hundred 1
(100), published by the United States Department of Labor, Bureau of Labor 2
Statistics; 3
(12) "Department" means the Department of Revenue; 4
(13) "Development area" means an area established under KRS 65.7049, 65.7051, and 5
65.7053; 6
(14) "Economic development projects" means projects which are approved for tax 7
credits under Subchapter 20, 22, 23, 24, 25, 26, 27, 28, 34, or 48 of KRS Chapter 8
154; 9
(15) "Financing costs" means principal, interest, costs of issuance, debt service reserve 10
requirements, underwriting discount, costs of credit enhancement or liquidity 11
instruments, and other costs directly related to the issuance of bonds or debt for 12
approved public infrastructure costs or approved signature project costs for projects 13
approved pursuant to KRS 154.30-050; 14
(16) "Footprint" means the actual perimeter of a discrete, identified project within a 15
development area. The footprint shall not include any portion of a development area 16
outside the area for which actual capital investments are made and must be 17
contiguous; 18
(17) "Governing body" means the body possessing legislative authority in a city or 19
county; 20
(18) "Increment bonds" means bonds and notes issued for the purpose of paying the 21
costs of one (1) or more projects; 22
(19) "Incremental revenues" means: 23
(a) The amount of revenues received by a taxing district, as determined by 24
subtracting old revenues from new revenues in a calendar year with respect to 25
a development area, or a project within a development area; or 26
(b) The amount of revenues received by the Commonwealth as determined by 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 69 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
subtracting old revenues from new revenues in a calendar year with respect to 1
the footprint; 2
(20) "Local participation agreement" means the agreement entered into under KRS 3
65.7063; 4
(21) "Local tax revenues" has the same meaning as in KRS 65.7045; 5
(22) "Modified new revenues for income tax" means the amount of individual income 6
tax included in state tax revenues that is: 7
(a) The result of multiplying the portion of state tax revenues from individual 8
income taxes by the modifier; 9
(b) Used for calculating state tax revenues in calendar years 2023 to 2026; and 10
(c) For projects approved prior to January 1, 2023; 11
(23) "Modifier" means the result of dividing the individual income tax rate of five 12
percent (5%), in effect as of December 31, 2022, by the individual income tax rate 13
under KRS 141.020 for the calendar year in which the new revenues for income tax 14
are being computed; 15
(24) "New revenues" means: 16
(a) The amount of local tax revenues received by a taxing district with respect to 17
a development area in any calendar year beginning with the year in which the 18
activation date occurred; and 19
(b) The amount of state tax revenues received by the Commonwealth with respect 20
to the footprint in any calendar year beginning with the year in which the 21
activation date occurred. 22
For projects approved prior to January 1, 2023, any state tax revenues received by 23
the Commonwealth from individual income tax shall be computed using modified 24
new revenues for income tax; 25
(25) "Old revenues" means: 26
(a) The amount of local tax revenues received by a taxing district with respect to 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 70 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
a development area as of December 31 of the year of preliminary approval; or 1
(b) 1. The amount of state tax revenues received by the Commonwealth within 2
the footprint as of December 31 of the year of preliminary approval. If 3
the authority determines that the amount of state tax revenues received 4
as of December 31 of the last calendar year prior to the commencement 5
of preliminary approval does not represent a true and accurate depiction 6
of revenues, the authority may consider revenues for a period of no 7
longer than three (3) calendar years prior to the year of preliminary 8
approval, so as to determine a fair representation of state tax revenues. 9
The amount determined by the authority shall be specified in the tax 10
incentive agreement. If state tax revenues were derived from the 11
footprint prior to the year of preliminary approval, old revenues shall 12
increase each calendar year by: 13
a. The percentage increase, if any, of the CPI or a comparable index; 14
or 15
b. An alternative percentage increase that is determined to be 16
appropriate by the authority. 17
The method for increasing old revenues shall be set forth in the tax 18
incentive agreement; 19
2. If state revenues were derived from the footprint prior to the year of 20
preliminary approval, the calculation of incremental revenues shall be 21
based on the value of old revenues as increased using the method 22
prescribed in subparagraph 1. of this paragraph to reflect the same 23
calendar year as is used in the determination of new revenues; 24
(26) "Outstanding" means increment bonds that have been issued, delivered, and paid 25
for by the purchaser, except any of the following: 26
(a) Increment bonds canceled upon surrender, exchange, or transfer, or upon 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 71 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
payment or redemption; 1
(b) Increment bonds in replacement of which or in exchange for which other 2
increment bonds have been issued; or 3
(c) Increment bonds for the payment, redemption, or purchase for cancellation 4
prior to maturity, of which sufficient moneys or investments, in accordance 5
with the ordinance or other proceedings or any applicable law, by mandatory 6
sinking fund redemption requirements, or otherwise, have been deposited, and 7
credited in a sinking fund or with a trustee or paying or escrow agent, whether 8
at or prior to their maturity or redemption, and, in the case of increment bonds 9
to be redeemed prior to their stated maturity, notice of redemption has been 10
given or satisfactory arrangements have been made for giving notice of that 11
redemption, or waiver of that notice by or on behalf of the affected bond 12
holders has been filed with the issuer or its agent; 13
(27) "Preliminary approval" means the action taken by the authority preliminarily 14
approving an eligible project for incentives under this subchapter; 15
(28) "Project" means any property, asset, or improvement located in a development area 16
and certified by the governing body as: 17
(a) Being for a public purpose; and 18
(b) Being for the development of facilities for residential, commercial, industrial, 19
public, recreational, or other uses, or for open space, including the 20
development, rehabilitation, renovation, installation, improvement, 21
enlargement, or extension of real estate and buildings; and 22
(c) Contributing to economic development or tourism; and 23
(d) Meeting the additional requirements established by KRS 154.30-040, 154.30-24
050, or 154.30-060; 25
(29) "Signature project" means a project approved under KRS 154.30-050; 26
(30) "State real property ad valorem tax" means real property ad valorem taxes levied 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 72 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
under KRS 132.020(1)(a); 1
(31) "State tax revenues" means revenues received by the Commonwealth from one (1) 2
or more of the following sources: 3
(a) State real property ad valorem taxes; 4
(b) Individual income taxes levied under KRS 141.020, other than individual 5
income taxes that have already been pledged to support an economic 6
development project within the development area; 7
(c) Corporation income taxes levied under KRS 141.040, other than corporation 8
income taxes that have already been pledged to support an economic 9
development project within the development area; 10
(d) Limited liability entity taxes levied under KRS 141.0401, other than limited 11
liability entity taxes that have already been pledged to support an economic 12
development project within the development area; and 13
(e) Sales taxes levied under KRS 139.200, excluding sales taxes already pledged 14
for: 15
1. Approved tourism attraction projects, as defined in KRS 148.851, within 16
the development area; and 17
2. Projects which are approved for sales tax refunds under Subchapter 20 18
of KRS Chapter 154 within the development area; 19
(32) "Tax incentive agreement" means an agreement entered into in accordance with 20
KRS 154.30-070; and 21
(33) "Termination date" means: 22
(a) For a tax incentive agreement satisfying the requirements of KRS 154.30-040 23
or 154.30-060, a date established by the tax incentive agreement that is no 24
more than twenty (20) years from the activation date. However, the 25
termination date for a tax incentive agreement shall in no event be more than 26
forty (40) years from the establishment date of the development area to which 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 73 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
the tax incentive agreement relates; and 1
(b) For a project grant agreement satisfying the requirements of KRS 154.30-050, 2
a date established by the tax incentive agreement that is no more than thirty 3
(30) years from the activation date. However, the termination date for a tax 4
incentive agreement shall in no event be more than forty (40) years from the 5
establishment date of the development area to which the tax incentive 6
agreement relates. 7
Section 18. KRS 154.30-030 is amended to read as follows: 8
(1) The Commonwealth shall offer three (3) tax increment financing participation 9
programs. The first program, the criteria and details of which are set forth in KRS 10
154.30-040, relates to a pledge of state real property ad valorem taxes only. The 11
second program, the criteria and details of which are set forth in KRS 154.30-050, 12
is the Signature Projects Program. The third program, the criteria and details of 13
which are set forth in KRS 154.30-060, relates to the pledge of state tax revenues to 14
support mixed-use development in blighted urban areas. 15
(2) (a) A city or county that has established a development area pursuant to KRS 16
65.7049, 65.7051, and 65.7053, or an agency designated as the entity 17
managing a development area established pursuant to KRS 65.7049, 65.7051, 18
and 65.7053, may submit an application to the authority requesting that the 19
Commonwealth participate in a project. 20
1. The application shall identify the specific program under which state 21
participation is being requested and shall include the following 22
attachments, in addition to any requirements developed by the authority 23
pursuant to paragraph (b) of this subsection: 24
a. A copy of the ordinance adopted by the city or county establishing 25
the development area; 26
b. A copy of the local participation agreement; and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 74 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
c. Data and information supporting the determinations and findings 1
required by KRS 65.7049. 2
2. The staff of the authority shall review the application to determine if the 3
applicant has met all of the statutory and regulatory requirements 4
established by this subchapter and shall notify the applicant in writing of 5
its determination. This review shall be preliminary in nature and shall 6
not constitute approval of the request. All applications for participation 7
by the Commonwealth shall be reviewed by the authority for approval. 8
3. a. Applications meeting all statutory and regulatory requirements 9
requesting participation by the Commonwealth pursuant to KRS 10
154.30-040, along with any supporting materials, shall be referred 11
by the staff of the authority to the authority for consideration. 12
b. i. Applicants meeting all statutory and regulatory requirements 13
requesting participation by the Commonwealth pursuant to 14
KRS 154.30-050(3)[(2)](b) or 154.30-060 shall be required 15
to submit a report prepared by an independent consultant or 16
financial adviser as described in subsection (6) of this section 17
for the application to be complete. The staff of the authority 18
shall notify the[such] applicants of the report requirements 19
and shall provide information regarding the contents and 20
requirements for the report at the same time it notifies the 21
applicant of the results of its preliminary review. 22
ii. Upon receipt and review of the report, the staff of the 23
authority shall refer the application and supporting 24
information to the authority for consideration. 25
(b) Additional standards and requirements for the application process shall be 26
established by the authority through the promulgation of administrative 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 75 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
regulations in accordance with KRS Chapter 13A. 1
(3) (a) The authority may request any materials and make any inquiries concerning 2
an application that the authority deems necessary. 3
(b) The authority shall, through the promulgation of administrative regulations in 4
accordance with KRS Chapter 13A, establish commercially reasonable 5
limitations on the financing costs that may be recovered under the provisions 6
of KRS 154.30-050. 7
(4) Upon review of an application and other information available, the authority may 8
pledge all or a portion of the state real property ad valorem tax incremental revenue 9
of the Commonwealth or state tax revenues attributable to the footprint of the 10
project, as limited by KRS 154.30-040, 154.30-050, or 154.30-060, whichever is 11
applicable. 12
(a) If incremental revenues are pledged from less than one hundred percent 13
(100%) of the footprint of the project, a description of the included portion of 14
the development area shall be provided. 15
(b) State tax revenues from the development area that have not been pledged to 16
projects within the development area may be used to support other economic 17
development projects or tourism projects approved under KRS 139.536 and 18
148.851 to 148.860, provided that state tax revenues shall not be pledged 19
more than once during the existence of the development area. Thus, state tax 20
revenues pledged to support increment bonds issued for the development area, 21
or a project in the development area shall not be pledged to support any other 22
development area, project, program, development, or undertaking during the 23
life of the development area. If less than one hundred percent (100%) of 24
incremental revenues are pledged pursuant to the provisions of this 25
subchapter, the remaining incremental revenues shall not be used to support 26
other economic development projects or tourism projects approved under 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 76 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
KRS 139.536 and 148.851 to 148.860. 1
(5) The pledge of incremental state real property ad valorem tax revenues or state tax 2
revenues of the Commonwealth by the authority shall be implemented through the 3
execution of a tax incentive agreement between the Commonwealth and the agency, 4
city, or county, as the case may be, in accordance with KRS 154.30-070. 5
(6) (a) The authority shall engage the services of a qualified independent outside 6
consultant or financial adviser to analyze the data related to the project and 7
the development area and prepare the report required by subsection (2) of this 8
section. The report shall include the following: 9
1. The estimated approved public infrastructure costs for the project and, if 10
relevant, approved signature project costs, financing costs, and costs 11
associated with land preparation, demolition, and clearance; 12
2. The feasibility of the project, taking into account the scope and location 13
of the project; 14
3. The estimated amount of local tax revenues and state tax revenues, as 15
applicable, that would be generated by the project over the period, 16
which may be up to twenty (20) years or thirty (30) years, as applicable, 17
from the activation date; 18
4. The estimated amount of local tax revenues and state tax revenues, as 19
applicable, that would be displaced within the Commonwealth, for the 20
purpose of quantifying economic activity which is being shifted over the 21
same period as that set forth in subparagraph 3. of this paragraph. The 22
projections for displaced activity shall include economic activity that is 23
lost to the Commonwealth as a result of the project, as well as economic 24
activity that is diverted to the project that formerly took place at existing 25
establishments within the Commonwealth prior to the commencement 26
date of the project; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 77 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
5. The estimated amount of local and state old revenues that would have 1
been generated in the footprint of the project in the absence of the 2
project, computed over the same time period as set forth in subparagraph 3
3. of this paragraph; 4
6. In the process of estimating the revenues and impacts prescribed in 5
subparagraphs 3. and 4. of this paragraph, the independent outside 6
consultant shall not consider any of the following: 7
a. Revenues or economic impacts associated with any projects within 8
the development area where the new project will be located; and 9
b. Revenues or economic impacts associated with economic 10
development projects and approved Kentucky Tourism 11
Development Act projects under KRS Chapter 148; 12
7. The relationship of the estimated incremental revenues to the financing 13
needs, including any increment bonds, of the project; 14
8. When estimating the fiscal impact of the project, the consultant shall 15
evaluate the amount of revenue estimated in subparagraph 3. of this 16
paragraph and shall deduct the amounts estimated in subparagraphs 4. 17
and 5. of this paragraph. The resulting difference shall be compared to 18
the estimated incremental revenues to determine the presence or absence 19
of a positive fiscal impact; and 20
9. A determination that the project will not occur if not for the designation 21
of the development area, the granting of incremental revenues by the 22
taxing district or districts, other than the Commonwealth, and the 23
granting of the state tax incremental revenues. 24
(b) 1. The independent consultant or financial advisor shall consult with the 25
Office of State Budget Director, and the Finance and Administration 26
Cabinet in the development of the report. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 78 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
2. The Office of State Budget Director and the staff of the authority, in 1
collaboration with the independent consultant or financial advisor, shall 2
agree on a methodology to be used and assumptions to be made by the 3
independent consultant or financial consultant in preparing its report. 4
3. On the basis of the independent consultant's report and the other 5
materials provided, prior to any approval of a project by the authority, 6
the Office of State Budget Director and the Finance and Administration 7
Cabinet shall certify to the authority whether there is a projected net 8
positive economic impact to the Commonwealth and the expected 9
amount of state tax incremental revenues from the project. 10
4. The city, county, or agency making the application shall pay all costs 11
associated with the independent consultant's or financial advisor's report. 12
Section 19. KRS 241.010 is amended to read as follows: 13
As used in KRS Chapters 241 to 244, unless the context requires otherwise: 14
(1) "Alcohol" means ethyl alcohol, hydrated oxide of ethyl or spirit of wine, from 15
whatever source or by whatever process it is produced; 16
(2) "Alcoholic beverage" means every liquid, solid, powder, or crystal, whether 17
patented or not, containing alcohol in an amount in excess of more than one percent 18
(1%) of alcohol by volume, which is fit for beverage purposes. It includes every 19
spurious or imitation liquor sold as, or under any name commonly used for, 20
alcoholic beverages, whether containing any alcohol or not. It does not include the 21
following products: 22
(a) Medicinal preparations manufactured in accordance with formulas prescribed 23
by the United States Pharmacopoeia, National Formulary, or the American 24
Institute of Homeopathy; 25
(b) Patented, patent, and proprietary medicines; 26
(c) Toilet, medicinal, and antiseptic preparations and solutions; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 79 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(d) Flavoring extracts and syrups; 1
(e) Denatured alcohol or denatured rum; 2
(f) Vinegar and preserved sweet cider; 3
(g) Wine for sacramental purposes; and 4
(h) Alcohol unfit for beverage purposes that is to be sold for legitimate external 5
use; 6
(3) (a) "Alcohol vaporizing device" or "AWOL device" means any device, machine, 7
or process that mixes liquor, spirits, or any other alcohol product with pure 8
oxygen or by any other means produces a vaporized alcoholic product used 9
for human consumption; 10
(b) "Alcohol vaporizing device" or "AWOL device" does not include an inhaler, 11
nebulizer, atomizer, or other device that is designed and intended by the 12
manufacturer to dispense a prescribed or over-the-counter medication or a 13
device installed and used by a licensee under this chapter to demonstrate the 14
aroma of an alcoholic beverage; 15
(4) "Automobile race track" means a facility primarily used for vehicle racing that has a 16
seating capacity of at least thirty thousand (30,000) people; 17
(5) "Barrel-aged and batched cocktail" means an alcoholic beverage that is: 18
(a) Composed of: 19
1. Distilled spirits that have been dispensed from their original sealed 20
container; and 21
2. Other ingredients or alcoholic beverages; 22
(b) Placed into a barrel or container on the premises of a retail licensee; and 23
(c) Dispensed from the barrel or container as a retail sale by the drink; 24
(6) "Bed and breakfast" means a one (1) family dwelling unit that: 25
(a) Has guest rooms or suites used, rented, or hired out for occupancy or that are 26
occupied for sleeping purposes by persons not members of the single-family 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 80 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
unit; 1
(b) Holds a permit under KRS Chapter 219; and 2
(c) Has an innkeeper who resides on the premises or property adjacent to the 3
premises during periods of occupancy; 4
(7) "Board" means the State Alcoholic Beverage Control Board created by KRS 5
241.030; 6
(8) "Bottle" means any container which is used for holding alcoholic beverages for the 7
use and sale of alcoholic beverages at retail; 8
(9) "Brewer" means any person who manufactures malt beverages or owns, occupies, 9
carries on, works, or conducts any brewery, either alone or through an agent; 10
(10) "Brewery" means any place or premises where malt beverages are manufactured for 11
sale, and includes all offices, granaries, mash rooms, cooling rooms, vaults, yards, 12
and storerooms connected with the premises; or where any part of the process of the 13
manufacture of malt beverages is carried on; or where any apparatus connected with 14
manufacture is kept or used; or where any of the products of brewing or 15
fermentation are stored or kept; 16
(11) "Building containing licensed premises" means the licensed premises themselves 17
and includes the land, tract of land, or parking lot in which the premises are 18
contained, and any part of any building connected by direct access or by an 19
entrance which is under the ownership or control of the licensee by lease holdings 20
or ownership; 21
(12) "Cannabinoid" means a compound found in the hemp plant Cannabis sativa L. 22
from a United States Department of Agriculture sanctioned domestic hemp 23
production program and does not include cannabinoids derived from any other 24
substance; 25
(13) "Cannabis-infused beverage": 26
(a) Means a properly permitted adult-use cannabinoid liquid product intended 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 81 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
for human consumption that has intoxicating properties that change the 1
function of the nervous system and results in alterations of perception, 2
cognition, or behavior and shall not contain more than five (5) milligrams 3
of intoxicating adult-use cannabinoids per twelve (12) ounce serving; and 4
(b) Shall not include: 5
1. Medicinal cannabis regulated under KRS Chapter 218B; 6
2. Any type of hemp tincture; and 7
3. Any product containing solely nonintoxicating cannabinoids; 8
(14)[(12)] "Caterer" means a person operating a food service business that prepares food 9
in a licensed and inspected commissary, transports the food and alcoholic beverages 10
to the caterer's designated and inspected banquet hall or to an agreed location, and 11
serves the food and alcoholic beverages pursuant to an agreement with another 12
person; 13
(15)[(13)] "Charitable organization" means a nonprofit entity recognized as exempt from 14
federal taxation under section 501(c) of the Internal Revenue Code (26 U.S.C. sec. 15
501(c)) or any organization having been established and continuously operating 16
within the Commonwealth of Kentucky for charitable purposes for three (3) years 17
and which expends at least sixty percent (60%) of its gross revenue exclusively for 18
religious, educational, literary, civic, fraternal, or patriotic purposes; 19
(16)[(14)] "Cider" means any fermented fruit-based beverage containing seven percent 20
(7%) or more alcohol by volume and includes hard cider and perry cider; 21
(17)[(15)] "City administrator" means city alcoholic beverage control administrator; 22
(18)[(16)] "Commercial airport" means an airport through which more than five hundred 23
thousand (500,000) passengers arrive or depart annually; 24
(19)[(17)] (a) "Commercial quadricycle" means a vehicle equipped with a minimum 25
of ten (10) pairs of fully operative pedals for propulsion by means of human 26
muscular power and which: 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 82 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
1. Has four (4) wheels; 1
2. Is operated in a manner similar to that of a bicycle; 2
3. Is equipped with a minimum of thirteen (13) seats for passengers; 3
4. Has a unibody design; 4
5. Is equipped with a minimum of four (4) hydraulically operated brakes; 5
6. Is used for commercial tour purposes; 6
7. Is operated by the vehicle owner or an employee of the owner; and 7
8. Has an electrical assist system that shall only be used when traveling to 8
or from its storage location while not carrying passengers. 9
(b) A "commercial quadricycle" is not a motor vehicle as defined in KRS 186.010 10
or 189.010; 11
(20)[(18)] "Commissioner" means the commissioner of the Department of Alcoholic 12
Beverage Control; 13
(21)[(19)] "Consumer" means a person, persons, or business organization who purchases 14
alcoholic beverages and who: 15
(a) Does not hold a license or permit issued by the department; 16
(b) Purchases the alcoholic beverages for personal consumption only and not for 17
resale; 18
(c) Is of lawful drinking age; and 19
(d) Receives the alcoholic beverages in territory where the alcoholic beverages 20
may be lawfully sold or received; 21
(22)[(20)] "Convention center" means any facility which, in its usual and customary 22
business, provides seating for a minimum of one thousand (1,000) people and offers 23
convention facilities and related services for seminars, training and educational 24
purposes, trade association meetings, conventions, or civic and community events 25
or for plays, theatrical productions, or cultural exhibitions; 26
(23)[(21)] "Convicted" and "conviction" means a finding of guilt resulting from a plea of 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 83 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
guilty, the decision of a court, or the finding of a jury, irrespective of a 1
pronouncement of judgment or the suspension of the judgment; 2
(24)[(22)] "County administrator" means county alcoholic beverage control 3
administrator; 4
(25)[(23)] "Department" means the Department of Alcoholic Beverage Control; 5
(26)[(24)] "Dining car" means a railroad passenger car that serves meals to consumers 6
on any railroad or Pullman car company; 7
(27)[(25)] "Discount in the usual course of business" means price reductions, rebates, 8
refunds, and discounts given by wholesalers to distilled spirits and wine retailers 9
pursuant to an agreement made at the time of the sale of the merchandise involved 10
and are considered a part of the sales transaction, constituting reductions in price 11
pursuant to the terms of the sale, irrespective of whether the quantity discount was: 12
(a) Prorated and allowed on each delivery; 13
(b) Given in a lump sum after the entire quantity of merchandise purchased had 14
been delivered; or 15
(c) Based on dollar volume or on the quantity of merchandise purchased; 16
(28)[(26)] "Distilled spirits" or "spirits" means any product capable of being consumed 17
by a human being which contains alcohol obtained by distilling, mixed with water 18
or other substances in solution, except wine, hard cider, and malt beverages; 19
(29)[(27)] "Distiller" means any person who is engaged in the business of manufacturing 20
distilled spirits at any distillery in the state and is registered in the Office of the 21
Collector of Internal Revenue for the United States at Louisville, Kentucky; 22
(30)[(28)] "Distillery" means any place or premises where distilled spirits are 23
manufactured for sale, and which are registered in the office of any collector of 24
internal revenue for the United States. It includes any United States government 25
bonded warehouse; 26
(31)[(29)] "Distributor" means any person who distributes malt beverages for the 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 84 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
purpose of being sold at retail; 1
(32)[(30)] "Dry" means a territory in which a majority of the electorate voted to prohibit 2
all forms of retail alcoholic beverage[alcohol] sales through a local option election 3
held under KRS Chapter 242; 4
(33)[(31)] "Election" means: 5
(a) An election held for the purpose of taking the sense of the people as to the 6
application or discontinuance of alcoholic beverage sales under KRS Chapter 7
242; or 8
(b) Any other election not pertaining to alcoholic beverages[alcohol]; 9
(34)[(32)] "Horse racetrack" means a facility licensed to conduct a horse race meeting 10
under KRS Chapter 230; 11
(35)[(33)] "Hotel" means a hotel, motel, or inn for accommodation of the traveling 12
public, designed primarily to serve transient patrons; 13
(36)[(34)] "Investigator" means any employee or agent of the department who is 14
regularly employed and whose primary function is to travel from place to place for 15
the purpose of visiting licensees, and any employee or agent of the department who 16
is assigned, temporarily or permanently, by the commissioner to duty outside the 17
main office of the department at Frankfort, in connection with the administration of 18
alcoholic beverage statutes; 19
(37)[(35)] "License" means any license issued pursuant to KRS Chapters 241 to 244; 20
(38)[(36)] "Licensee" means any person to whom a license has been issued, pursuant to 21
KRS Chapters 241 to 244; 22
(39)[(37)] "Limited restaurant" means: 23
(a) A facility where the usual and customary business is the preparation and 24
serving of meals to consumers, which has a bona fide kitchen facility, which 25
receives at least seventy percent (70%) of its food and alcoholic beverage 26
receipts from the sale of food, which maintains a minimum seating capacity of 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 85 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
fifty (50) persons for dining, which has no open bar, which requires that 1
alcoholic beverages be sold in conjunction with the sale of a meal, and which 2
is located in a wet or moist territory under KRS 242.1244; or 3
(b) A facility where the usual and customary business is the preparation and 4
serving of meals to consumers, which has a bona fide kitchen facility, which 5
receives at least seventy percent (70%) of its food and alcoholic beverage 6
receipts from the sale of food, which maintains a minimum seating capacity of 7
one hundred (100) persons of dining, and which is located in a wet or moist 8
territory under KRS 242.1244; 9
(40)[(38)] "Local administrator" means a city alcoholic beverage control administrator, 10
county alcoholic beverage control administrator, or urban-county alcoholic 11
beverage control administrator; 12
(41)[(39)] "Malt beverage" means any fermented undistilled alcoholic beverage of any 13
name or description, manufactured from malt wholly or in part, or from any 14
substitute for malt, and includes weak cider; 15
(42)[(40)] "Manufacture" means distill, rectify, brew, bottle, and operate a winery; 16
(43)[(41)] "Manufacturer" means a winery, distiller, rectifier, or brewer, and any other 17
person engaged in the production or bottling of alcoholic beverages; 18
(44)[(42)] "Marina" means a dock or basin providing moorings for boats and offering 19
supply, repair, or other services for remuneration; 20
(45)[(43)] "Minor" means any person who is not twenty-one (21) years of age or older; 21
(46)[(44)] "Moist" means a territory in which a majority of the electorate voted to permit 22
limited alcoholic beverage[alcohol] sales by any one (1) or a combination of 23
special limited local option elections authorized by KRS Chapter 242; 24
(47)[(45)] "Population" means the population figures established by the federal 25
decennial census for a census year or the current yearly population estimates 26
prepared by the Kentucky State Data Center, Urban Studies Center of the 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 86 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
University of Louisville, Louisville, Kentucky, for all other years; 1
(48)[(46)] "Premises" means the land and building in and upon which any business 2
regulated by alcoholic beverage statutes is operated or carried on. "Premises" shall 3
not include as a single unit two (2) or more separate businesses of one (1) owner on 4
the same lot or tract of land, in the same or in different buildings if physical and 5
permanent separation of the premises is maintained, excluding employee access by 6
keyed entry and emergency exits equipped with crash bars, and each has a separate 7
public entrance accessible directly from the sidewalk or parking lot. Any licensee 8
holding an alcoholic beverage license on July 15, 1998, shall not, by reason of this 9
subsection, be ineligible to continue to hold his or her license or obtain a renewal, 10
of the license; 11
(49)[(47)] "Primary source of supply" or "supplier" means the distiller, winery, brewer, 12
producer, owner of the commodity at the time it becomes a marketable product, 13
bottler, or authorized agent of the brand owner. In the case of imported products, 14
the primary source of supply means either the foreign producer, owner, bottler, or 15
agent of the prime importer from, or the exclusive agent in, the United States of the 16
foreign distiller, producer, bottler, or owner; 17
(50)[(48)] "Private club" means a nonprofit social, fraternal, military, or political 18
organization, club, or nonprofit or for-profit entity maintaining or operating a club 19
room, club rooms, or premises from which the general public is excluded; 20
(51)[(49)] "Private selection event" means a private event with a licensed distiller during 21
which participating consumers, retail licensees, wholesalers, distributors, or a 22
distillery's own representatives select a single barrel or a blend of barrels of the 23
distiller's products to be specially packaged for the participants; 24
(52)[(50)] "Private selection package" means a bottle of distilled spirits sourced from the 25
barrel or barrels selected by participating consumers, retail licensees, wholesalers, 26
distributors, microbreweries that hold a quota retail drink or quota retail package 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 87 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
license, or a distillery's own representatives during a private selection event; 1
(53)[(51)] "Public nuisance" means a condition that endangers safety or health, is 2
offensive to the senses, or obstructs the free use of property so as to interfere with 3
the comfortable enjoyment of life or property by a community or neighborhood or 4
by any considerable number of persons; 5
(54)[(52)] "Qualified historic site" means: 6
(a) A contributing property with dining facilities for at least fifty (50) persons at 7
tables, booths, or bars where food may be served within a commercial district 8
listed in the National Register of Historic Places; 9
(b) A site that is listed as a National Historic Landmark or in the National 10
Register of Historic Places with dining facilities for at least fifty (50) persons 11
at tables, booths, or bars where food may be served; 12
(c) A distillery which is listed as a National Historic Landmark and which 13
conducts souvenir retail package sales under KRS 243.0305; or 14
(d) A not-for-profit or nonprofit facility listed on the National Register of Historic 15
Places; 16
(55)[(53)] "Rectifier" means any person who rectifies, purifies, or refines distilled 17
spirits, malt, or wine by any process other than as provided for on distillery 18
premises, and every person who, without rectifying, purifying, or refining distilled 19
spirits by mixing alcoholic beverages with any materials, manufactures any 20
imitations of or compounds liquors for sale under the name of whiskey, brandy, gin, 21
rum, wine, spirits, cordials, bitters, or any other name; 22
(56)[(54)] "Repackaging" means the placing of alcoholic beverages in any retail 23
container irrespective of the material from which the container is made; 24
(57)[(55)] "Restaurant" means a facility where the usual and customary business is the 25
preparation and serving of meals to consumers, that has a bona fide kitchen facility, 26
and that receives at least fifty percent (50%) of its food and alcoholic beverage 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 88 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
receipts from the sale of food at the premises; 1
(58)[(56)] "Retail container" means any bottle, can, barrel, or other container which, 2
without a separable intermediate container, holds alcoholic beverages and is 3
suitable and destined for sale to a retail outlet, whether it is suitable for delivery or 4
shipment to the consumer or not; 5
(59)[(57)] "Retail sale" means any sale of alcoholic beverages to a consumer, including 6
those transactions taking place in person, electronically, online, by mail, or by 7
telephone; 8
(60)[(58)] "Retailer" means any licensee who sells and delivers any alcoholic beverage 9
to consumers, except for manufacturers with limited retail sale privileges and direct 10
shipper licensees; 11
(61)[(59)] "Riverboat" means any boat or vessel with a regular place of mooring in this 12
state that is licensed by the United States Coast Guard to carry forty (40) or more 13
passengers for hire on navigable waters in or adjacent to this state; 14
(62)[(60)] "Sale" means any transfer, exchange, or barter for consideration, and includes 15
all sales made by any person, whether principal, proprietor, agent, servant, or 16
employee, of any alcoholic beverage; 17
(63)[(61)] "Service bar" means a bar, counter, shelving, or similar structure used for 18
storing or stocking supplies of alcoholic beverages that is a workstation where 19
employees prepare alcoholic beverage drinks to be delivered to customers away 20
from the service bar; 21
(64)[(62)] "Sell" includes solicit or receive an order for, keep or expose for sale, keep 22
with intent to sell, and the delivery of any alcoholic beverage; 23
(65)[(63)] "Small farm winery" means a winery whose wine production is not less than 24
two hundred fifty (250) gallons and not greater than five hundred thousand 25
(500,000) gallons in a calendar year; 26
(66)[(64)] "Souvenir package" means a special package of distilled spirits available from 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 89 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
a licensed retailer that is: 1
(a) Available for retail sale at a licensed Kentucky distillery where the distilled 2
spirits were produced or bottled; or 3
(b) Available for retail sale at a licensed Kentucky distillery but produced or 4
bottled at another of that distiller's licensed distilleries in Kentucky; 5
(67)[(65)] "State administrator" or "administrator" means the distilled spirits 6
administrator or the malt beverages administrator, or both, as the context requires; 7
(68)[(66)] "State park" means a state park that has a: 8
(a) Nine (9) or eighteen (18) hole golf course; or 9
(b) Full-service lodge and dining room; 10
(69)[(67)] "Supplemental bar" means a bar, counter, shelving, or similar structure used 11
for serving and selling distilled spirits or wine by the drink for consumption on the 12
licensed premises to guests and patrons from additional locations other than the 13
main bar; 14
(70)[(68)] "Territory" means a county, city, district, or precinct; 15
(71)[(69)] "Urban-county administrator" means an urban-county alcoholic beverage 16
control administrator; 17
(72)[(70)] "Valid identification document" means an unexpired, government-issued form 18
of identification that contains the photograph and date of birth of the individual to 19
whom it is issued; 20
(73)[(71)] "Vehicle" means any device or animal used to carry, convey, transport, or 21
otherwise move alcoholic beverages or any products, equipment, or appurtenances 22
used to manufacture, bottle, or sell these beverages; 23
(74)[(72)] "Vintage distilled spirit" means: 24
(a) A private selection package; or 25
(b) A package or packages of distilled spirits that: 26
1. Are in their original manufacturer's unopened container; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 90 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
2. Are not owned by a distillery; and 1
3. Are not otherwise available for purchase from a licensed wholesaler 2
within the Commonwealth; 3
(75)[(73)] (a) "Vintage distilled spirits seller" means a nonlicensed person at least 4
twenty-one (21) years of age who is: 5
1. An administrator, executor, receiver, or other fiduciary who receives and 6
sells vintage distilled spirits in execution of the person's fiduciary 7
capacity; 8
2. A creditor who receives or takes possession of vintage distilled spirits as 9
security for, or in payment of, debt, in whole or in part; 10
3. A public officer or court official who levies on vintage distilled spirits 11
under order or process of any court or magistrate to sell the vintage 12
distilled spirits in satisfaction of the order or process; or 13
4. Any other person not engaged in the business of selling alcoholic 14
beverages. 15
(b) "Vintage distilled spirits seller" does not mean: 16
1. A person selling alcoholic beverages as part of an approved KRS 17
243.630 transfer; or 18
2. A person selling alcoholic beverages as authorized by KRS 243.540; 19
(76)[(74)] "Warehouse" means any place in which alcoholic beverages are housed or 20
stored; 21
(77)[(75)] "Weak cider" means any fermented fruit-based beverage containing more than 22
one percent (1%) but less than seven percent (7%) alcohol by volume; 23
(78)[(76)] "Wet" means a territory in which a majority of the electorate voted to permit 24
all forms of retail alcoholic beverage[alcohol] sales by a local option election under 25
KRS 242.050 or 242.125 on the following question: "Are you in favor of the sale of 26
alcoholic beverages in (name of territory)?"; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 91 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(79)[(77)] "Wholesale sale" means a sale to any person for the purpose of resale; 1
(80)[(78)] "Wholesaler" means any person who distributes alcoholic beverages for the 2
purpose of being sold at retail, but it shall not include a subsidiary of a 3
manufacturer or cooperative of a retail outlet; 4
(81)[(79)] "Wine" means the product of the normal alcoholic fermentation of the juices 5
of fruits, with the usual processes of manufacture and normal additions, and 6
includes champagne and sparkling and fortified wine of an alcoholic content not to 7
exceed twenty-four percent (24%) by volume. It includes sake, cider, hard cider, 8
and perry cider and also includes preparations or mixtures vended in retail 9
containers if these preparations or mixtures contain not more than fifteen percent 10
(15%) of alcohol by volume. It does not include weak cider; and 11
(82)[(80)] "Winery" means any place or premises in which wine is manufactured from 12
any fruit, or brandies are distilled as a by-product of wine or other fruit, or cordials 13
are compounded, except a place or premises that manufactures wine for sacramental 14
purposes exclusively. 15
Section 20. KRS 243.720 is amended to read as follows: 16
(1) (a) There is levied upon the use, sale, or distribution by sale or gift of distilled 17
spirits a tax of one dollar and ninety-two cents ($1.92) on each wine gallon of 18
distilled spirits, and a proportional rate per gallon on all distilled spirits used, 19
sold, or distributed in any container of more or less than one (1) gallon, but 20
the rate of the excise tax on spirits in retail containers of one-half (1/2) pint 21
shall be twelve cents ($0.12); and 22
(b) Notwithstanding the provisions of paragraph (a) of this subsection, distilled 23
spirits placed in containers for sale at retail, where the distilled spirits 24
represent six percent (6%) or less of the total volume of the contents of 25
the[such] containers, shall be taxed at the rate of twenty-five cents ($0.25) per 26
gallon. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 92 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(2) There is levied upon the use, sale, or distribution by sale or gift of wine, a tax of 1
fifty cents ($0.50) on each gallon of wine, and a proportional rate per gallon on the 2
wine used, sold, or distributed in any container of more or less than one (1) gallon, 3
but the tax shall not be less than four cents ($0.04) on the sale or distribution of any 4
retail container of wine. 5
(3) (a) There is levied upon the sale or distribution by sale or gift of malt beverages 6
an excise tax of two dollars and fifty cents ($2.50) on each barrel of thirty-one 7
(31) gallons and a proportional rate per gallon on malt beverages sold or 8
distributed in any container of more or less than thirty-one (31) gallons; 9
(b) Each brewer producing malt beverages in this state shall be entitled to a credit 10
of fifty percent (50%) of the tax levied on each barrel of malt beverages sold 11
in this state, up to three hundred thousand (300,000) barrels per annum. 12
(4) There is levied upon the use, sale, or distribution by sale or gift of cannabis-13
infused beverages a tax of one dollar and ninety-two cents ($1.92) on each gallon 14
of a cannabis-infused beverage, and a proportional rate per gallon on all 15
cannabis-infused beverages used, sold, or distributed in any container of more or 16
less than one (1) gallon. 17
(5) This section shall not apply to: 18
(a) Wine manufactured, sold, given away, or distributed and used solely for 19
sacramental purposes; or 20
(b) Distilled spirits and wine purchased by holders of special licenses provided 21
for in KRS 243.320 and purchased and used in the manner authorized by 22
those licenses. 23
Section 21. KRS 243.730 is amended to read as follows: 24
(1) (a) Wholesalers of distilled spirits and wine shall pay and report the tax levied by 25
KRS 243.720(1) and (2) on or before the twentieth day of the calendar month 26
next succeeding the month in which possession or title of the distilled spirits 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 93 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
and wine is transferred from the wholesaler to retailers or consumers in this 1
state, in accordance with administrative[rules and] regulations promulgated 2
under KRS Chapter 13A[of the Department of Revenue] designed reasonably 3
to protect the revenues of the Commonwealth. 4
(b) 1. Distributors or retailers of malt beverages, who purchase malt beverages 5
directly from a brewer, shall pay and report the tax levied by KRS 6
243.720(3) on or before the twentieth day of the calendar month next 7
succeeding the month in which the brewer sells, transfers, or passes title 8
of the malt beverage to the distributor or retailer, in accordance with 9
administrative[rules and] regulations promulgated under KRS Chapter 10
13A[of the Department of Revenue] designed reasonably to protect the 11
revenues of the Commonwealth. 12
2. The credit allowed brewers in this state, under the provisions of KRS 13
243.720(3)(b), shall flow through to the distributor or retailer who 14
purchases malt beverages directly from the brewer. 15
3. If a brewer sells, transfers, or passes title to malt beverages to any of its 16
employees for home consumption or to any charitable or fraternal 17
organization pursuant to the provisions of KRS 243.150, the brewer 18
shall be responsible for paying and reporting the tax levied by KRS 19
243.720(3) in accordance with the provisions of paragraph (d) of this 20
subsection[ (c) of this section]. 21
(c) Cannabis-infused beverage distributors shall pay and report the tax levied 22
by subsection (4) of Section 20 of this Act on or before the twentieth day of 23
the calendar month next succeeding the month in which possession or title 24
of the cannabis-infused beverages are transferred from the cannabis-25
infused beverage distributor to retailers or consumers in this state, in 26
accordance with administrative regulations promulgated under KRS 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 94 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
Chapter 13A designed reasonably to protect the revenues of the 1
Commonwealth. 2
(d) 1. Every brewer selling, transferring, or passing title to malt beverages to 3
any person in this state other than a distributor or retailer; 4
2. Every manufacturer of cannabis-infused beverages permitted by the 5
Department for Public Health selling, transferring, or passing title to 6
cannabis-infused beverages to any person in this state other than a 7
distributor or retailer;[,] and 8
3. Every other person selling, transferring, or passing title of distilled 9
spirits, wine, [or ]malt beverages, or cannabis-infused beverages to 10
distributors, retailers, cannabis-infused beverage licensees, or 11
consumers; 12
shall report and pay the tax levied by KRS 243.720[(1), (2), or (3)] on or 13
before the twentieth day of the calendar month next succeeding the month in 14
which possession or title of distilled spirits, wine, [or ]malt beverages, or 15
cannabis-infused beverages is transferred to a distributor, retailer, cannabis-16
infused beverage licensee, or consumer in this state, in accordance with 17
administrative[rules and] regulations promulgated under KRS Chapter 18
13A[of the Department of Revenue] designed reasonably to protect the 19
revenues of the Commonwealth. 20
(e)[(d)] Every distributor, retailer, or consumer possessing, using, selling, or 21
distributing distilled spirits, wine,[ or] malt beverages, or cannabis-infused 22
beverages in this state upon which the tax levied by KRS 243.720[(1), (2), or 23
(3)] and KRS 243.884 has not been paid shall be jointly and severally liable 24
for reporting and paying the tax due, in accordance with administrative[rules 25
and] regulations promulgated under KRS Chapter 13A[of the Department of 26
Revenue] designed reasonably to protect the revenues of the Commonwealth. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 95 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
The[Such] liability shall not be extinguished until the tax has been paid to the 1
Department of Revenue. 2
(f)[(e)] Notwithstanding the provisions of paragraph (a) of this subsection, 3
every owner of a small farm winery shall pay and report the tax levied by 4
KRS 243.720 (1) and (2) on a quarterly basis, in accordance with 5
administrative regulations of the Department of Revenue designed reasonably 6
to protect the revenues of the Commonwealth. 7
(2) Every wholesaler of distilled spirits or wine before using, selling, or distributing by 8
sale or gift distilled spirits and wine shall register[qualify] with the Department of 9
Revenue. 10
(3) Every brewer before selling or distributing by sale or gift malt beverages, or before 11
importing malt beverages into the state, shall register[qualify] with the Department 12
of Revenue in a[such] manner as the Department of Revenue may require. 13
(4) Every manufacturer of cannabis-infused beverages before selling or distributing 14
by sale or gift cannabis-infused beverages, or before importing cannabis-infused 15
beverages into the state, shall: 16
(a) Obtain a permit as a food manufacturer through the Department for Public 17
Health; and 18
(b) Register with the Department of Revenue in a manner as the Department of 19
Revenue may require. 20
Section 22. KRS 243.790 is amended to read as follows: 21
The sale or distribution of alcoholic beverages or cannabis-infused beverages 22
manufactured in or imported into this state for shipment permanently out of the state to 23
be sold without the state and consumed without the state shall not be subject to the tax 24
imposed by KRS 243.720. Provided, however, the Department of Revenue may, when 25
necessary for the purpose of control enforcement or protection of revenue, prescribe the 26
conditions under which containers of the[such] alcoholic beverages or cannabis-infused 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 96 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
beverages for shipment permanently out of the state to be sold without the state and 1
consumed without the state may be kept and trafficked in without payment of the tax. 2
Section 23. KRS 243.850 is amended to read as follows: 3
(1) For the purpose of assisting in the enforcement of Sections 20, 21, 22, and 24 of 4
this Act[KRS 243.720 to 243.850 and 243.884 or any amendments thereof], every 5
licensee, except retailers, whether subject to the payment of taxes imposed by 6
Sections 20, 21, 22, and 24 of this Act[said sections or any amendments thereof], 7
shall, on or before the twentieth day of each month, render to the Department of 8
Revenue a statement, in writing, of all [his] trafficking in alcoholic beverages or 9
cannabis-infused beverages during the preceding month. 10
(2) The[Such] statement shall: 11
(a) Be taken directly from the records of the reporting licensee or manufacturer 12
of cannabis-infused beverages permitted by the Department for Public 13
Health, and shall set forth on forms furnished by the Department of Revenue 14
the required[such] information; and[ as shall be required by it. such statement 15
shall] 16
(b) Include alcoholic beverages or cannabis-infused beverages[ alcohol] 17
destined for sale outside the state, as well as alcoholic beverages or cannabis-18
infused beverages subject to the tax imposed by Sections 20, 21, 22, and 24 19
of this Act[KRS 243.720 to 243.850 and 243.884 or any amendments 20
thereof].[ Provided, that ] 21
(3) The Department of Revenue shall have authority to require from retail licensees, 22
[and ]other licensees, and manufacturers of cannabis-infused beverages, other 23
reports and statements at the necessary[such] times[ as are necessary] for the 24
enforcement of Sections 20, 21, 22, and 24 of this Act[KRS 243.720 to 243.850 25
and 243.884 or any amendments thereof]. 26
Section 24. KRS 243.884 is amended to read as follows: 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 97 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(1) (a) For the privilege of making "wholesale sales" or "sales at wholesale" of malt 1
beverages[beer], wine, [or ]distilled spirits, or cannabis-infused beverages, a 2
tax is hereby imposed upon all wholesalers of wine and distilled spirits, all 3
distributors of malt beverages or[beer,] cannabis-infused beverages, all 4
direct shipper licensees shipping alcoholic beverages[alcohol] or cannabis-5
infused beverages to a consumer at a Kentucky address, all distillers making 6
sales pursuant to KRS 243.0305(3), (4)(a)1. and 2. and (c), (7), (9), (10), (12), 7
and (13), all microbreweries selling malt beverages under KRS 243.157, [and 8
]all small farm wineries selling wine under KRS 243.155, and all 9
manufacturers of cannabis-infused beverages permitted by the Department 10
for Public Health. 11
(b) Prior to July 1, 2015, the tax shall be imposed at the rate of eleven percent 12
(11%) of the gross receipts of any [such] wholesaler or distributor derived 13
from "sales at wholesale" or "wholesale sales" made within the 14
Commonwealth, except as provided in subsection (3) of this section. For the 15
purposes of this section, the gross receipts of a microbrewery making 16
"wholesale sales" shall be calculated by determining the dollar value amount 17
that the microbrewer would have collected had it conveyed to a distributor the 18
same volume sold to a consumer as allowed under KRS 243.157 (3)(b) and 19
(c). 20
(c) [On and after July 1, 2015, ]The following rates shall apply to wholesale sales 21
or sales at wholesale: 22
1. For distilled spirits and cannabis-infused beverages, eleven percent 23
(11%)[ of wholesale sales or sales at wholesale]; and 24
2. For wine and malt beverages, [and beer: 25
a. Ten and three-quarters of one percent (10.75%) for wholesale sales 26
or sales at wholesale made on or after July 1, 2015, and before 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 98 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
June 1, 2016; 1
b. Ten and one-half of one percent (10.5%) for wholesale sales or 2
sales at wholesale made on or after June 1, 2016, and before June 3
1, 2017; 4
c. Ten and one-quarter of one percent (10.25%) for wholesale sales 5
or sales at wholesale made on or after June 1, 2017, and before 6
June 1, 2018; and 7
d. ]ten percent (10%)[ for wholesale sales or sales at wholesale made 8
on or after June 1, 2018]. 9
(d) [On and after March 12, 2021, ]The following rates shall apply for direct 10
shipper sales: 11
1. For distilled spirits and cannabis-infused beverages shipments, eleven 12
percent (11%) for wholesale sales or sales at wholesale; and 13
2. For wine and malt beverage[ and beer] shipments, ten percent (10%) for 14
wholesale sales or sales at wholesale. 15
(e) For direct shipper sales or sales made pursuant to KRS 243.0305, if a 16
wholesale price is not readily available, the direct shipper licensee or distillery 17
shall calculate the wholesale price to be seventy percent (70%) of the retail 18
price of the alcoholic beverages. 19
(2) Wholesalers of distilled spirits and wine, distributors of malt beverages[,] or 20
cannabis-infused beverages, microbreweries, distillers, manufacturers of 21
cannabis-infused beverages permitted by the Department for Public Health, and 22
direct shipper licensees shall pay and report the tax levied by this section on or 23
before the twentieth day of the calendar month next succeeding the month in which 24
possession or title of the distilled spirits, wine,[ or] malt beverages, or cannabis-25
infused beverages is transferred from the wholesaler or distributor to retailers, or by 26
microbreweries, distillers, manufacturers of cannabis-infused beverages permitted 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 99 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
by the Department for Public Health, or direct shipper licensees to consumers in 1
this state, in accordance with administrative[rules and] regulations promulgated 2
under KRS Chapter 13A[of the Department of Revenue] designed reasonably to 3
protect the revenues of the Commonwealth. 4
(3) Gross receipts from sales at wholesale or wholesale sales shall not include the 5
following sales: 6
(a) Sales made between wholesalers, [or ]between distributors, or between 7
manufacturers of cannabis-infused beverages permitted by the Department 8
for Public Health; 9
(b) Sales from the first fifty thousand (50,000) gallons of wine produced by a 10
small farm winery in a calendar year made by: 11
1. The small farm winery; or 12
2. A wholesaler of that wine produced by the small farm winery; and 13
(c) Sales made between a direct shipper licensee and a consumer located outside 14
of Kentucky. 15
SECTION 25. A NEW SECTION OF KRS CHAPTER 246 IS CREATED TO 16
READ AS FOLLOWS: 17
The General Assembly declares: 18
(1) Alternative fuels are vitally important to the Commonwealth because the 19
alternative fuel may: 20
(a) Reduce pollution; 21
(b) Improve energy security; and 22
(c) Support the Commonwealth's economy; 23
(2) Alternative fuels derived from resources within the Commonwealth, including: 24
(a) Ethanol derived from corn; 25
(b) Biodiesel derived from soybean oil; 26
(c) Waste streams; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 100 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(d) Renewable or zero emissions energy sources; 1
(e) Gaseous carbon-18 oxides; and 2
(f) Alternative jet fuels generated by agricultural production facilities in the 3
Commonwealth; 4
reduce undesirable impacts to the environment and provide additional demand 5
for those resources; 6
(3) Environmental benefits resulting from alternative fuels include: 7
(a) Reduced harmful emissions, including carbon dioxide, carbon monoxide, 8
and sulfur; and 9
(b) Improved air quality by reducing ozone-forming emissions; 10
(4) Alternative fuels may: 11
(a) Stimulate the economy; 12
(b) Create jobs across the Commonwealth; 13
(c) Diversify the Commonwealth's energy supply; and 14
(d) Reduce dependence on imported fuels; 15
through the development of a production network in the Commonwealth for 16
consumers in the Commonwealth; 17
(5) There are various other benefits which may be achieved, including improved: 18
(a) Performance of vehicles that results in a reduction of operation costs for the 19
citizens of the Commonwealth; and 20
(b) Transportation systems, including the creation of a sustainable supply; and 21
(6) Its commitment to: 22
(a) A full evaluation of the Commonwealth's jet fuel tax policy positions; and 23
(b) Furthering research and development to build an alternative fuels policy 24
that may be declared the best in the nation. 25
SECTION 26. A NEW SECTION OF KRS CHAPTER 139 IS CREATED TO 26
READ AS FOLLOWS: 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 101 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(1) As used in this section: 1
(a) "Entertainment event": 2
1. Means a live performance or exhibition of musical, theatrical, 3
cultural, culinary, or other artistic presentation; and 4
2. Does not include sporting events or tournaments; 5
(b) "Facility operator" means a person who owns or operates a venue; 6
(c) "Qualifying attraction" means a series of entertainment events which is: 7
1. Held at a venue over a duration of at least two (2) consecutive days; 8
2. Hosted by a sponsoring entity pursuant to an agreement with a facility 9
operator that authorizes the sponsoring entity to conduct one (1) or 10
more series of entertainment events annually during at least five (5) 11
consecutive years; and 12
3. Open to the public upon purchase of tickets, with attendance totaling 13
at least sixty thousand (60,000) admissions over the duration of each 14
series of entertainment events; 15
(d) "Sponsoring entity" means the person hosting a qualifying attraction; and 16
(e) "Venue" means: 17
1. Public property located in a consolidated local government or an 18
urban-county government which is owned, operated, or controlled by 19
the consolidated local government or urban-county government; 20
2. A park located in a consolidated local government that is: 21
a. Open to the general public; and 22
b. Owned, operated, or controlled by any nonprofit corporation 23
established under KRS 273.161 to 273.390; 24
3. Property located in a consolidated local government or an urban-25
county government that is owned, operated, or controlled by a public 26
university; or 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 102 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
4. Privately owned property located in a consolidated local government 1
or an urban-county government that is suitable for hosting 2
entertainment events and qualifying attractions. 3
(2) Notwithstanding KRS 134.580 and 139.770: 4
(a) A sponsoring entity and facility operator shall be granted a sales tax 5
incentive totaling fifty percent (50%) of the Kentucky sales tax generated by 6
the sale of admissions to a qualifying attraction held at a venue, and the 7
sales of tangible personal property and services at the qualifying attraction, 8
including but not limited to the sale of food and beverage concessions, 9
souvenirs, camping, and parking; 10
(b) The amount of the sales tax incentive authorized in paragraph (a) of this 11
subsection shall be allocated as follows: 12
1. Fifty percent (50%) shall be paid to the facility operator and utilized to 13
support operations and maintenance at the venue; and 14
2. Fifty percent (50%) shall be paid to the sponsoring entity of the 15
qualifying attraction from which the sales taxes were generated; 16
(c) Only one (1) incentive request shall be made for each qualifying attraction 17
each year; 18
(d) The sponsoring entity and facility operator shall have no obligation to 19
refund or otherwise return any amount of the sales tax incentive to the 20
persons from whom the sales tax was collected; 21
(e) The sales tax incentive shall be reduced by the vendor compensation 22
allowed under KRS 139.570; and 23
(f) Interest shall not be allowed or paid on any sales tax incentive payment 24
made under this section. 25
(3) The department shall accept initial applications for sales tax incentives under this 26
section for qualifying attractions held on or after July 1, 2025. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 103 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(4) To be eligible for a sales tax incentive under this section, the sponsoring entity 1
shall file an initial application with the department, which: 2
(a) Includes sufficient information regarding the qualifying attraction to 3
demonstrate whether it qualifies for the sales tax incentive; and 4
(b) Is filed at least sixty (60) days prior to the date of the first entertainment 5
event constituting the qualifying attraction. 6
(5) Within thirty (30) days of receipt of the initial application, the department shall 7
notify the sponsoring entity of its preliminary approval or denial of the qualifying 8
attraction. 9
(6) If the initial application is denied, the department shall provide the reason for the 10
denial. 11
(7) After approval of its initial application and the completion of the qualifying 12
attraction, a sponsoring entity shall apply for a sales tax incentive no earlier than 13
thirty (30) days following the end of the month during which sales taxes that were 14
generated from the qualifying attraction are collected. The application may 15
aggregate eligible sales taxes from previous months if the events comprising the 16
qualifying attraction were held in more than one (1) month. 17
(8) The department shall review each application for a sales tax incentive and 18
determine if it meets the requirements of this section, pending the verification of 19
required attendance. 20
(9) In determining eligibility for a sales tax incentive authorized under this section, 21
the department shall waive the duration and attendance requirements listed in 22
subsection (1)(c)1. and 3. of this section if the person requesting an incentive 23
demonstrates that any delays, cancellations, or postponements were due to 24
inclement weather or other extraordinary events beyond the control of the parties 25
involved and that the weather or other extraordinary events rendered the 26
satisfaction of the requirement impossible. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 104 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(10) Both the initial application and the sales tax incentive application shall be in the 1
form prescribed by the department through the promulgation of an administrative 2
regulation in accordance with KRS Chapter 13A. 3
(11) The department shall verify the amount of sales tax incentive and pay the 4
allocations determined to be due in accordance with subsection (2)(b) of this 5
section within forty-five (45) days of receipt of the later of: 6
(a) The application submitted under subsection (7) of this section; or 7
(b) All necessary supporting information required by the department to 8
determine that the sponsoring entity is eligible for the incentive. 9
(12) (a) Prior to November 1, 2026, and continuing each November 1 thereafter to 10
November 1, 2035, the department shall provide an annual report detailing 11
information related to each qualifying attraction receiving incentives during 12
the fiscal year concluding on June 30 of the reporting period. 13
(b) The department shall include the following information in the report: 14
1. The name of the qualifying attraction; 15
2. The venue where the qualifying attraction was held; 16
3. The name of the facility operator; 17
4. The name of the sponsoring entity; 18
5. The duration of the qualifying attraction and the number of 19
admissions over that duration; and 20
6. The amount of incentive paid to the facility operator; and 21
7. The amount of incentive paid to the sponsoring entity. 22
(c) The information required to be reported under this subsection shall not be 23
considered confidential taxpayer information and shall not be subject to 24
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 25
prohibiting disclosure or reporting of information. 26
(13) The provisions of this section shall expire on June 30, 2035, and a qualifying 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 105 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
attraction held after June 30, 2035, shall not be eligible for the incentives 1
authorized in this section. 2
(14) The General Assembly is committed to the research and development of tourism 3
policies, including the aspiration to hold other entertainment events across the 4
Commonwealth and especially in rural Kentucky. 5
Section 27. KRS 131.190 is amended to read as follows: 6
(1) No present or former commissioner or employee of the department, present or 7
former member of a county board of assessment appeals, present or former property 8
valuation administrator or employee, present or former secretary or employee of the 9
Finance and Administration Cabinet, former secretary or employee of the Revenue 10
Cabinet, or any other person, shall intentionally and without authorization inspect 11
or divulge any information acquired by him or her of the affairs of any person, or 12
information regarding the tax schedules, returns, or reports required to be filed with 13
the department or other proper officer, or any information produced by a hearing or 14
investigation, insofar as the information may have to do with the affairs of the 15
person's business. 16
(2) The prohibition established by subsection (1) of this section shall not extend to: 17
(a) Information required in prosecutions for making false reports or returns of 18
property for taxation, or any other infraction of the tax laws; 19
(b) Any matter properly entered upon any assessment record, or in any way made 20
a matter of public record; 21
(c) Furnishing any taxpayer or his or her properly authorized agent with 22
information respecting his or her own return; 23
(d) Testimony provided by the commissioner or any employee of the department 24
in any court, or the introduction as evidence of returns or reports filed with the 25
department, in an action for violation of state or federal tax laws or in any 26
action challenging state or federal tax laws; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 106 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(e) Providing an owner of unmined coal, oil or gas reserves, and other mineral or 1
energy resources assessed under KRS 132.820, or owners of surface land 2
under which the unmined minerals lie, factual information about the owner's 3
property derived from third-party returns filed for that owner's property, under 4
the provisions of KRS 132.820, that is used to determine the owner's 5
assessment. This information shall be provided to the owner on a confidential 6
basis, and the owner shall be subject to the penalties provided in KRS 7
131.990(2). The third-party filer shall be given prior notice of any disclosure 8
of information to the owner that was provided by the third-party filer; 9
(f) Providing to a third-party purchaser pursuant to an order entered in a 10
foreclosure action filed in a court of competent jurisdiction, factual 11
information related to the owner or lessee of coal, oil, gas reserves, or any 12
other mineral resources assessed under KRS 132.820. The department may 13
promulgate an administrative regulation establishing a fee schedule for the 14
provision of the information described in this paragraph. Any fee imposed 15
shall not exceed the greater of the actual cost of providing the information or 16
ten dollars ($10); 17
(g) Providing information to a licensing agency, the Transportation Cabinet, or 18
the Kentucky Supreme Court under KRS 131.1817; 19
(h) Statistics of gasoline and special fuels gallonage reported to the department 20
under KRS 138.210 to 138.448; 21
(i) Providing any utility gross receipts license tax return information that is 22
necessary to administer the provisions of KRS 160.613 to 160.617 to 23
applicable school districts on a confidential basis; 24
(j) Providing documents, data, or other information to a third party pursuant to an 25
order issued by a court of competent jurisdiction; 26
(k) Publishing administrative writings on its official website in accordance with 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 107 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
KRS 131.020(1)(b); or 1
(l) Providing information to the Legislative Research Commission under: 2
1. KRS 139.519 for purposes of the sales and use tax refund on building 3
materials used for disaster recovery; 4
2. KRS 141.436 for purposes of the energy efficiency products credits; 5
3. KRS 141.437 for purposes of the ENERGY STAR home and the 6
ENERGY STAR manufactured home credits; 7
4. KRS 141.383 for purposes of the film industry incentives; 8
5. KRS 154.26-095 for purposes of the Kentucky industrial revitalization 9
credit[tax credits] and the job assessment fees; 10
6. KRS 141.068 for purposes of the Kentucky investment fund; 11
7. KRS 141.396 for purposes of the angel investor[ tax] credit; 12
8. KRS 141.389 for purposes of the distilled spirits credit; 13
9. KRS 141.408 for purposes of the inventory credit; 14
10. KRS 141.390 for purposes of the recycling and composting 15
credits[credit]; 16
11. KRS 141.3841 for purposes of the selling farmer[ tax] credit; 17
12. KRS 141.4231 for purposes of the renewable chemical production[ tax] 18
credit; 19
13. KRS 141.524 for purposes of the Education Opportunity Account 20
Program[ tax] credit; 21
14. KRS 141.398 for purposes of the development area[ tax] credit; 22
15. KRS 139.516 for[ the] purposes of the sales and use tax exemptions 23
for[exemption on] the commercial mining of cryptocurrency; 24
16. KRS 141.419 for purposes of the decontamination[ tax] credit; 25
17. KRS 141.391 for purposes of the qualified broadband investment[ tax] 26
credit;[ and] 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 108 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
18. KRS 139.499 for purposes of the sales and use tax 1
exemptions[exemption] for a qualified data center project; and 2
19. Section 26 of this Act for purposes of the sales and use tax incentive 3
for a qualifying attraction. 4
(3) The commissioner shall make available any information for official use only and on 5
a confidential basis to the proper officer, agency, board or commission of this state, 6
any Kentucky county, any Kentucky city, any other state, or the federal 7
government, under reciprocal agreements whereby the department shall receive 8
similar or useful information in return. 9
(4) Access to and inspection of information received from the Internal Revenue Service 10
is for department use only, and is restricted to tax administration purposes. 11
Information received from the Internal Revenue Service shall not be made available 12
to any other agency of state government, or any county, city, or other state, and 13
shall not be inspected intentionally and without authorization by any present 14
secretary or employee of the Finance and Administration Cabinet, commissioner or 15
employee of the department, or any other person. 16
(5) Statistics of crude oil as reported to the department under the crude oil excise tax 17
requirements of KRS Chapter 137 and statistics of natural gas production as 18
reported to the department under the natural resources severance tax requirements 19
of KRS Chapter 143A may be made public by the department by release to the 20
Energy and Environment Cabinet, Department for Natural Resources. 21
(6) Notwithstanding any provision of law to the contrary, beginning with mine-map 22
submissions for the 1989 tax year, the department may make public or divulge only 23
those portions of mine maps submitted by taxpayers to the department pursuant to 24
KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined-25
out parcel areas. These electronic maps shall not be relied upon to determine actual 26
boundaries of mined-out parcel areas. Property boundaries contained in mine maps 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 109 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
required under KRS Chapters 350 and 352 shall not be construed to constitute land 1
surveying or boundary surveys as defined by KRS 322.010 and any administrative 2
regulations promulgated thereto. 3
Section 28. KRS 154.60-040 is amended to read as follows: 4
(1) As used in this section: 5
(a) "Actively engaged farmer" means a person who makes a significant 6
contribution of: 7
1. Land, capital, and equipment to a farming operation; and 8
2. Active personal labor or management to a farming operation; 9
(b) 1. "Agricultural assets" means: 10
a. Agricultural land which has been appraised by an individual 11
certified by the Real Estate Appraisers Board created under KRS 12
324A.015; and 13
b. Buildings, facilities, machinery, equipment, agricultural products, 14
or horticultural products, if: 15
i. Owned by the same seller[selling farmer] owning the 16
agricultural land sold to an actively engaged farmer or[a] 17
beginning farmer; 18
ii. Purchased at the same time and in the same transaction with 19
the agricultural land; and 20
iii. Purchased with the intent to be used on the purchased 21
agricultural land. 22
2. "Agricultural assets" does not mean: 23
a. A personal residence or any other residential structures;[ and] 24
b. Any agricultural assets that have been previously included in an 25
approved application for the Kentucky selling farmer tax credit; 26
and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 110 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
c. Any land which has, is, or will be used in the production of solar 1
power for personal or commercial purposes; 2
(c)[(b)] "Agricultural land" means: 3
1. Any land located entirely in Kentucky that is zoned or permitted for 4
farming, if the jurisdiction where the land is located has enacted an 5
ordinance for zoning or permitting; and 6
2. a. Is a tract of land of at least ten (10) contiguous acres in area for a 7
farming operation for agricultural products; or 8
b. Is a tract of land of at least five (5) contiguous acres in area for a 9
farming operation for aquaculture or horticultural products; 10
owned by the seller[selling farmer] prior to the sale; 11
(d)[(c)] "Agricultural products" means: 12
1. Livestock or livestock products; 13
2. Poultry or poultry products; 14
3. Milk or milk products; or 15
4. Field crops and other crops, including timber if approved by the 16
authority; 17
(e)[(d)] "Aquaculture" means the farming of fish, crustaceans, mollusks, aquatic 18
plants, algae, or other similar organisms; 19
(f) "Beginning farmer" means an actively engaged farmer who has not 20
previously held an ownership interest in agricultural land used for a 21
farming operation for a period exceeding twenty (20) years prior to entering 22
into an agreement to purchase agricultural assets from a seller; 23
(g) "Buyer" means an actively engaged farmer or beginning farmer who 24
purchases agricultural assets from a seller; 25
(h) "Department" means the Department of Revenue organized under KRS 26
131.020; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 111 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(i)[(e)] "Farm product" means aquaculture, agricultural products, or 1
horticultural products; 2
(j)[(f)] 1. "Farming operation" means the management and operation of 3
agricultural assets for the purpose of pursuing a profitable commercial 4
business venture to produce agricultural products, horticultural products, 5
or both for sale. 6
2. "Farming operation" does not mean any: 7
a.[ Hobby farm, as determined by the Internal Revenue Service; 8
b.] Nonprofit venture; 9
b.[c.] Farm used primarily for storing agricultural products or 10
horticultural products; or 11
c.[d.] Farm used to grow or raise agricultural products or horticultural 12
products primarily for use by the immediate family members or 13
owners of the agricultural assets; 14
(k)[(g)] "Horticultural products" means orchards, fruits, vegetables, nuts, 15
flowers, or ornamental plants;[ and] 16
(l)[(h)] "Immediate family member" means any of the following in relation to 17
any owner or spouse of the owner of the agricultural assets: 18
1. Parent or grandparent; 19
2. Children or their spouses; or 20
3. Siblings or their spouses; 21
(m) "Seller" means any individual or entity subject to the tax imposed by KRS 22
141.020 or 141.040 and 141.0401; and 23
(n) "Significant contribution" has the same meaning as in 7 C.F.R. sec. 24
1400.3. 25
(2) Any incentive offered to an eligible company under the Selling Farmer Tax Credit 26
Program shall be negotiated by Cabinet for Economic Development officials and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 112 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
shall be subject to approval by the authority. 1
(3) The purpose of the Selling Farmer Tax Credit Program is to promote the continued 2
use of agricultural land in Kentucky for farming purposes by granting a tax credit to 3
a seller[selling farmer] who agrees to sell agricultural assets to an actively engaged 4
farmer or a beginning farmer. 5
(4) A seller[Selling farmers] wanting to sell agricultural assets may be eligible for a tax 6
credit up to five percent (5%) of the selling price of qualifying agricultural assets, 7
subject to: 8
(a) A twenty-five thousand dollar ($25,000) cap for each taxable year of the 9
seller when agricultural assets are sold to an actively engaged farmer who 10
does not meet the definition of a beginning[selling] farmer; 11
(b) A fifty thousand dollar ($50,000) cap for each taxable year of the seller 12
when agricultural assets are sold to a beginning farmer; 13
(c) A one hundred thousand dollar ($100,000) lifetime cap for each seller selling 14
to an actively engaged farmer;[ and] 15
(d) A two hundred thousand dollar ($200,000) lifetime cap for each seller 16
selling to a beginning farmer; and 17
(e)[(c)] A proration by the authority based on the overall cap shared between the 18
Small Business Tax Credit Program and the Selling Farmer Tax Credit 19
Program cap of three million dollars ($3,000,000) under KRS 154.60-020. 20
(5) The tax credit allowed in subsection (4) of this section may be claimed under KRS 21
141.3841. 22
(6) In order to be eligible to receive approval for a tax credit, the seller[a selling 23
farmer] shall, at a minimum: 24
(a) 1. a. Be registered with the Kentucky Secretary of State; and 25
b. Be in good standing with the Kentucky Secretary of State; or 26
2. If not required to be registered with the Kentucky Secretary of State, be 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 113 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
a taxpayer[resident] of Kentucky; 1
(b) Prior to a sale of agricultural assets, be a small business with fifty (50) or 2
fewer full-time employees and be the sole legal owner of agricultural assets 3
sold to an actively engaged farmer or a beginning farmer; 4
(c) Not be a farm equipment dealer, livestock dealer, or similar entity primarily 5
engaged in the business of selling agricultural assets for profit and not 6
engaged in farming as a primary business activity; 7
(d) Not be a bank or any other similar lending or financial institution; 8
(e) Not be: 9
1. An owner, partner, member, shareholder, or trustee; 10
2. A spouse of an owner, partner, member, shareholder, or trustee; or 11
3. An immediate family member of any of the owners, partners, members, 12
shareholders, or trustees; 13
of the actively engaged farmer or beginning farmer to whom the 14
seller[selling farmer] is seeking to sell agricultural assets; 15
(f) 1. Demonstrate management and operation of real and personal property 16
for the production of a farm product; 17
2. Execute and effectuate a purchase contract to sell agricultural land with 18
an actively engaged farmer or a beginning farmer for an amount 19
evidenced by an appraisal; and 20
(g) Sell, convey, and transfer ownership of related agricultural assets to an 21
actively engaged farmer or a beginning farmer. 22
(7) In order for the seller[selling farmer] to qualify for the tax credit, an actively 23
engaged farmer or a beginning farmer shall, at a minimum: 24
(a) 1. a. Be registered with the Kentucky Secretary of State; and 25
b. Be in good standing with the Kentucky Secretary of State; or 26
2. If not required to be registered with the Kentucky Secretary of State, be 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 114 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
a resident of Kentucky; 1
(b) Possess all licenses, registrations, and experience needed to legally operate a 2
farming operation within the jurisdiction for the agricultural land purchased 3
from a the seller[selling farmer]; 4
(c)[ Not previously have held an ownership interest in agricultural land used for a 5
farming operation for a period exceeding ten (10) years prior to entering into 6
an agreement to purchase agricultural assets from a selling farmer; 7
(d)] Not have an ownership interest in any of the agricultural assets included in the 8
transaction with the seller[selling farmer]; and 9
(d)[(e)] Provide a majority of the management, and materially participate in the 10
operation of a for-profit farming operation located in Kentucky and purchased 11
from a seller[selling farmer], with the intent to continue a for-profit farming 12
operation on the purchased agricultural land for a minimum of ten (10)[five 13
(5)] years after the sale date. 14
(8) The seller[selling farmer] shall submit an application[ after consummation of the 15
sale, transfer of title, and conveyance of agricultural assets together] with all 16
information necessary for the authority to determine eligibility for the tax credit. 17
(9) The authority may consider applications prior to the consummation of the sale, 18
transfer of title, and conveyance of agricultural assets. 19
(10) An application for the selling farmer tax credit shall contain, at a minimum, 20
information about the: 21
(a) Seller and buyer[Selling farmer and purchasing beginning farmer eligibility]; 22
(b) Purchase contract and closing statement; 23
(c) Documentation, such as a deed, title conveyance for the transfer of assets, 24
including verification of Kentucky residency of the buyer; and 25
(d) Any other information the authority may require to determine eligibility for 26
the credit. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 115 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(11)[(10)] For each approved application, the authority shall transmit to the department[ 1
of Revenue] sufficient information about the seller[selling farmer] to ensure 2
compliance with this section and KRS 141.3841, including the amount of approved 3
tax credit allowed to the seller[selling farmer]. 4
(12) If the buyer fails to meet the requirements of this section, the department shall 5
assess a penalty against the buyer in an amount equal to the tax credit awarded to 6
the seller. The department may assess an additional penalty in excess of the tax 7
credit awarded. 8
(13) (a) The selling farmer tax credit shall sunset on December 31, 2031, and new 9
applications shall not be accepted or considered on or after December 31, 10
2031. 11
(b) All outstanding applications with preliminary or final approval under this 12
subchapter as of December 31, 2031, shall continue to be governed by the 13
provisions of this subchapter.[ 14
(11) Beginning January 1, 2020, the authority may approve selling farmer tax credits.] 15
Section 29. KRS 141.3841 is amended to read as follows: 16
(1) The selling farmer[farmers] tax credit permitted by KRS 154.60-040: 17
(a) Shall be nonrefundable and nontransferable; and 18
(b) May be claimed against the taxes imposed in KRS 141.020 or 141.040 and 19
141.0401, with the ordering of the credit as provided in KRS 141.0205. 20
(2) (a) The maximum amount of credit that may be claimed by a seller[selling 21
farmer] in each taxable year is limited to: 22
1. No more than the total amount of credit approved by the Kentucky 23
Economic Development Finance Authority; 24
2. Twenty-five thousand dollars ($25,000) cap for each taxable year of 25
the seller when agricultural assets are sold to an actively engaged 26
farmer who does not meet the definition of a beginning farmer; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 116 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
3. Fifty thousand dollars ($50,000) cap for each taxable year of the seller 1
when agricultural assets are sold to a beginning farmer; 2
4. One hundred thousand dollars ($100,000) lifetime cap for each seller 3
selling to an actively engaged farmer; and 4
5. Two hundred thousand dollars ($200,000) lifetime cap for each seller 5
selling to a beginning farmer[in any taxable year; and 6
3. No more than one hundred thousand dollars ($100,000) total tax credit 7
over the lifetime of the selling farmer]. 8
(b) The credit shall be first claimed on the tax return for the taxable year during 9
which the credit was approved. 10
(c) Any unused credit in a taxable year may be carried forward for up to five (5) 11
taxable years and, if not utilized within the five (5) year period, shall be lost. 12
(3) In order for the General Assembly to evaluate the fulfillment of the purpose stated 13
in KRS 154.60-040, the department shall provide the following information, on a 14
cumulative basis, for each seller[selling farmer], for each taxable year: 15
(a) The location, by county, of the agricultural assets sold to an actively engaged 16
farmer or a beginning farmer and approved for a tax credit under KRS 17
154.60-040; 18
(b) The total amount of tax credit approved by the Kentucky Economic 19
Development Finance Authority for each seller[selling farmer]; 20
(c) The amount of tax credit claimed for each seller[selling farmer] in each 21
taxable year; and 22
(d) 1. In the case of all taxpayers other than corporations, based on ranges of 23
adjusted gross income of no larger than five thousand dollars ($5,000) 24
for the taxable year, the total amount of tax credits claimed and the 25
number of returns claiming a tax credit for each adjusted gross income 26
range; and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 117 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
2. In the case of all corporations, based on ranges of net income no larger 1
than fifty thousand dollars ($50,000) for the taxable year, the total 2
amount of tax credit claimed and the number of returns claiming a tax 3
credit for each net income range. 4
(4) The report required by subsection (3) of this section shall be submitted to the 5
Interim Joint Committee on Appropriations and Revenue beginning no later than 6
November 1, 2021, and no later than each November 1 thereafter, as long as the 7
credit is claimed on any return processed by the department. 8
Section 30. KRS 141.010 is amended to read as follows: 9
As used in this chapter, for taxable years beginning on or after January 1, 2018: 10
(1) "Adjusted gross income," in the case of taxpayers other than corporations, means 11
the amount calculated in KRS 141.019; 12
(2) "Captive real estate investment trust" means a real estate investment trust as defined 13
in Section 856 of the Internal Revenue Code that meets the following requirements: 14
(a) 1. The shares or other ownership interests of the real estate investment 15
trust are not regularly traded on an established securities market; or 16
2. The real estate investment trust does not have enough shareholders or 17
owners to be required to register with the Securities and Exchange 18
Commission; 19
(b) 1. The maximum amount of stock or other ownership interest that is owned 20
or constructively owned by a corporation equals or exceeds: 21
a. Twenty-five percent (25%), if the corporation does not occupy 22
property owned, constructively owned, or controlled by the real 23
estate investment trust; or 24
b. Ten percent (10%), if the corporation occupies property owned, 25
constructively owned, or controlled by the real estate investment 26
trust. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 118 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
The total ownership interest of a corporation shall be determined by 1
aggregating all interests owned or constructively owned by a 2
corporation; and 3
2. For the purposes of this paragraph: 4
a. "Corporation" means a corporation taxable under KRS 141.040, 5
and includes an affiliated group as defined in KRS 141.200, that is 6
required to file a consolidated return pursuant to KRS 141.200; 7
and 8
b. "Owned or constructively owned" means owning shares or having 9
an ownership interest in the real estate investment trust, or owning 10
an interest in an entity that owns shares or has an ownership 11
interest in the real estate investment trust. Constructive ownership 12
shall be determined by looking across multiple layers of a 13
multilayer pass-through structure; and 14
(c) The real estate investment trust is not owned by another real estate investment 15
trust; 16
(3) "Commissioner" means the commissioner of the department; 17
(4) "Corporation" has the same meaning as in Section 7701(a)(3) of the Internal 18
Revenue Code; 19
(5) "Critical infrastructure" means property and equipment owned or used by 20
communications networks, electric generation, transmission or distribution systems, 21
gas distribution systems, or water or wastewater pipelines that service multiple 22
customers or citizens, including but not limited to real and personal property such 23
as buildings, offices, lines, poles, pipes, structures, or equipment; 24
(6) "Declared state disaster or emergency" means a disaster or emergency event for 25
which: 26
(a) The Governor has declared a state of emergency pursuant to KRS 39A.100; or 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 119 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(b) A presidential declaration of a federal major disaster or emergency has been 1
issued; 2
(7) "Department" means the Department of Revenue; 3
(8) "Dependent" means those persons defined as dependents in the Internal Revenue 4
Code; 5
(9) "Disaster or emergency-related work" means repairing, renovating, installing, 6
building, or rendering services that are essential to the restoration of critical 7
infrastructure that has been damaged, impaired, or destroyed by a declared state 8
disaster or emergency; 9
(10) "Disaster response business" means any entity: 10
(a) That has no presence in the state and conducts no business in the state, except 11
for disaster or emergency-related work during a disaster response period; 12
(b) Whose services are requested by a registered business or by a state or local 13
government for purposes of performing disaster or emergency-related work in 14
the state during a disaster response period; and 15
(c) That has no registrations, tax filings, or nexus in this state other than disaster 16
or emergency-related work during the calendar year immediately preceding 17
the declared state disaster or emergency; 18
(11) "Disaster response employee" means an employee who does not work or reside in 19
the state, except for disaster or emergency-related work during the disaster response 20
period; 21
(12) "Disaster response period" means a period that begins ten (10) days prior to the first 22
day of the Governor's declaration under KRS 39A.100, or the President's 23
declaration of a federal major disaster or emergency, whichever occurs first, and 24
that extends thirty (30) calendar days after the declared state disaster or emergency; 25
(13) "Doing business in this state" includes but is not limited to: 26
(a) Being organized under the laws of this state; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 120 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(b) Having a commercial domicile in this state; 1
(c) Owning or leasing property in this state; 2
(d) Having one (1) or more individuals performing services in this state; 3
(e) Maintaining an interest in a pass-through entity doing business in this state; 4
(f) Deriving income from or attributable to sources within this state, including 5
deriving income directly or indirectly from a trust doing business in this state, 6
or deriving income directly or indirectly from a single-member limited 7
liability company that is doing business in this state and is disregarded as an 8
entity separate from its single member for federal income tax purposes; or 9
(g) Directing activities at Kentucky customers for the purpose of selling them 10
goods or services. 11
Nothing in this subsection shall be interpreted in a manner that goes beyond the 12
limitations imposed and protections provided by the United States Constitution or 13
Pub. L. No. 86-272; 14
(14) "Employee" has the same meaning as in Section 3401(c) of the Internal Revenue 15
Code; 16
(15) "Employer" has the same meaning as in Section 3401(d) of the Internal Revenue 17
Code; 18
(16) "Fiduciary" has the same meaning as in Section 7701(a)(6) of the Internal Revenue 19
Code; 20
(17) "Financial institution" means: 21
(a) A national bank organized as a body corporate and existing or in the process 22
of organizing as a national bank association pursuant to the provisions of the 23
National Bank Act, 12 U.S.C. secs. 21 et seq., in effect on December 31, 24
1997, exclusive of any amendments made subsequent to that date; 25
(b) Any bank or trust company incorporated or organized under the laws of any 26
state, except a banker's bank organized under KRS 286.3-135; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 121 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(c) Any corporation organized under the provisions of 12 U.S.C. secs. 611 to 631, 1
in effect on December 31, 1997, exclusive of any amendments made 2
subsequent to that date, or any corporation organized after December 31, 3
1997, that meets the requirements of 12 U.S.C. secs. 611 to 631, in effect on 4
December 31, 1997; or 5
(d) Any agency or branch of a foreign depository as defined in 12 U.S.C. sec. 6
3101, in effect on December 31, 1997, exclusive of any amendments made 7
subsequent to that date, or any agency or branch of a foreign depository 8
established after December 31, 1997, that meets the requirements of 12 U.S.C. 9
sec. 3101 in effect on December 31, 1997; 10
(18) "Fiscal year" has the same meaning as in Section 7701(a)(24) of the Internal 11
Revenue Code; 12
(19) "Gross income": 13
(a) In the case of taxpayers other than corporations, has the same meaning as in 14
Section 61 of the Internal Revenue Code; and 15
(b) In the case of corporations, means the amount calculated in KRS 141.039; 16
(20) "Individual" means a natural person; 17
(21) "Internal Revenue Code" means for taxable years beginning on or after January 1, 18
2025[2024], the Internal Revenue Code in effect on December 31, 2024[2023], 19
exclusive of any amendments made subsequent to that date, other than amendments 20
that extend provisions in effect on December 31, 2024[2023], that would otherwise 21
terminate; 22
(22) "Limited liability pass-through entity" means any pass-through entity that affords 23
any of its partners, members, shareholders, or owners, through function of the laws 24
of this state or laws recognized by this state, protection from general liability for 25
actions of the entity; 26
(23) "Modified gross income" means the greater of: 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 122 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(a) Adjusted gross income as defined in 26 U.S.C. sec. 62, including any 1
amendments in effect on December 31 of the taxable year, and adjusted as 2
follows: 3
1. Include interest income derived from obligations of sister states and 4
political subdivisions thereof; and 5
2. Include lump-sum pension distributions taxed under the special 6
transition rules of Pub. L. No. 104-188, sec. 1401(c)(2); or 7
(b) Adjusted gross income as defined in subsection (1) of this section and 8
adjusted to include lump-sum pension distributions taxed under the special 9
transition rules of Pub. L. No. 104-188, sec. 1401(c)(2); 10
(24) "Net income": 11
(a) In the case of taxpayers other than corporations, means the amount calculated 12
in KRS 141.019; and 13
(b) In the case of corporations, means the amount calculated in KRS 141.039; 14
(25) "Nonresident" means any individual not a resident of this state; 15
(26) "Number of withholding exemptions claimed" means the number of withholding 16
exemptions claimed in a withholding exemption certificate in effect under KRS 17
141.325, except that if no such certificate is in effect, the number of withholding 18
exemptions claimed shall be considered to be zero; 19
(27) "Part-year resident" means any individual that has established or abandoned 20
Kentucky residency during the calendar year; 21
(28) "Pass-through entity" means any partnership, S corporation, limited liability 22
company, limited liability partnership, limited partnership, or similar entity 23
recognized by the laws of this state that is not taxed for federal purposes at the 24
entity level, but instead passes to each partner, member, shareholder, or owner their 25
proportionate share of income, deductions, gains, losses, credits, and any other 26
similar attributes; 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 123 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(29) "Payroll period" has the same meaning as in Section 3401(b) of the Internal 1
Revenue Code; 2
(30) "Person" has the same meaning as in Section 7701(a)(1) of the Internal Revenue 3
Code; 4
(31) "Registered business" means a business entity that owns or otherwise possesses 5
critical infrastructure and that is registered to do business in the state prior to the 6
declared state disaster or emergency; 7
(32) "Resident" means an individual domiciled within this state or an individual who is 8
not domiciled in this state, but maintains a place of abode in this state and spends in 9
the aggregate more than one hundred eighty-three (183) days of the taxable year in 10
this state; 11
(33) "S corporation" has the same meaning as in Section 1361(a) of the Internal Revenue 12
Code; 13
(34) "State" means a state of the United States, the District of Columbia, the 14
Commonwealth of Puerto Rico, or any territory or possession of the United States; 15
(35) "Taxable net income": 16
(a) In the case of corporations that are taxable in this state, means "net income" as 17
defined in subsection (24) of this section; 18
(b) In the case of corporations that are taxable in this state and taxable in another 19
state, means "net income" as defined in subsection (24) of this section and as 20
allocated and apportioned under KRS 141.120; 21
(c) For homeowners' associations as defined in Section 528(c) of the Internal 22
Revenue Code, means "taxable income" as defined in Section 528(d) of the 23
Internal Revenue Code. Notwithstanding the provisions of subsection (21) of 24
this section, the Internal Revenue Code sections referred to in this paragraph 25
shall be those code sections in effect for the applicable tax year; and 26
(d) For a corporation that meets the requirements established under Section 856 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 124 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
of the Internal Revenue Code to be a real estate investment trust, means "real 1
estate investment trust taxable income" as defined in Section 857(b)(2) of the 2
Internal Revenue Code, except that a captive real estate investment trust shall 3
not be allowed any deduction for dividends paid; 4
(36) "Taxable year" means the calendar year or fiscal year ending during such calendar 5
year, upon the basis of which net income is computed, and in the case of a return 6
made for a fractional part of a year under the provisions of this chapter or under 7
administrative regulations prescribed by the commissioner, "taxable year" means 8
the period for which the return is made; and 9
(37) "Wages" has the same meaning as in Section 3401(a) of the Internal Revenue Code 10
and includes other income subject to withholding as provided in Section 3401(f) 11
and Section 3402(k), (o), (p), (q), and (s) of the Internal Revenue Code. 12
Section 31. KRS 243.027 is amended to read as follows: 13
(1) KRS 243.027 to 243.029 shall supersede any conflicting statute in KRS Chapters 14
241 to 244. 15
(2) A direct shipper Type A license shall authorize the holder to ship alcoholic 16
beverages to consumers. A direct shipper Type B license shall authorize the holder 17
to ship cannabis-infused beverages to consumers. The department shall issue a 18
direct shipper license to a successful applicant that: 19
(a) Pays the applicable[an] annual license fee[ of one hundred dollars ($100)]; 20
(b) Is a manufacturer located in this state or any other state, a cannabis-infused 21
beverage manufacturer licensed by the Department for Public Health, or an 22
alcoholic beverage supplier licensed under KRS 243.212 or 243.215; and 23
(c) Holds a current license, permit, or other authorization to manufacture or 24
supply alcoholic beverages or cannabis-infused beverages in the state where 25
the applicant is located. If an applicant is located outside of Kentucky, proof 26
of its current license, permit, or other authorization as issued by its home state 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 125 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
shall be sufficient proof of its eligibility to hold a direct shipper license in 1
Kentucky. 2
(3) (a) A manufacturer applicant shall only be authorized to ship[ alcoholic] 3
beverages that are sold under a brand name owned or exclusively licensed to 4
the manufacturer, provided the[ alcoholic] beverages were: 5
1. Produced by the manufacturer; 6
2. Produced for the manufacturer under a written contract with another 7
manufacturer; or 8
3. Bottled or canned for or by the manufacturer. 9
(b) An applicant licensed under KRS 243.212 or 243.215 shall only be authorized 10
to ship alcoholic beverages or cannabis-infused beverages for which it is the 11
primary source of supply. 12
(4) The department shall establish the form for a direct shipper license application 13
through the promulgation of an administrative regulation. These requirements shall 14
include only the following: 15
(a) The address of the manufacturer or supplier; and 16
(b) If the applicant is located outside this state, a copy of the applicant's current 17
license, permit, or other authorization to manufacture, store, or supply 18
alcoholic beverages or cannabis-infused beverages in the state where the 19
applicant is located. 20
(5) For purposes of this section, the holder of a direct shipper license may utilize the 21
services of a third party to fulfill shipments, subject to the following: 22
(a) The third party shall not be required to hold any alcoholic beverage license or 23
cannabis-infused beverage license, but no licensed entity shall serve as a 24
third party to fulfill shipments other than the holder of a storage license or 25
transporter's license; 26
(b) The third party may operate from the premises of the direct shipper licensee 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 126 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
or from another business location; and 1
(c) The direct shipper licensee shall be liable for any violation of KRS 242.250, 2
242.260, 242.270, or 244.080 that may occur by the third party. 3
(6) A direct shipper licensee shall: 4
(a) Agree that the Secretary of State shall serve as its registered agent for service 5
of process. The licensee shall agree that legal service on the agent constitutes 6
legal service on the direct shipper licensee; 7
(b) Maintain the records required under KRS 243.027 to 243.029 and provide the 8
department and the Department of Revenue access to or copies of these 9
records; 10
(c) Allow the department or the Department of Revenue to perform an audit of 11
the direct shipper licensee's records or an inspection of the direct shipper 12
licensee's licensed premises upon request. If an audit or inspection reveals a 13
violation, the department or the Department of Revenue may recover 14
reasonable expenses from the licensee for the cost of the audit or inspection; 15
(d) Register with the Department of Revenue, and file all reports and pay all taxes 16
required under KRS 243.027 to 243.029; and 17
(e) Submit to the jurisdiction of the Commonwealth of Kentucky for any 18
violation of KRS 242.250, 242.260, 242.270, or 244.080 or for nonpayment 19
of any taxes owed. 20
(7) (a) Each direct shipper licensee shall submit to the department and the 21
Department of Revenue a quarterly report for that direct shipper license 22
showing: 23
1. The total amount of[ alcoholic] beverages shipped into the state per 24
consumer; 25
2. The name and address of each consumer; 26
3. The purchase price of the[ alcoholic] beverages shipped and the amount 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 127 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
of taxes charged to the consumer for the[ alcoholic] beverages shipped; 1
and 2
4. The name and address of each common carrier. 3
(b) The Department of Revenue shall create a form through the promulgation of 4
an administrative regulation for reporting under paragraph (a) of this 5
subsection. 6
(c) The department shall provide a list of all active direct shipper licensees to 7
licensed common carriers on a quarterly basis to reduce the number of 8
unlicensed shipments in the Commonwealth. 9
(8) A direct shipper licensee shall submit a current copy of its alcoholic beverage 10
license or cannabis-infused beverage license from its home state along with the 11
applicable[one hundred dollar ($100)] license fee every year upon renewal of its 12
direct shipper license. 13
(9) Notwithstanding any provision of this section to the contrary, a manufacturer 14
located and licensed in Kentucky may ship by a common carrier holding a 15
Kentucky transporter's license samples of alcoholic beverages produced by the 16
manufacturer in quantities not to exceed one (1) liter, per any recipient, of any 17
individual product in one (1) calendar year of distilled spirits or wine, or ninety-six 18
(96) ounces, per any recipient, of any individual product in one (1) calendar year of 19
malt beverages, to any of the following: 20
(a) Marketing or media representatives twenty-one (21) years of age or older; 21
(b) Distilled spirits, wine, or malt beverage competitions or contests; 22
(c) Wholesalers or distributors located outside of Kentucky; 23
(d) Federal, state, or other regulatory testing labs; 24
(e) Third-party product formulation and development partners; and 25
(f) Persons or entities engaged in a private selection event pursuant to KRS 26
243.0305. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 128 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
Such samples shall be marked by affixing across the product label, a not readily 1
removed disclaimer with the words "Sample-Not for Sale" and the name of the 2
manufacturer. 3
Section 32. KRS 243.030 is amended to read as follows: 4
The following licenses that authorize traffic in distilled spirits and wine and in cannabis-5
infused beverages may be issued by the distilled spirits administrator. Licenses that 6
authorize traffic in all alcoholic beverages may be issued by both the distilled spirits 7
administrator and malt beverages administrator. The licenses and their accompanying 8
fees are as follows: 9
(1) Distiller's license: 10
(a) Class A, per annum .............................................................................$3,090.00 11
(b) Class B (craft distillery), per annum ....................................................$1,000.00 12
(c) Off-premises retail sales outlet, per annum ............................................$300.00 13
(2) Rectifier's license: 14
(a) Class A, per annum .............................................................................$2,580.00 15
(b) Class B (craft rectifier), per annum ........................................................$825.00 16
(3) Winery license, per annum ..........................................................................$1,030.00 17
(4) Small farm winery license, per annum ...........................................................$110.00 18
(a) Small farm winery off-premises retail license, per annum ......................$30.00 19
(5) Wholesaler's license, per annum ..................................................................$2,060.00 20
(6) Quota retail package license, per annum .........................................................$570.00 21
(7) Quota retail drink license, per annum ..............................................................$620.00 22
(8) Transporter's license, per annum ....................................................................$210.00 23
(9) Special nonbeverage alcohol license, per annum .............................................$60.00 24
(10) Special agent's or solicitor's license, per annum ...............................................$30.00 25
(11) Bottling house or bottling house storage license, per annum ......... .............$1,030.00 26
(12) Special temporary license, per event ..............................................................$100.00 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 129 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(13) Special Sunday retail drink license, per annum ............................................. $520.00 1
(14) Caterer's license, per annum .......................................................................... $830.00 2
(15) Special temporary alcoholic beverage auction license, per event ...................$100.00 3
(16) Extended hours supplemental license, per annum .......................................$2,060.00 4
(17) Hotel in-room license, per annum ...................................................................$210.00 5
(18) Air transporter license, per annum ..................................................................$520.00 6
(19) Sampling license, per annum ...........................................................................$110.00 7
(20) Replacement or duplicate license ......................................................................$25.00 8
(21) Entertainment destination center license: 9
(a) When the licensee is a city, county, urban-county government, 10
consolidated local government, charter county government, or 11
unified local government, per annum .................................................$2,577.00 12
(b) All other licensees, per annum ............................................................$7,730.00 13
(22) Limited restaurant license, per annum .... ........................................................$780.00 14
(23) Limited golf course license, per annum ...........................................................$720.00 15
(24) Small farm winery wholesaler's license, per annum .......................................$110.00 16
(25) Qualified historic site license, per annum ....................................................$1,030.00 17
(26) Nonquota type 1 license, per annum ........................ ...................................$4,120.00 18
(27) Nonquota type 2 license, per annum ................................................................$830.00 19
(28) Nonquota type 3 license, per annum ................................................................$310.00 20
(29) Distilled spirits and wine storage license, per annum ..................................$620.00 21
(30) Out-of-state distilled spirits and wine supplier's license, per annum ..........$1, 550.00 22
(31) Limited out-of-state distilled spirits and wine supplier's 23
license, per annum ..........................................................................................$260.00 24
(32) Authorized public consumption license, per annum ........................................$250.00 25
(33) Direct shipper Type A license, per annum .......................................................$100.00 26
(34) Limited nonquota package license, per annum ................................................$300.00 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 130 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(35) Vintage distilled spirits license, per annum .....................................................$300.00 1
(36) Cannabis-infused beverage retail package license, per annum .................$2,000.00 2
(37) Cannabis-infused beverage distributor's license, per annum ....................$1,000.00 3
(38) Cannabis-infused beverage distributor's license, 4
supplemental, per annum ............................................................................$1,000.00 5
(39) Direct shipper Type B license, per annum ..................................................$1,000.00 6
(40) A nonrefundable fee of sixty dollars ($60) shall be charged to process each new 7
transitional license pursuant to KRS 243.045. 8
(41)[(37)] Other special licenses the board finds necessary for the proper regulation and 9
control of the traffic in distilled spirits and wine and provides for by administrative 10
regulation. In establishing the amount of license taxes that are required to be fixed 11
by the board, it shall have regard for the value of the privilege granted. 12
(42)[(38)] The fee for each of the first five (5) supplemental bar licenses shall be the 13
same as the fee for the primary retail drink license. There shall be no charge for 14
each supplemental license issued in excess of five (5) to the same licensee at the 15
same premises. 16
A nonrefundable application fee of fifty dollars ($50) shall be charged to process each 17
new application under this section, except for subsections (4), (8), (9), (10), (12), (15), 18
(19), and (20) of this section. The application fee shall be applied to the licensing fee if 19
the license is issued; otherwise it shall be retained by the department. 20
Section 33. KRS 243.040 is amended to read as follows: 21
The following kinds of malt beverage licenses may be issued by the malt beverages 22
administrator, the fees for which shall be: 23
(1) Brewer's license, per annum ........................................................................$2,580.00 24
(2) Microbrewery license, per annum ...................................................................$520.00 25
(3) Distributor's license, per annum ......................................................................$520.00 26
(4) Nonquota retail malt beverage package license, per annum ............................$210.00 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 131 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(5) Out-of-state malt beverage supplier's license, 1
per annum ....................................................................................................$1,550.00 2
(6) Malt beverage storage license, per annum ......................................................$260.00 3
(7) Replacement or duplicate license, per annum ...................................................$25.00 4
(8) Limited out-of-state malt beverage supplier's license, 5
per annum .......................................................................................................$260.00 6
(9) Nonquota type 4 malt beverage drink license, 7
per annum .......................................................................................................$210.00 8
(10) Direct shipper Type A license, per annum .......................................................$100.00 9
(11) The holder of a nonquota retail malt beverage package license may obtain a 10
Nonquota type 4 malt beverage drink license for a fee of fifty dollars ($50). The 11
holder of a Nonquota type 4 malt beverage drink license may obtain a nonquota 12
retail malt beverage package license for a fee of fifty dollars ($50). 13
(12) A nonrefundable fee of sixty dollars ($60) shall be charged to process each new 14
transitional license pursuant to KRS 243.045. 15
(13) Other special licenses as the state board finds to be necessary for the administration 16
of KRS Chapters 241 to 244 and for the proper regulation and control of the 17
trafficking in malt beverages, as provided for by administrative regulations 18
promulgated by the state board. 19
A nonrefundable application fee of fifty dollars ($50) shall be charged to process each 20
new application for a license under this section. The application fee shall be applied to 21
the licensing fee if the license is issued, or otherwise the fee shall be retained by the 22
department. 23
Section 34. KRS 154.20-220 is amended to read as follows: 24
As used in KRS 154.20-220 to 154.20-229: 25
(1) "Affiliate" means the following: 26
(a) Members of a family, including only brothers and sisters of the whole or half 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 132 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
blood, spouse, ancestors, and lineal descendants of an individual; 1
(b) An individual, and a corporation more than fifty percent (50%) in value of the 2
outstanding stock of which is owned, directly or indirectly, by or for that 3
individual; 4
(c) An individual, and a limited liability company of which more than fifty 5
percent (50%) of the capital interest or profits are owned or controlled, 6
directly or indirectly, by or for that individual; 7
(d) Two (2) corporations which are members of the same controlled group, which 8
includes and is limited to: 9
1. One (1) or more chains of corporations connected through stock 10
ownership with a common parent corporation if: 11
a. Stock possessing more than fifty percent (50%) of the total 12
combined voting power of all classes of stock entitled to vote or 13
more than fifty percent (50%) of the total value of shares of all 14
classes of stock of each of the corporations, except the common 15
parent corporation, is owned by one (1) or more of the other 16
corporations; and 17
b. The common parent corporation owns stock possessing more than 18
fifty percent (50%) of the total combined voting power of all 19
classes of stock entitled to vote or more than fifty percent (50%) of 20
the total value of shares of all classes of stock of at least one (1) of 21
the other corporations, excluding, in computing the voting power 22
or value, stock owned directly by the other corporations; or 23
2. Two (2) or more corporations if five (5) or fewer persons who are 24
individuals, estates, or trusts own stock possessing more than fifty 25
percent (50%) of the total combined voting power of all classes of stock 26
entitled to vote or more than fifty percent (50%) of the total value of 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 133 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
shares of all classes of stock of each corporation, taking into account the 1
stock ownership of each person only to the extent the stock ownership is 2
identical with respect to each corporation; 3
(e) A grantor and a fiduciary of any trust; 4
(f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a 5
grantor of both trusts; 6
(g) A fiduciary of a trust and a beneficiary of that trust; 7
(h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a 8
grantor of both trusts; 9
(i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value 10
of the outstanding stock of which is owned, directly or indirectly, by or for the 11
trust or by or for a person who is a grantor of the trust; 12
(j) A fiduciary of a trust and a limited liability company more than fifty percent 13
(50%) of the capital interest, or the interest in profits, of which is owned 14
directly or indirectly, by or for the trust or by or for a person who is a grantor 15
of the trust; 16
(k) A corporation, a partnership, or a limited partnership if the same persons own: 17
1. More than fifty percent (50%) in value of the outstanding stock of the 18
corporation; and 19
2. More than fifty percent (50%) of the capital interest, or the profits 20
interest, in the partnership or limited partnership; 21
(l) A corporation and a limited liability company if the same persons own: 22
1. More than fifty percent (50%) in value of the outstanding stock of the 23
corporation; and 24
2. More than fifty percent (50%) of the capital interest or the profits in the 25
limited liability company; 26
(m) A partnership or limited partnership and a limited liability company if the 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 134 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
same persons own: 1
1. More than fifty percent (50%) of the capital interest or profits in the 2
partnership or limited partnership; and 3
2. More than fifty percent (50%) of the capital interest or the profits in the 4
limited liability company; and 5
(n) Two (2) or more limited liability companies, if the same persons own more 6
than fifty percent (50%) of the capital interest or are entitled to more than fifty 7
percent (50%) of the capital profits in the limited liability companies; 8
(2) "Approved company" means an eligible company that has received final approval 9
from the authority; 10
(3) "Authority" means the Kentucky Economic Development Finance Authority 11
established by KRS 154.20-010; 12
(4) "Colocation tenant" means an entity that contracts with the owner or operator for 13
space within a qualified data center project; 14
(5) "Commonwealth" means the Commonwealth of Kentucky; 15
(6) "Data center equipment": 16
(a) Means computer equipment and software for the processing, storage, retrieval, 17
or communication of data, used directly and exclusively in a qualified data 18
center project, including but not limited to: 19
1. a. Servers; 20
b. Routers; 21
c. Connections; 22
d. Monitoring and security systems for the data center equipment; 23
e. Fiber optic cabling and network equipment leading to and from the 24
data center project; and 25
f. Other enabling machinery, equipment, and hardware; 26
regardless of whether the property is affixed to or incorporated into real 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 135 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
property; 1
2. Equipment used in the operation of computer equipment or software or 2
for the benefit of the data center project, including component parts, 3
installations, refreshments, replacements, and upgrades, regardless of 4
whether the property is affixed to or incorporated into real property; 5
3. All equipment necessary for the transformation, generation, distribution, 6
or management of electricity that is required to operate computer server 7
equipment, including substations, generators, uninterruptible energy 8
equipment, supplies, conduit, fuel piping and storage, cabling, duct 9
banks, switches, switchboards, batteries, testing equipment, and backup 10
generators; 11
4. All equipment necessary to cool and maintain a controlled environment 12
for the operation of the computer servers and other components of the 13
data center project, including chillers, mechanical equipment, refrigerant 14
piping, fuel piping and storage, adiabatic and free cooling systems, 15
cooling towers, water softeners, air handling units, indoor direct 16
exchange units, fans, ducting, and filters; 17
5. All water conservation systems for the equipment, including facilities or 18
mechanisms that are designed to collect, conserve, and reuse water; 19
6. All computer server equipment, chassis, networking equipment, 20
switches, racks, fiber optic and copper cabling, trays, and conduit; 21
7. All monitoring equipment and security systems for the data center 22
project, including security system monitoring services; 23
8. All software and prewritten computer software access services; 24
9. Extended warranty services with respect to data center equipment; and 25
10. Any other tangible personal property that is essential to the operations of 26
the qualified data center project, excluding: 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 136 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
a. Electricity used by a qualified data center project; and 1
b. Property used for administrative purposes at the data center 2
project, including office equipment; and 3
(b) Does not include: 4
1. Construction equipment; or 5
2. Building and construction materials permanently incorporated as an 6
improvement to real property; 7
(7) "Department" means the Department of Revenue; 8
(8) "Eligible company": 9
(a) Means any corporation, limited liability company, partnership. limited 10
partnership, sole proprietorship, business trust, or any other entity with a 11
qualified data center project; and 12
(b) Includes an operator, an owner, a project organizer, and a colocation tenant; 13
(9) "Eligible costs" means expenditures made by the preliminarily approved company 14
or approved company after preliminary approval for the purchase, installation, 15
repair, and replacement of data center equipment for the qualified data center 16
project; 17
(10) "Final approval" means the action taken by the authority to verify that, on or before 18
the fifth anniversary of the preliminary approval, the minimum capital investment 19
has been made, with respect to the data center project; 20
(11) "Memorandum of agreement" means the agreement between the eligible company 21
and the authority executed under KRS 154.20-229; 22
(12) "Operator": 23
(a) Means any entity, other than an owner, a project organizer, or a colocation 24
tenant: 25
1. Operating a qualified data center project pursuant to a lease or other 26
contract with the owner; and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 137 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
2. Responsible for the control, oversight, or maintenance of a data center 1
project; and 2
(b) Includes: 3
1. An affiliate of an operator; 4
2. A licensed property management company; 5
3. A property lessor; or 6
4. Any other individual or entity responsible for the control, oversight, or 7
maintenance of a data center project; 8
(13) "Owner" means an entity, other than a project organizer, holding fee title to a data 9
center project and includes an affiliate of an owner; 10
(14) "Preliminary approval" means the action taken by the authority to enter into a 11
memorandum of agreement with an eligible company; 12
(15) "Project organizer" means an entity that: 13
(a) Solely provides qualified data center infrastructure for a qualified data center 14
project; and 15
(b) Will enter into or has entered into a separate agreement with another entity for 16
the purchase, use, or operation of the qualified data center infrastructure; 17
(16) "Qualified data center infrastructure" means providing site development and 18
organization for a qualified data center project, including but not limited to: 19
(a) An uninterruptible power supply, including electrical substations and backup 20
generators for safety against power disruptions; 21
(b) Availability of water and natural gas service, including any necessary 22
infrastructure; and 23
(c) Multiple layers of security, including: 24
1. Physical security at the data center project, including fencing, entry 25
control and monitoring, or security guards; 26
2. Infrastructure monitoring, including monitoring for water, power, 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 138 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
telecommunications, and internet connectivity; and 1
3. Environmental control measures, including sensors or responsive 2
equipment for detecting fire, flood, or other natural disasters; 3
(17) "Qualified data center project": 4
(a) Means: 5
1. Providing qualified data center infrastructure; 6
2. Acquiring, leasing, rehabilitating, expanding, or constructing one (1) or 7
more buildings that: 8
a. House a group of networked server computers in order to 9
centralize the storage, management, and dissemination of data and 10
information for a single project; and 11
b. Contain: 12
i. Dedicated cooling equipment for the computing machines 13
and related infrastructure; 14
ii. Extra capacity for data redundancy, including the ability to 15
maintain or replace equipment without a system shutdown; 16
and 17
iii. Physically isolated systems to avoid disruption from both 18
planned and unplanned events; or 19
3. Any combination of the activities described in subparagraphs 1. 20
and 2. of this paragraph; 21
(b) Has the following minimum capital investment on or before the fifth 22
anniversary of the preliminary approval: 23
1. For an owner, operator, or colocation tenant, at least: 24
a. Four hundred fifty million dollars ($450,000,000) if located in a 25
county having a population equal to or greater than one hundred 26
thousand (100,000); 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 139 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
b. One hundred million dollars ($100,000,000) if located in a 1
county having a population greater than fifty thousand (50,000) 2
but less than one hundred thousand (100,000); or 3
c. Twenty-five million dollar ($25,000,000) if located in a county 4
having a population of not more than fifty thousand (50,000); 5
determined using the county's population estimate from the most 6
recently available five (5) year American Community Survey as 7
published by the United States Census Bureau at the time of 8
application by the eligible company; or 9
2. For a project organizer, at least one hundred fifty million dollars 10
($150,000,000); 11
(c)[ Is located within a consolidated local government having a population equal 12
to or greater than five hundred thousand (500,000), determined using the 13
county's population estimate from the most recently available five (5) year 14
American Community Survey as published by the United States Census 15
Bureau at the time of application by the eligible company; 16
(d)] Does not include any data center project that: 17
1. Will result in the replacement of data centers existing in the 18
Commonwealth; 19
2. Applies for or accepts any other economic development incentives 20
under KRS Chapter 154; or 21
3. Benefits from the sales and use tax exemption for the sale or purchase of 22
electricity used in commercial mining of cryptocurrency; and 23
(18) "Term" means the period of time for which a memorandum of agreement may be in 24
effect, which shall not exceed: 25
(a) Fifteen (15) years for a qualified data center project of a project organizer; 26
and 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 140 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(b) For any other qualified data center project: 1
1. Fifty (50) years for a data center project having a capital investment 2
equal to or greater than four hundred fifty million dollars 3
($450,000,000); or 4
2. Twenty-five (25) years for a data center project having a capital 5
investment less than four hundred fifty million dollars ($450,000,000). 6
Section 35. 2025 RS HB 566/EN, Section 3, is amended to read as follows: 7
(1) There is hereby created and established the Kentucky Horse Racing and Gaming 8
Corporation to regulate all forms of live horse racing, pari-mutuel wagering, sports 9
wagering, breed integrity and development, and on and after July 1, 2025, 10
charitable gaming, in the Commonwealth, exclusive of the state lottery established 11
under KRS Chapter 154A. It shall be an independent, de jure municipal corporation 12
and political subdivision of the Commonwealth of Kentucky which shall be a public 13
body corporate and politic. The corporation shall be deemed a public agency within 14
the meaning of KRS 61.805 and 61.870. The corporation shall be managed in such 15
a manner that enables the people of the Commonwealth to benefit from its actions 16
and to enjoy the best possible racing and gaming experiences. The General 17
Assembly hereby recognizes that the operations of racing and gaming are unique 18
activities for state government and that a corporate structure will best enable racing 19
and gaming to be managed in a businesslike manner. It is the intent of the General 20
Assembly that the Kentucky Horse Racing and Gaming Corporation shall be 21
accountable to the Governor, the General Assembly, and the people of the 22
Commonwealth. 23
(2) (a) 1. The Auditor of Public Accounts shall perform an audit of the 24
corporation once every four (4) years, a copy of which shall be sent to 25
the Governor and the Legislative Research Commission. 26
2. A different auditing entity that is qualified to evaluate municipal 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 141 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
corporations shall conduct an annual audit of the corporation once each 1
year in every year when the Auditor of Public Accounts does not 2
perform an audit. A copy of this audit shall be sent to the Governor and 3
Legislative Research Commission. 4
3. This first audit conducted under this subsection shall cover fiscal year 5
2024-2025[2026-2027]. 6
(b) The corporation shall submit a written annual report to the Governor and the 7
Legislative Research Commission on or before July 1 of each year. The first 8
report shall be due July 1, 2025. The corporation shall file any additional 9
reports requested by the Governor or the Legislative Research Commission. 10
The annual report shall include the following information: 11
1. The receipts and disbursements of the corporation; and 12
2. Actions taken by the corporation. 13
(c) The corporation may submit any additional information and recommendations 14
that the corporation considers useful or that the Governor or the Legislative 15
Research Commission requests. 16
(3) The Kentucky Horse Racing and Gaming Corporation shall be administered by a 17
board of directors to regulate the conduct of: 18
(a) Live horse racing; 19
(b) Pari-mutuel wagering; 20
(c) Sports wagering; 21
(d) Charitable gaming on and after July 1, 2025; 22
(e) Breed integrity and development; and 23
(f) Related activities within the Commonwealth of Kentucky. 24
(4) (a) The corporation shall establish and maintain a general office for the 25
transaction of its business and may, in its discretion, establish a branch office 26
or offices. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 142 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(b) The corporation may hold meetings at any of its offices or at any other place 1
at its convenience. 2
(c) A majority of the voting members of the corporation shall constitute a quorum 3
for the transaction of its business or exercise of any of its powers. 4
(5) Except as otherwise provided, the corporation shall be responsible for the 5
following: 6
(a) Developing and implementing programs designed to ensure the safety and 7
well-being of horses, jockeys, and drivers; 8
(b) Developing programs and procedures that will fulfill its oversight and 9
regulatory role on such matters as medical practices and integrity issues; 10
(c) Recommending tax incentives and implementing incentive programs to ensure 11
the strength and growth of the equine industry; 12
(d) Designing and implementing programs that strengthen the ties between 13
Kentucky's horse industry and the state's universities, with the goal of 14
significantly increasing the economic impact of the horse industry on 15
Kentucky's economy, improving research for the purpose of promoting the 16
enhanced health and welfare of the horse, and other related industry issues; 17
(e) Developing and supporting programs which ensure that Kentucky remains in 18
the forefront of equine research; 19
(f) Designing and implementing programs that support and ensure breed integrity 20
and development; 21
(g) Developing monitoring programs to ensure the highest integrity of sporting 22
events and sports wagering; 23
(h) Developing a program to share wagering information with sports governing 24
bodies upon which sports wagering may be conducted. The program shall be 25
designed to assist the corporation in determining potential problems or 26
questionable activity and provide reports to sports governing bodies 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 143 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
effectively; 1
(i) Developing programs and procedures that will fulfill its oversight and 2
regulatory role to ensure the highest integrity in charitable gaming; 3
(j) Developing programs and procedures that will provide oversight and 4
regulation for all current forms of gaming and wagering; 5
(k) Annually evaluating the allocation and use of funds among the purposes listed 6
in Section 10 of this Act from unredeemed pari-mutuel vouchers; and 7
(l) Ensuring that the correct responsibilities are assigned to each of its offices as 8
established in KRS 230.232. 9
(6) (a) The corporation shall conduct all procurements in accordance with procedures 10
which are not inconsistent with the provisions of KRS Chapter 45A and this 11
chapter; provided, however, that this chapter shall control if and to the extent 12
that any provision in this chapter is expressly inconsistent with any provision 13
of KRS Chapter 45A. 14
(b) The corporation may promulgate administrative regulations establishing its 15
procurement procedures. If the corporation elects to promulgate 16
administrative regulations establishing its procurement procedures rather than 17
conduct procurements in accordance with KRS Chapter 45A, the corporation 18
may include sections of KRS Chapter 45A as part of its administrative 19
regulations. 20
(c) Major procurements for personal service contracts shall not be subject to the 21
requirements of KRS 45A.695(2)(b) due to the unique operational activities 22
conducted for state government by the corporation. The corporation's 23
procurement procedures or administrative regulations shall be designed to 24
provide for the purchase of supplies, equipment, services, and construction 25
items that provide the greatest long-term benefit to the state and the greatest 26
integrity for the corporation and the public. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 144 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(d) In its bidding and negotiation processes, the corporation may do its own 1
bidding and procurement, or may utilize the services of the Finance and 2
Administration Cabinet, or a combination thereof. The president of the 3
corporation may, in lieu of the secretary of the Finance and Administration 4
Cabinet, declare an emergency for purchasing purposes. 5
(7) Corporation records shall be open and subject to public inspection in accordance 6
with KRS 61.870 to 61.884 unless: 7
(a) A record is exempted from inspection under KRS 61.878; 8
(b) A record involves a trade secret or other legally protected intellectual property 9
or confidential proprietary information of the corporation or of an applicant, 10
licensee, individual, or entity having submitted information of such character 11
to the corporation, in which case, the portion of the record relating to these 12
subjects may be closed; or 13
(c) The disclosure of the record could impair or adversely affect the operational 14
security of the corporation in the regulation of matters within its jurisdiction 15
or could impair or adversely impact the operational security of applicants or 16
licensees. 17
(8) Meetings of the corporation through its board of directors shall be open to the 18
public in accordance with KRS 61.800 to 61.850 unless the exceptions set forth in 19
KRS 61.810 apply or the meeting addresses trade secrets, confidential or 20
proprietary information, or operational security issues as described in subsection 21
(7)(c) of this section. If this is the case, the corporation may meet in closed session 22
and shall follow the procedures set forth in KRS 61.815. 23
(9) The corporation may participate in all state agency price contracts to the same 24
extent as agencies of the Commonwealth in accordance with KRS 45A.050(3). 25
(10) (a) The corporation is hereby authorized to accept and expend such moneys as 26
may be appropriated by the General Assembly or such moneys as may be 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 145 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
received from any source for effectuating its purposes, including without 1
limitation the payment of the initial expenses of administration and operation 2
of the corporation. 3
(b) After the transfer to the corporation of any funds appropriated in fiscal year 4
2024-2025 and fiscal year 2025-2026 for the administration of this chapter 5
and KRS Chapter 238, the corporation shall be self-sustaining and self-funded 6
and moneys in the state general fund shall not be used or obligated to pay the 7
expenses of the corporation. 8
(11) On July 1, 2024: 9
(a) The Kentucky Horse Racing and Gaming Corporation shall assume all 10
responsibilities of the Kentucky Horse Racing Commission; 11
(b) The Kentucky Horse Racing Commission shall be abolished and all 12
employees of the Kentucky Horse Racing Commission are transferred to the 13
corporation; and 14
(c) All personnel, equipment, and funding shall be transferred from the Kentucky 15
Horse Racing Commission to the Kentucky Horse Racing and Gaming 16
Corporation. 17
(12) On July 1, 2025: 18
(a) The office regulating charitable gaming in the Kentucky Horse Racing and 19
Gaming Corporation shall assume all responsibilities of the Department of 20
Charitable Gaming; 21
(b) The Department of Charitable Gaming shall be abolished and all employees 22
of the Department of Charitable Gaming are transferred to the corporation; 23
and 24
(c) All personnel, equipment, and funding shall be transferred from the 25
Department of Charitable Gaming to the Kentucky Horse Racing and Gaming 26
Corporation. 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 146 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
(13) Notwithstanding any other law to the contrary, nothing in this chapter or KRS 1
Chapter 238 shall authorize the corporation to: 2
(a) Regulate or control horse sales; 3
(b) Require the licensure of horse breeders in their capacity as breeders; 4
(c) Prohibit or restrict any approved, either by statute or administrative 5
regulation, game or charitable gaming activity in use in the Commonwealth as 6
of July 1, 2025, without action by the Kentucky General Assembly; or 7
(d) Exercise jurisdiction over matters within the exclusive national authority of 8
entities designated by the laws of the United States of America. 9
Section 36. (1) Beginning July 1, 2025, until April 15, 2026, the Kentucky 10
Horse Racing and Gaming Corporation shall not authorize additional locations for the 11
play of electronic charity game tickets beyond the office location of the charitable 12
organization, the location where the charitable organization is licensed to conduct bingo, 13
and the location where pre-approved charitable fundraising events are authorized. 14
(2) Subsection (1) of this section shall not: 15
(a) Prevent electronic charity game ticket activities and electronic charity game 16
ticket locations operating prior to July 1, 2025, from being resupplied or updated; or 17
(b) Apply if the corporation promulgates administrative regulations that regulate 18
electronic charity game tickets. 19
Section 37. The Kentucky Horse Racing and Gaming Corporation may 20
promulgate administrative regulations in accordance with KRS 13A.200 to regulate all 21
activities authorized by KRS Chapters 230 and 238 in contemplation of statutes granting 22
additional authority to the corporation that shall go into effect July 1, 2025. 23
Section 38. A claim for refund or credit of a tax overpayment for any taxable 24
period made by an amended return, tax refund application, or any other method on or 25
after the effective date of this Act, and based on the amendments to subsection (3) of 26
Section 4 of this Act or subsection (3) of Section 5 of this Act, shall not be recognized for 27 UNOFFICIAL COPY 25 RS HB 775/EN
Page 147 of 147
HB077520.100 - 1339 - XXXX 3/14/2025 9:32 PM Engrossed
any purpose. 1
Section 39. Sections 4 and 5 of this Act shall apply retroactively to property 2
assessed on or after December 31, 2022. 3
Section 40. Sections 19 to 24, 26, and 35 to 37 of this Act take effect on July 1, 4
2025. 5