Schedule KQBI, Kentucky Qualified Broadband Investment Tax Credit Application And Schedule, is used by taxpayers who want to apply for and claim a Kentucky tax credit connected to qualified broadband investments. This schedule applies to investments that help expand broadband services in Kentucky, upgrade existing broadband infrastructure, or increase broadband access for Kentucky residents. The credit is based on sales and use tax remitted or intended to be remitted on eligible broadband equipment or services. The Department of Revenue certifies the approved credit amount for each taxpayer, and the annual statewide credit limit is $5,000,000 for each taxable year that the credit is available. If total requested credits from all applicants exceed the annual cap, each taxpayer’s approved credit is prorated based on the taxpayer’s requested credit compared with the total requested credit from all applicants. The credit is nonrefundable and nontransferable, meaning it can reduce eligible Kentucky tax, but it cannot create a refund and cannot be sold or assigned to someone else. There is no carryforward for unused credit, so any approved amount not used in the same year is lost. Schedule KQBI is important because it works as both the application for preliminary approval and the schedule used with the taxpayer’s return after the credit is certified.
How To File Schedule KQBI
Schedule KQBI must be submitted to the Department of Revenue before December 31, 2025, for the 2025 application year. After submission, the Department should confirm receipt of the application. If confirmation is not received within one week, contact the Tax Credits Section at 502-564-8139. The schedule may later be attached to Form 720, Form 720U, Form PTE, Form 725, Form 740, Form 740-NP, or Form 741, depending on the taxpayer’s return type. When claiming the credit on the return, attach the approved credit certificate and verification of sales and use tax remitted. Verification may include receipts for eligible equipment or services purchased, or a lease agreement for eligible equipment or services. Failure to provide the required sales and use tax verification with the return may cause the credit to be denied.
How To Complete Schedule KQBI
Top Of Schedule
Application Deadline: Submit the application before December 31, 2025. Do not wait until the return filing date if the credit has not yet been approved.
Attach To Return: Attach the schedule to Form 720, 720U, PTE, 725, 740, 740-NP, or 741 when claiming the approved credit.
KRS 141.391: This schedule is used for the Kentucky Qualified Broadband Investment Tax Credit under KRS 141.391.
Name Of Entity: Enter the legal name of the entity or taxpayer applying for the credit.
Mailing Address: Enter the mailing address where the taxpayer or entity can receive correspondence about the application.
Location County: Enter the Kentucky county where the qualified broadband investment is located or where the broadband investment activity applies.
Federal Identification Number: Enter the taxpayer identification number. Individuals enter a Social Security number. All other entities enter the federal employer identification number.
Kentucky Corporation/LLET Account Number: Enter the Kentucky Corporation/LLET account number if applicable. The number must be 9 digits. If it has only 6 digits, add leading zeros at the beginning.
Amount Of Sales Tax Remitted Or Intend To Remit: Enter the amount of Kentucky sales tax already remitted or expected to be remitted on the qualified broadband investment.
Required Investment Statement
Statement Requirement: Attach a statement explaining how approval of the tax credit will create greater investment in Kentucky.
Statement Option i, Expansion Of Broadband Services: Use this explanation if the investment will expand broadband service coverage in Kentucky.
Statement Option ii, Upgrade To Existing Broadband Infrastructure: Use this explanation if the investment will improve or modernize existing broadband infrastructure.
Statement Option iii, Increase Of Access To Broadband For Residents: Use this explanation if the investment will increase broadband access for Kentucky residents.
Department Of Revenue Use Only
Do not complete this section. It is completed by the Department of Revenue to calculate and certify the approved credit.
Line 1(a): Requested Credit For Kentucky Qualified Broadband Investment: This is the taxpayer’s requested credit amount. It is used as the numerator if the annual credit cap must be prorated.
Line 1(b): Total Requested Credit For All Applicants: This is the total requested credit from all applicants. It is used as the denominator if the annual credit cap must be prorated.
Approved Credit Formula: If total requested credits exceed the annual cap, the Department divides the taxpayer’s requested credit by the total requested credit for all applicants, then multiplies that fraction by $5,000,000 to determine the taxpayer’s approved credit.
Approved Credit: This box is completed by the Department to show the certified amount of credit approved for the taxpayer.
By And Date Fields: These signature and date fields are completed by Department personnel.
Taxpayer Declaration And Contact Information
Declaration Statement: Review the full application, schedules, and attached statements before signing. By signing, the taxpayer declares under penalties of perjury that the application is true, correct, and complete.
Signature: The authorized signer must sign the application.
Title: Enter the signer’s title, such as owner, officer, member, partner, trustee, or authorized representative.
Date: Enter the date the application is signed.
Contact Name If Different From Signer: Enter the name of the person the Department should contact if that person is not the signer.
Email Address: Enter the contact email address for questions or correspondence about the application.
Telephone Number: Enter the contact telephone number.
Fax Number: Enter the fax number if available.
Taxpayer Use Only
Complete this section when filing the return to claim the certified credit.
Amount Of Credit Approved: Enter the amount of credit approved by the Department from the approved credit certificate.
Amount Of Credit Claimed: Enter the amount of approved credit being claimed on the Kentucky return for the taxable year.
Submit Verification Of Sales And Use Tax Remitted: Attach proof that sales and use tax was remitted on the qualified broadband investment. This proof may include receipts, purchase documentation, or lease agreements for eligible equipment or services.
Eligible Equipment Or Services
Eligible Equipment Or Services, General Rule: Eligible equipment or services are items used to expand broadband services in Kentucky.
Wires, Cables, Fiber, And Related Network Items: Eligible items may include wires, cables, fiber, conduits, antennas, poles, switches, routers, amplifiers, rectifiers, repeaters, receivers, multiplexers, transmitters, circuit cards, insulating materials, protective materials, cases, power equipment, backup power equipment, diagnostic equipment, storage devices, and modems.
General Central Office Or Headend Equipment: Eligible equipment may include channel cards, frames, and cabinets used in central office or headend operations.
Successor Technology Equipment: Eligible items may include equipment used in successor technologies that monitor, test, maintain, enable, or facilitate eligible equipment or services.
Machinery And Software: Machinery and software may qualify when used as part of eligible broadband expansion equipment or services.
Ancillary Components: Ancillary components may qualify when they support eligible broadband equipment or services.
Appurtenances And Accessories: Appurtenances and accessories may qualify when they are connected to eligible broadband expansion.
Other Broadband Infrastructure: Other infrastructure may qualify if it is used in whole or in part to provide or expand broadband communications services.
Credit Rules To Remember
Credit Availability Period: The credit is available for tax years beginning on or after January 1, 2025, and expires December 31, 2029.
Credit Based On Sales And Use Tax: The credit is based on sales and use tax remitted on qualified broadband investments.
Seller Reimbursement Reduction: The credit is reduced by seller reimbursement allowed under Kentucky law.
Fifty Percent Limit: The credit is limited to 50% of eligible equipment or services.
Annual Cap: The total statewide credit cap is $5,000,000 per taxable year.
No Carryforward: Any credit not used in the same year is lost and cannot be carried forward.
Nonrefundable Credit: The credit can reduce tax liability, but it cannot create a refund.
Nontransferable Credit: The credit cannot be transferred to another taxpayer.
Taxes The Credit May Offset: The credit may be applied against Kentucky individual income tax, corporation income tax, and/or limited liability entity tax.
Final Review Before Filing
Review the entity name, mailing address, location county, identification number, Kentucky Corporation/LLET account number, and sales tax amount before submitting the application. Make sure the required investment statement is attached and clearly explains how the project expands broadband service, upgrades infrastructure, or increases broadband access for Kentucky residents. After the Department approves the credit, enter the approved amount and claimed amount in the taxpayer use section, attach the credit certificate, and include verification of sales and use tax remitted with the return.