Title 307 | Chapter 001 | Regulation 080E
307 KAR 1:080REG
A proposed version of this document exists.
PREVIOUS VERSION
The previous document that this document is based upon is available.
STATEMENT OF EMERGENCY
307 KAR 1:080E
CABINET FOR ECONOMIC DEVELOPMENT
(Emergency Amended After Comments)
307 KAR 1:080E.Kentucky Entertainment Incentive Program (Effective July 1, 2025).
Section 1.
Definitions.(1)
"Above-the-line production crew" is defined by KRS 154.61-010(1).(2)
"Approved company" is defined by KRS 154.61-010(3).(3)
"Applicant" means an eligible company submitting an application for incentives under KRS 154.61-030.(4)
"Application" means an Application for Kentucky Entertainment Incentive (KEI) for tax incentives filed with the Cabinet pursuant to KRS 154.61-030.(5)
"Below-the-line production crew" is defined by KRS 154.61-010(4).(6)
"Cabinet" is defined by KRS 154.61-010(5).(7)
"Commonwealth" is defined by KRS 154.61-010(6).(8)
"Common ownership" means two or more legal entities, such as corporations, limited liability companies, partnerships, and the like, where the:(a)
Entities are owned by the same person(s);(b)
Same person(s) serves as officer(s) or director(s) of those entities; or(c)
Majority of one entity is owned by one or more of the other entities.(9)
"Compensation" is defined by KRS 154.61-010(7).(10)
"Continuous film production" is defined by KRS 154.61-010(8).(11)
"Council" is defined by KRS 154.61-010(9).(12)
"Eligible company" is defined by KRS 154.61-010(11).(13)
"Employee" is defined by KRS 154.61-010(12).(14)
"Enhanced incentive county" is defined by KRS 154.61-010(13).(15)
"Financial interest" means a pecuniary interest that a reasonable person would expect to influence the impartiality of the transaction.(16)
"Kentucky-based company" is defined by KRS 154.61-010(16).(17)
"Kentucky Film Office" means the office created by KRS 154.12-280.(18)
"Kentucky vendor" means an individual or entity that:(a)
Sells or rents a type of property of which more than a de minimis amount is regularly held in its inventory in the ordinary course of business in Kentucky, or provides a service not performed at the filming or production site but in Kentucky, which is the subject of the production expenditure, in its ordinary course of business;(b)
Has a physical location in Kentucky with at least one Kentucky resident employee working at such location on a regular basis. Registering with the Kentucky Secretary of State or appointing a registered agent in Kentucky does not establish a physical location in Kentucky for purposes of this definition;(c)
Is registered with the Kentucky Department of Revenue for collection of sales and use tax where required by law;(d)
Has a local Kentucky business license where required by law. The approved company is required to obtain a copy of the license from any Kentucky vendor where the total amount of purchases exceed $50,000 for such vendor during the period considered in the application and approval by the council; and(e)
Provides services rendered on set or within the Commonwealth and:1.
Is identified on the daily production reports; or2.
Can provide other reasonable evidence that such services were rendered within the Commonwealth.(19)
"Negotiated" means an arm's-length transaction between two (2) or more parties who are unrelated and unaffiliated, and entered into voluntarily in an open market where the parties acted in their own self-interest.(20)
"Non-resident" is any individual not meeting the definition of a "resident" under KRS 154.61-010(22).(21)
"Pass-through entity" is defined by KRS 141.010(28).(22)
"Person" is defined by KRS 154.61-010(20).(23)
"Program" means the Kentucky Entertainment Incentive Program established by KRS 141.383, 154.61-020, and 154.61-030.(24)
"Qualifying expenditure" is defined by KRS 154.61-010(21).(25)
"Qualifying Kentucky crew training program" means a training program offered in conjunction with a motion picture or entertainment production, as defined by KRS 154.61-010(18), in partnership with:(a)
An accredited Kentucky educational institution;(b)
A local trade association; or(c)
A regional educational or trade association.(26)
"Qualifying payroll expenditure" is defined by KRS 154.61-010(22).(27)
"Resident" is defined by KRS 154.61-010(23).Section 2.
Qualifying Payroll Expenditures under the Kentucky Entertainment Incentive Program.(1)
Qualifying payroll expenditures submitted to the Cabinet by an approved company shall only include those expenditures made in Kentucky for services performed in the Commonwealth by above-the-line production crew or below-the-line production crew.(2)
When submitting qualifying payroll expenditures for above-the-line production crew, an approved company shall demonstrate to the Cabinet that the employee's salary was negotiated prior to commencement of the production. Salaries paid to above-the-line production crew with a financial interest in the approved company shall be disclosed and accompanied by supporting documentation, to the Cabinet's satisfaction, demonstrating the payroll expenditure was reasonable within market rates. Financial interest shall extend to parent companies, subsidiaries, or any other related individuals or entities deriving income, profits, or loss from the approved company.(3)
When submitting qualifying payroll expenditures made in the Commonwealth for services performed in the Commonwealth, an approved company shall demonstrate to the Cabinet that the employee rendered the service on-set or otherwise within the Commonwealth. Compensation for services conducted or rendered both in the Commonwealth and outside of the Commonwealth shall only qualify as a qualified payroll expenditure to the extent the service is physically rendered in the Commonwealth. If an approved company is unable to track the cost of the services physically rendered in Commonwealth, then some other reasonable method which approximates the cost of the services rendered in the Commonwealth may be used to determine the amount attributable to the Commonwealth subject to adjustment by the Cabinet.(4)
Failing to provide documentation when requested by the Cabinet shall result in expenditures being disqualified and the claimed qualifying payroll expenditure being excluded.Section 3.
Qualifying Expenditures under the Kentucky Entertainment Incentive Program.(1)
An approved company submitting qualifying expenditures to the Cabinet shall only include expenditures made in the Commonwealth for one or more of the categories listed in KRS 154.61-010(21)(a)(1) through (9).(2)
Expenditures shall be considered made in the Commonwealth where they are made to a Kentucky vendor.(3)
Expenditures shall not be considered to be made in the Commonwealth when those expenditures are paid to a Kentucky vendor acting as a conduit, waypoint, or pass-through entity solely to enable the purchases or rentals to qualify as qualifying expenditures.(4)
Expenditures made to persons with common ownership or a financial interest with an approved company shall be accompanied by supporting documentation, to the Cabinet's satisfaction, demonstrating the expenditure was reasonable within market rates. Supporting documentation shall disclose the total value of goods and services provided for the project as well as a breakdown of all such related party transactions. Common ownership shall extend to parent companies, subsidiaries, or any other related individuals or entities deriving income, profits, or loss from the approved company.(5)
Failing to provide documentation when requested by the Cabinet shall result in expenditures being disqualified and the claimed qualifying expenditure being excluded.Section 4.
Application Requirements.(1)
Applicants seeking incentives under the program shall submit an Application for Kentucky Entertainment Incentive (KEI) to the Cabinet that includes:(a)
The name and address of the applicant;(b)
Verification that the applicant is a Kentucky-based company;(c)
The preliminary production script or a detailed synopsis of the script;(d)
The locations where the filming or production will occur;(e)
The anticipated date on which filming or production shall begin in Kentucky;(f)
The anticipated date on which the applicant will complete incurring expenditures in Kentucky;(g)
The total anticipated qualifying expenditures;(h)
The total anticipated qualifying payroll expenditures for resident and nonresident above-the-line crew by county;(i)
The total anticipated qualifying payroll expenditures for resident and nonresident below-the-line crew by county;(j)
The address of a Kentucky location at which records of the production will be kept;(k)
An affirmation that if not for the incentive offered under this subchapter, the eligible company would not film or produce the production in the Commonwealth;(l)
Proof of funding for the project. Proof shall demonstrate fifty (50) percent of funds raised through the following:1.
IATSE Bonds, SAG Bonds, Completion Bonds;2.
Payroll statements;3.
Bank statements;4.
Financing or funding contracts; or5.
Commitment letters, where the applicant shall:a.
Demonstrate twenty-five (25) percent of committed funds are held in an escrow account; andb.
Present a balance sheet and letter from an accredited financial institution, attorney, or accountant holding the funds.(m)
Whether the applicant has a distribution contract for the project and supporting plans and documentation regarding distribution;(n)
Whether the applicant has previously received approval for incentives under the program, and, if so, shall specify the year(s) of such approval and amount(s) of incentives received in each year. This information shall include incentives received by any other entity with common ownership or any individual with a financial interest in the applicant. Common ownership extends to parent companies, subsidiaries, or any other related individuals or entities deriving income, profits, or loss from the applicant;(o)
The number of resident and nonresident above-the-line and below-the-line production crew members included by the applicant, or any other entity with common ownership or any individual with a financial interest in the applicant, on a previous application. This information shall include:1.
The date of the application;2.
Whether the application was approved;3.
The dates upon which the crew members were or are to be utilized; and4.
Each crew member's role in the production;(p)
Any deal memoranda between applicants and key personnel;(q)
A detailed episode-by-episode synopsis and committed talent;(r)
A detailed breakdown of the project's budget including all estimated line items used to support claimed qualifying payroll expenditures and qualifying expenditures. All budget line items shall be reasonable and within market rates;(s)
A detailed explanation of timing of the production in the event there are commonly held or financially interested applicants with overlapping personnel; and(t)
Whether there are one (1) or more qualifying Kentucky crew training programs offered in conjunction with the project.(2)
Applicants shall submit a completed application no later than thirty (30) calendar days prior to the date upon which applicant seeks to have the application reviewed by the council.(3)
Within twenty (20) calendar days of receiving an application, the Kentucky Film Office shall notify the applicant:(a)
That the Kentucky Film Office received the application;(b)
Whether, upon initial review, the applicant appears to meet the criteria of an eligible company or whether the Kentucky Film Office requires additional verification or documentation; and(c)
That either:1.
Based upon the annual allocated funds for the program, enough uncommitted incentives remain in the program's calendar year to move forward with an economic analysis and ranking of the application and notification to the council thereof; or2.
Based upon the remaining annual allocated funds for the program, the Kentucky Film Office will not move forward with the application.Section 5.
Incentive Awards. To effectuate the purposes of the program set forth in KRS 154.61-020(1), the amount of incentive awards approved for all applicants in any single calendar month, not otherwise meeting the definition of continuous film production, shall be limited to no more than ten million dollars ($10,000,000) of the total annual tax credit cap under KRS 154.61-020(4). If the amount of incentive awards approved does not meet the ten-million-dollar ($10,000,000) limitation set forth in this subsection, the remainder shall carry forward to the subsequent calendar month. The council may elect to commit more than this monthly allocation in the event a project:(1)
Has anticipated qualifying expenditures and payroll expenditures that exceed this amount; and(2)
Commitment of incentives to the project is supported by the economic analysis set forth in Section 6 of this administrative regulation.Section 6.
Economic Analysis.(1)
The Cabinet shall conduct an economic analysis of each application.(2)
The analysis shall evaluate each application on the:(a)
Percentage of spend in the Commonwealth in relation to the total amount anticipated to be spent on a project;(b)
Relative percentage of total production costs associated with above-the-line and below-the-line production crew costs;(c)
Percentage of project filming or production in enhanced incentive counties;(d)
Number of anticipated employed Kentucky residents compared to the total above-the-line and below-the-line production crew;(e)
Amount of time filming or production will occur in Kentucky;(f)
Presence of a distribution contract;(g)
Percentage of funding secured;(h)
Total amount of incentives sought compared to the number of Kentucky-based below-the-line production crew members employed;(i)
Percentage of incentives sought attributable to non-Kentucky-based production crew members; and(j)
Availability of one (1) or more qualifying Kentucky crew training programs offered in conjunction with the project.(3)
The Cabinet shall conduct an economic analysis of each application submitted under the program based upon the program's purposes set forth in KRS 154.61-020(1)(a) through (d). Analysis shall prioritize applications with more Kentucky-based jobs, committed funding, spend to Kentucky-based vendors residents, qualifying Kentucky crew training programs, and overall economic benefit to Kentucky in relation to the total amount of proposed spend on a project or incentives sought by an eligible company.(4)
For a national touring production of a Broadway show produced in Kentucky in accordance with KRS 154.61-010(18)(a)2., the number of anticipated employed Kentucky residents identified in subsection (2)(d) of this section shall include the number of Kentucky-based jobs at the production's venue supported by the production.(5)
Upon completion of the project, submission of qualifying expenditures and qualifying payroll expenditures, and certification of eligible expenditures by an independent certified public accountant, the Cabinet may reduce the approved incentive amount to an approved company based upon the variation between the approved company's application for incentives and actual expenditures submitted to the Cabinet.Section 7.
Fees. Applicants seeking incentives under the program shall include with their application:(1)
A nonrefundable application fee in the amount of:(a)
$250 where the total amount of qualifying expenditures and qualifying payroll expenditures is less than$50,000;(b)
$500 where the total amount of qualifying expenditures and qualifying payroll expenditures is between $50,000 and $100,000; or(c)
$1,000 where the total amount of qualifying expenditures and qualifying payroll expenditures is more than $100,000; and(2)
An administrative fee of one-half of one percent (0.5%) of the estimated amount of tax incentive sought or $500, whichever is greater.Section 8.
Incorporation by Reference.(1)
"Application for Kentucky Entertainment Incentive (KEI)", September 2025, is incorporated by reference.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Cabinet for Economic Development, Mayo-Underwood Building, 500 Mero Street, Frankfort, Kentucky 40601, Monday through Friday, 8:00 a.m. to 4:30 p.m.HISTORY: COMPILER'S NOTE: 2025 RS HB 6, enacted by the General Assembly on March 27, 2025, altered the information to be provided at the time an administrative regulation is filed. Aside from formatting changes necessary to upload the regulation into the LRC's publication application, this regulation has been published as submitted by the agency.
JEFF NOEL, Secretary
APPROVED BY AGENCY: September 15, 2025
FILED WITH LRC: September 15, 2025 at 10:35 a.m.
CONTACT PERSON: Matthew Wingate, General Counsel, Cabinet for Economic Development, Mayo Underwood Building, 500 Mero Street, Frankfort, Kentucky 40601, phone (502) 782-1948, fax (502) 564-3256, email matthew.wingate@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Matthew Wingate or Dawn Powers
Subject Headings:
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes the application, criteria, fee structure, and economic analysis to evaluate applications for the Kentucky Entertainment Incentive Program.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to administer the Kentucky Entertainment Incentive Program and Kentucky Film Office as required by statute.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the content of the authorizing statutes by establishing the application process and review criteria and requirements for the Kentucky Entertainment Incentive Program.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation assists with the effective administration of the statutes by establishing a framework for prioritizing applications based upon the purpose of the Kentucky Entertainment Incentive Program statutes.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
N/A.
(b) The necessity of the amendment to this administrative regulation:
N/A.
(c) How the amendment conforms to the content of the authorizing statutes:
N/A.
(d) How the amendment will assist in the effective administration of the statutes:
N/A.
(3) Does this administrative regulation or amendment implement legislation from the previous five years?
(4) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
this administrative regulation impacts the applicants to the Kentucky Entertainment Incentive Program. (4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including: (a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: Regulated entities will be able to participate in the Kentucky Entertainment Incentive Program through the established process. (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): Regulated entities will experience no new costs in complying with this administrative regulation. (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): Recipients will be able to participate in the Kentucky Entertainment Incentive Program.
(5) Provide an analysis of how the entities identified in question (4) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (4) will have to take to comply with this administrative regulation or amendment:
Regulated entities will be able to participate in the Kentucky Entertainment Incentive Program through the established process.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (4):
Regulated entities will experience no new costs in complying with this administrative regulation.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (4):
Recipients will be able to participate in the Kentucky Entertainment Incentive Program.
(6) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
No expenses or an unknown amount will be incurred.
(b) On a continuing basis:
No expenses or an unknown amount will be incurred.
(7) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation or this amendment:
Pursuant to KRS 154.61-020, the total tax incentive amount of the Kentucky Entertainment Incentive Program is $75,000,000. Sources of funding for staffing are provided from General Funds provided to the Cabinet and restricted funds from application fees as set by KRS 154.61-030(5) and two and one-half percent (2.5%) of the transient room tax collected pursuant to KRS 142.400, up to the maximum amount of five hundred thousand dollars ($500,000) for the period beginning July 1, 2025, and ending June 30, 2027, as set by KRS 154.12-280(4).
(8) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
Neither an increase in fees nor funding will be necessary to implement this administrative regulation.
(9) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
KRS 154.61-030(5) establishes the fees used in this administrative regulation. This regulation does not increase any fees.
(10) TIERING: Is tiering applied?
Tiering was not appropriate in this administrative regulation because the administrative regulation applies equally to all applicants.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 154.12-280, 154.61-010, 154.61-020, 154.61-030.
(2) Identify the promulgating agency and any other affected state units, parts, or divisions:
Cabinet for Economic Development, other agencies have not been identified.
(a) Estimate the following for the first year:
Expenditures:
The Cabinet does not anticipate expenditures as a result of this administrative regulation.
Revenues:
The Cabinet does not anticipate revenues as a result of this administrative regulation.
Cost Savings:
The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The Cabinet does not expect a change to revenues or cost savings in subsequent years.
(3) Identify affected local entities (for example: cities, counties, fire departments, school districts):
N/A
(a) Estimate the following for the first year:
Expenditures:
The Cabinet does not anticipate expenditures as a result of this administrative regulation.
Revenues:
The Cabinet does not anticipate revenues as a result of this administrative regulation.
Cost Savings:
The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The Cabinet does not expect a change to revenues or cost savings in subsequent years.
(4) Identify additional regulated entities not listed in questions (2) or (3):
Additional regulated entities include applicants to the Kentucky Entertainment Incentive Program.
(a) Estimate the following for the first year:
Expenditures:
The Cabinet does not anticipate expenditures as a result of this administrative regulation.
Revenues:
The Cabinet does not anticipate revenues as a result of this administrative regulation.
Cost Savings:
The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
Expenditures: The Cabinet does not anticipate expenditures as a result of this administrative regulation. Revenues: The Cabinet does not anticipate revenues as a result of this administrative regulation. Cost Savings: The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(5) Provide a narrative to explain the:
(a) Fiscal impact of this administrative regulation:
The administrative regulation implements the application process and review criteria and requirements for the Kentucky Entertainment Incentive Program. The administrative regulation does not create a fiscal impact.
(b) Methodology and resources used to determine the fiscal impact:
N/A.
(6) Explain:
(a) Whether this administrative regulation will have an overall negative or adverse major economic impact to the entities identified in questions (2) - (4). ($500,000 or more, in aggregate)
The administrative regulation will not have a major economic impact – as defined by KRS 13A.010 – on regulated entities.
(b) The methodology and resources used to reach this conclusion:
This administrative regulation does not create a fiscal impact.
STATEMENT OF EMERGENCY
307 KAR 1:080E
CABINET FOR ECONOMIC DEVELOPMENT
(Emergency Amended After Comments)
307 KAR 1:080E.Kentucky Entertainment Incentive Program (Effective July 1, 2025).
Section 1.
Definitions.(1)
"Above-the-line production crew" is defined by KRS 154.61-010(1).(2)
"Approved company" is defined by KRS 154.61-010(3).(3)
"Applicant" means an eligible company submitting an application for incentives under KRS 154.61-030.(4)
"Application" means an Application for Kentucky Entertainment Incentive (KEI)(5)
"Below-the-line production crew" is defined by KRS 154.61-010(4).(6)
"Cabinet" is defined by KRS 154.61-010(5).(7)
"Commonwealth" is defined by KRS 154.61-010(6).(8)
"Common ownership" means two or more legal entities, such as corporations, limited liability companies, partnerships, and the like, where the:(a)
(b)
(c)
(9)
"Compensation" is defined by KRS 154.61-010(7).(10)
"Continuous film production" is defined by KRS 154.61-010(8).(11)
"Council" is defined by KRS 154.61-010(9).(12)
"Eligible company" is defined by KRS 154.61-010(11).(13)
"Employee" is defined by KRS 154.61-010(12).(14)
"Enhanced incentive county" is defined by KRS 154.61-010(13).(15)
"Financial interest" means a pecuniary interest that a reasonable person would expect to influence the impartiality of the transaction.(16)
"Kentucky-based company" is defined by KRS 154.61-010(16).(17)
"Kentucky Film Office" means the office created(18)
"Kentucky vendor" means an individual or entity that:(a)
Sells or rents a type of property of which more than a de minimis amount is regularly held in its inventory in the ordinary course of business in Kentucky, or provides a service not performed at the filming or production site but in Kentucky, which is the subject of the production expenditure, in its ordinary course of business;(b)
Has a physical location in Kentucky with at least one Kentucky resident employee working at such location on a regular basis. Registering with the Kentucky Secretary of State or appointing a registered agent in Kentucky does not establish a physical location in Kentucky for purposes of this definition;(c)
Is registered with the Kentucky Department of Revenue for collection of sales and use tax where required by law;(d)
Has a local Kentucky business license where required by law. The approved company is required to obtain a copy of the license from any Kentucky vendor where the total amount of purchases exceed $50,000 for such vendor during the period considered in the application and approval by the council; and(e)
Provides1.
Is identified on the daily production reports; or2.
Can provide other reasonable evidence that such services were rendered within the Commonwealth.(19)
"Negotiated" means an arm's-length transaction between two (2) or more parties who are unrelated and unaffiliated, and entered into voluntarily in an open market where the parties acted in their own self-interest.(20)
"Non-resident" is any individual not meeting the definition of a "resident" under KRS 154.61-010(22).(21)
"Pass-through entity" is defined by KRS 141.010(28).(22)
"Person" is defined by KRS 154.61-010(20).(23)
"Program" means the Kentucky Entertainment Incentive Program established by KRS 141.383, 154.61-020, and 154.61-030.(24)
"Qualifying expenditure" is defined by KRS 154.61-010(21).(25)
"Qualifying Kentucky crew training program" means a training program offered in conjunction with a motion picture or entertainment production, as defined by KRS 154.61-010(18), in partnership with:(a)
An accredited Kentucky educational institution;(b)
A local trade association; or(c)
A regional educational or trade association.(26)(25)
"Qualifying payroll expenditure" is defined by KRS 154.61-010(22).(27)(26)
"Resident" is defined by KRS 154.61-010(23).Section 2.
Qualifying Payroll Expenditures under the Kentucky Entertainment Incentive Program.(1)
Qualifying payroll expenditures submitted to the Cabinet by an approved company shall only include those expenditures made in Kentucky for services performed in the Commonwealth by above-the-line production crew or below-the-line production crew.(2)
When submitting qualifying payroll expenditures for above-the-line production crew, an approved company shall demonstrate to the Cabinet that the employee's salary was negotiated prior to commencement of the production. Salaries paid to above-the-line production crew(3)
When submitting qualifying payroll expenditures made in the Commonwealth for services performed in the Commonwealth, an approved company shall demonstrate to the Cabinet that the employee rendered the service on-set or otherwise within the Commonwealth. Compensation for services conducted or rendered both in the Commonwealth and outside of the Commonwealth shall only qualify as a qualified payroll expenditure to the extent the service is physically rendered in the Commonwealth. If an approved company is unable to track the cost of the services physically rendered in Commonwealth, then some other reasonable method which approximates the cost of the services rendered in the Commonwealth may be used to determine the amount attributable to the Commonwealth subject to adjustment by the Cabinet.(4)
Failing to provide documentation when requested by the Cabinet shall result in expenditures being disqualified and the claimed qualifying payroll expenditure being excluded.Section 3.
Qualifying Expenditures under the Kentucky Entertainment Incentive Program.(1)
An approved company submitting qualifying expenditures to the Cabinet shall only include expenditures made in the Commonwealth for one or more of the categories listed in KRS 154.61-010(21)(a)(1) through (9).(2)
Expenditures shall be considered made in the Commonwealth where they are made to a Kentucky vendor.(3)
Expenditures shall not be considered to be made in the Commonwealth when those expenditures are paid to a Kentucky vendor acting as a conduit, waypoint, or pass-through entity solely to enable the purchases or rentals to qualify as qualifying expenditures.(4)
Expenditures made to persons with common ownership or a financial interest with an approved company shall(5)
Failing to provide documentation when requested by the Cabinet shall result in expenditures being disqualified and the claimed qualifying expenditure being excluded.Section 4.
Application Requirements.(1)
Applicants seeking incentives under the program shall submit an Application for Kentucky Entertainment Incentive (KEI) to the Cabinet that includes:(a)
The name and address of the applicant;(b)
Verification that the applicant is a Kentucky-based company;(c)
The preliminary production script or a detailed synopsis of the script;(d)
The locations where the filming or production will occur;(e)
The anticipated date on which filming or production shall begin in Kentucky;(f)
The anticipated date on which the applicant will complete incurring expenditures in Kentucky;(g)
The total anticipated qualifying expenditures;(h)
The total anticipated qualifying payroll expenditures for resident and nonresident above-the-line crew by county;(i)
The total anticipated qualifying payroll expenditures for resident and nonresident below-the-line crew by county;(j)
The address of a Kentucky location at which records of the production will be kept;(k)
An affirmation that if not for the incentive offered under this subchapter, the eligible company would not film or produce the production in the Commonwealth;(l)
Proof of funding for the project.1.
IATSE Bonds2.
Payroll statements;3.
Bank statements;4.
Financing or funding contracts5.
Commitment letters, where the applicant shall:a.
Demonstrate twenty-five (25) percent of committed funds are held in an escrow account; andb.
Present a balance sheet and letter from an accredited financial institution, attorney, or accountant holding the funds.(m)
Whether the applicant has a distribution contract for the project and supporting plans and documentation regarding distribution;(n)
Whether the applicant has previously received approval for incentives under the program, and, if so, shall specify the year(s) of such approval and amount(s) of incentives received in each year. This information shall include incentives received by any other entity with common ownership or any individual with a financial interest in the applicant. Common ownership extends to parent companies, subsidiaries, or any other related individuals or entities deriving income, profits, or loss from the applicant;(o)
The number of resident and nonresident above-the-line and below-the-line production crew members included by the applicant, or any other entity with common ownership or any individual with a financial interest in the applicant, on a previous application. This information shall include:1.
The date of the application;2.
Whether the application was approved;3.
The dates upon which the crew members were or are to be utilized; and4.
Each crew member's role in the production;(p)
Any deal memoranda between applicants and key personnel;(q)
A detailed episode-by-episode synopsis and committed talent;(r)
A detailed breakdown of the project's budget including all estimated line items used to support claimed qualifying payroll expenditures and qualifying expenditures. All budget line items shall be reasonable and within market rates;(s)
A detailed explanation of timing of the production in the event there are commonly held or financially interested applicants with overlapping personnel; and(t)
Whether there are one (1) or more qualifying Kentucky crew training programs offered in conjunction with the project.(2)
Applicants shall submit a completed application no later than thirty (30) calendar days prior to the date upon which applicant seeks to have the application reviewed by the council.(3)
Within twenty (20) calendar days of receiving an application, the Kentucky Film Office(a)
That the Kentucky Film Office(b)
Whether, upon initial review, the applicant appears to meet the criteria of an eligible company or whether the Kentucky Film Office(c)
That1.
Based upon the annual allocated funds for the program, enough uncommitted incentives remain in the program's calendar year to move forward with an economic analysis and ranking of the application and notification to the council thereof; or2.
Based upon the remaining annual allocated funds for the program, the Kentucky Film OfficeSection 5.
Incentive Awards. To effectuate the purposes of the program set forth in KRS 154.61-020(1),(1)
(2)
the amount of incentive awards approved for all applicants in any single calendar month, not otherwise meeting the definition of continuous film production, shall be limited to no more than ten million dollars ($10,000,000)(1)
Has anticipated qualifying expenditures and payroll expenditures that exceed this amount; and(2)
Commitment of incentives to the project is supported by the economic analysis set forth in Section 6 of this administrative regulation.Section 6.
Economic Analysis.(1)
The Cabinet shall conduct an economic analysis of each application.(2)
The analysis shall evaluate each application on the:(a)
(b)
(c)
(d)
Number(e)
(f)
(g)
Percentage of funding secured;(h)
Total amount of incentives sought compared to the number of Kentucky-based below-the-line production crew members employed;(i)
Percentage of incentives sought attributable to non-Kentucky-based production crew members; and(j)
Availability of one (1) or more qualifying Kentucky crew training programs offered in conjunction with the project.(3)
The Cabinet shall conduct an economic analysis of(4)
For a national touring production of a Broadway show produced in Kentucky in accordance with KRS 154.61-010(18)(a)2., the number of anticipated employed Kentucky residents identified in subsection (2)(d) of this section shall include the number of Kentucky-based jobs at the production's venue supported by the production.(5)
Upon completion of the project, submission of qualifying expenditures and qualifying payroll expenditures, and certification of eligible expenditures by an independent certified public accountant, the Cabinet may reduce the approved incentive amount to an approved company based upon the variation between the approved company's application for incentives and actual expenditures submitted to the Cabinet.Section 7.
Fees. Applicants seeking incentives under the program shall include with their application:(1)
A nonrefundable application fee in the amount of:(a)
(b)
(c)
(2)
An administrative fee of one-half of one percent (0.5%) of the estimated amount of tax incentive sought orSection 8.
Incorporation by Reference.(1)
"Application for Kentucky Entertainment Incentive (KEI)", September 2025, is incorporated by reference.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Cabinet for Economic Development, Mayo-Underwood Building, 500 Mero Street, Frankfort, Kentucky 40601, Monday through Friday, 8:00 a.m. to 4:30 p.m.HISTORY: COMPILER'S NOTE: 2025 RS HB 6, enacted by the General Assembly on March 27, 2025, altered the information to be provided at the time an administrative regulation is filed. Aside from formatting changes necessary to upload the regulation into the LRC's publication application, this regulation has been published as submitted by the agency.
JEFF NOEL, Secretary
APPROVED BY AGENCY: September 15, 2025
FILED WITH LRC: September 15, 2025 at 10:35 a.m.
CONTACT PERSON: Matthew Wingate, General Counsel, Cabinet for Economic Development, Mayo Underwood Building, 500 Mero Street, Frankfort, Kentucky 40601, phone (502) 782-1948, fax (502) 564-3256, email matthew.wingate@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Matthew Wingate or Dawn Powers
Subject Headings:
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes the application, criteria, fee structure, and economic analysis to evaluate applications for the Kentucky Entertainment Incentive Program.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to administer the Kentucky Entertainment Incentive Program and Kentucky Film Office as required by statute.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the content of the authorizing statutes by establishing the application process and review criteria and requirements for the Kentucky Entertainment Incentive Program.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation assists with the effective administration of the statutes by establishing a framework for prioritizing applications based upon the purpose of the Kentucky Entertainment Incentive Program statutes.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
N/A.
(b) The necessity of the amendment to this administrative regulation:
N/A.
(c) How the amendment conforms to the content of the authorizing statutes:
N/A.
(d) How the amendment will assist in the effective administration of the statutes:
N/A.
(3) Does this administrative regulation or amendment implement legislation from the previous five years?
(4) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
this administrative regulation impacts the applicants to the Kentucky Entertainment Incentive Program. (4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including: (a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: Regulated entities will be able to participate in the Kentucky Entertainment Incentive Program through the established process. (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): Regulated entities will experience no new costs in complying with this administrative regulation. (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): Recipients will be able to participate in the Kentucky Entertainment Incentive Program.
(5) Provide an analysis of how the entities identified in question (4) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (4) will have to take to comply with this administrative regulation or amendment:
Regulated entities will be able to participate in the Kentucky Entertainment Incentive Program through the established process.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (4):
Regulated entities will experience no new costs in complying with this administrative regulation.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (4):
Recipients will be able to participate in the Kentucky Entertainment Incentive Program.
(6) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
No expenses or an unknown amount will be incurred.
(b) On a continuing basis:
No expenses or an unknown amount will be incurred.
(7) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation or this amendment:
Pursuant to KRS 154.61-020, the total tax incentive amount of the Kentucky Entertainment Incentive Program is $75,000,000. Sources of funding for staffing are provided from General Funds provided to the Cabinet and restricted funds from application fees as set by KRS 154.61-030(5) and two and one-half percent (2.5%) of the transient room tax collected pursuant to KRS 142.400, up to the maximum amount of five hundred thousand dollars ($500,000) for the period beginning July 1, 2025, and ending June 30, 2027, as set by KRS 154.12-280(4).
(8) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
Neither an increase in fees nor funding will be necessary to implement this administrative regulation.
(9) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
KRS 154.61-030(5) establishes the fees used in this administrative regulation. This regulation does not increase any fees.
(10) TIERING: Is tiering applied?
Tiering was not appropriate in this administrative regulation because the administrative regulation applies equally to all applicants.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 154.12-280, 154.61-010, 154.61-020, 154.61-030.
(2) Identify the promulgating agency and any other affected state units, parts, or divisions:
Cabinet for Economic Development, other agencies have not been identified.
(a) Estimate the following for the first year:
Expenditures:
The Cabinet does not anticipate expenditures as a result of this administrative regulation.
Revenues:
The Cabinet does not anticipate revenues as a result of this administrative regulation.
Cost Savings:
The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The Cabinet does not expect a change to revenues or cost savings in subsequent years.
(3) Identify affected local entities (for example: cities, counties, fire departments, school districts):
N/A
(a) Estimate the following for the first year:
Expenditures:
The Cabinet does not anticipate expenditures as a result of this administrative regulation.
Revenues:
The Cabinet does not anticipate revenues as a result of this administrative regulation.
Cost Savings:
The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The Cabinet does not expect a change to revenues or cost savings in subsequent years.
(4) Identify additional regulated entities not listed in questions (2) or (3):
Additional regulated entities include applicants to the Kentucky Entertainment Incentive Program.
(a) Estimate the following for the first year:
Expenditures:
The Cabinet does not anticipate expenditures as a result of this administrative regulation.
Revenues:
The Cabinet does not anticipate revenues as a result of this administrative regulation.
Cost Savings:
The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
Expenditures: The Cabinet does not anticipate expenditures as a result of this administrative regulation. Revenues: The Cabinet does not anticipate revenues as a result of this administrative regulation. Cost Savings: The Cabinet does not anticipate cost savings as a result of this administrative regulation.
(5) Provide a narrative to explain the:
(a) Fiscal impact of this administrative regulation:
The administrative regulation implements the application process and review criteria and requirements for the Kentucky Entertainment Incentive Program. The administrative regulation does not create a fiscal impact.
(b) Methodology and resources used to determine the fiscal impact:
N/A.
(6) Explain:
(a) Whether this administrative regulation will have an overall negative or adverse major economic impact to the entities identified in questions (2) - (4). ($500,000 or more, in aggregate)
The administrative regulation will not have a major economic impact – as defined by KRS 13A.010 – on regulated entities.
(b) The methodology and resources used to reach this conclusion:
This administrative regulation does not create a fiscal impact.