Ky. Rev. Stat. » Chapter 141

Ky. Rev. Stat. § 141.040

Corporation income tax -- Exemptions -- Rate

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(1) Every corporation doing business in this state, except those corporations listed in paragraphs (a) and (b) of this subsection, shall pay for each taxable year a tax to be computed by the taxpayer on taxable net income at the rates specified in this section: (a) For taxable years beginning prior to January 1, 2021: 1. Financial institutions, as defined in KRS 136.500, except bankers banks organized under KRS 286.3-135; 2. Savings and loan associations organized under the laws of this state and under the laws of the United States and making loans to members only; 3. Banks for cooperatives; 4. Production credit associations; 5. Insurance companies, including farmers' or other mutual hail, cyclone, windstorm, or fire insurance companies, insurers, and reciprocal underwriters; 6. Corporations or other entities exempt under Section 501 of the Internal Revenue Code; 7. Religious, educational, charitable, or like corporations not organized or conducted for pecuniary profit; and 8. Corporations whose only owned or leased property located in this state is located at the premises of a printer with which it has contracted for printing, provided that: a. The property consists of the final printed product, or copy from which the printed product is produced; and b. The corporation has no individuals receiving compensation in this state as provided in KRS 141.120(8)(b); and (b) For taxable years beginning on or after January 1, 2021: 1. Insurance companies, including farmers' or other mutual hail, cyclone, windstorm, or fire insurance companies, insurers, and reciprocal underwriters; 2. Corporations or other entities exempt under Section 501 of the Internal Revenue Code; 3. Religious, educational, charitable, or like corporations not organized or conducted for pecuniary profit; 4. Corporations whose only owned or leased property located in this state is located at the premises of a printer with which it has contracted for printing, provided that: a. The property consists of the final printed product, or copy from which the printed product is produced; and b. The corporation has no individuals receiving compensation in this state as provided in KRS 141.120(8)(b); and 5. For taxable years beginning before January 1, 2027, a disaster response business. (2) For taxable years beginning on or after January 1, 2018, the rate of five percent (5%) of taxable net income shall apply. (3) For taxable years beginning on or after January 1, 2007, and before January 1, 2018, the following rates shall apply: (a) Four percent (4%) of the first fifty thousand dollars ($50,000) of taxable net income; (b) Five percent (5%) of taxable net income over fifty thousand dollars ($50,000) up to one hundred thousand dollars ($100,000); and (c) Six percent (6%) of taxable net income over one hundred thousand dollars ($100,000). (4) (a) An S corporation shall pay income tax on the same items of income and in the same manner as required for federal purposes, except to the extent required by differences between this chapter and the federal income tax law and regulations. (b) 1. If the S corporation is required under Section 1363(d) of the Internal Revenue Code to submit installments of tax on the recapture of LIFO benefits, installments to pay the Kentucky tax due shall be paid on or before the due date of the S corporation's return, as extended, if applicable. 2. Notwithstanding KRS 141.170(3), no interest shall be assessed on the installment payment for the period of extension. (c) If the S corporation is required under Section 1374 or 1375 of the Internal Revenue Code to pay tax on built-in gains or on passive investment income, the amount of tax imposed by this subsection shall be computed by applying the highest rate of tax for the taxable year. Effective: July 15, 2024 History: Amended 2024 Ky. Acts ch. 166, sec. 36, effective July 15, 2024. -- Amended 2021 Ky. Acts ch. 31, sec. 3, effective June 29, 2021. -- Amended 2019 Ky. Acts ch. 196, sec. 12, effective June 27, 2019. -- Amended 2018 Ky. Acts ch. 171, sec. 58, effective April 14, 2018; and ch. 207, sec. 58, effective April 27, 2018. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 3, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 251, secs. 46 and 47, effective April 25, 2006; and ch. 252, Pt. XIII, sec. 1, effective April 25, 2006. -- Amended 2005 Ky. Acts ch. 168, sec. 7, effective March 18, 2005. -- Amended 1996 Ky. Acts ch. 254, sec. 32, effective July 15, 1996. -- Amended 1990 Ky. Acts ch. 262, sec. 6, effective July 13, 1990; and ch. 476, Pt. VII C, sec. 629, effective April 11, 1990. -- Amended 1988 Ky. Acts ch. 111, sec. 1, effective July 15, 1988; and ch. 332, sec. 1, effective July 15, 1988. -- Amended 1986 Ky. Acts ch. 459, sec. 4, effective July 15, 1986. -- Amended 1985 (1st Extra. Sess.) Ky. Acts ch. 6, Pt. III, sec. 18, effective July 29, 1985. -- Amended 1980 Ky. Acts ch. 176, sec. 3, effective July 15, 1980. -- Amended 1976 Ky. Acts ch. 155, sec. 8. -- Amended 1972 Ky. Acts ch. 62, Part III. sec. 2; and ch. 121, sec. 4. -- Amended 1970 Ky. Acts ch. 14, sec. 5. -- Amended 1966 Ky. Acts ch. 176, Part 1, sec. 4; and ch. 255, sec. 137. -- Amended 1956 (4th Extra. Sess.) Ky. Acts ch. 4, sec. 4. -- Amended 1954 Ky. Acts ch. 79, sec. 5. -- Amended 1952 Ky. Acts ch. 124, sec. 2. -- Amended 1948 Ky. Acts ch. 93, sec. 3. -- Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. secs. 4281b-14, 4281b-14a. Legislative Research Commission Note (6/27/2019). This statute was amended in 2019 Ky. Acts ch. 151, sec. 40 (HB 354) and ch. 196, sec. 12 (HB 458). Although HB 354 was enacted, 2019 Ky. Acts ch. 196, sec. 16 (HB 458) repealed certain sections of that prior Act, including Section 40, and directed the Reviser of Statutes to not codify them. Therefore, the amendment to this statute in 2019 Ky. Acts ch. 151, sec. 40, was not codified. Legislative Research Commission Note (4/27/2018). Pursuant to 2018 Ky. Acts ch. 207, sec. 153, the amendments made to this statute in that Act apply to taxable years beginning on or after January 1, 2018. Legislative Research Commission Note (7/12/2006). 2006 Ky. Acts ch. 247 instructs the Reviser of Statutes to adjust KRS references throughout the statutes to conform with the 2006 renumbering of the Financial Services Code, KRS Chapter 286. Such an adjustment has been made in this statute. Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007." Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005. Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts chs. 11, 85, 95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory references to agencies and officers whose names have been changed in 2005 legislation confirming the reorganization of the executive branch. Such a correction has been made in this section.

Notes of Decisions
Cited in 18 cases (4 in the last 5 years), 1942–2022 · leading case: Miller v. Johnson Controls, Inc.
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Miller v. Johnson Controls, Inc. (2009) ky · cites it 2× “From before 1966, when the General Assembly adopted UDITPA, until the amendments of 1996, that statute provided that "[e]very corporation doing business in this state, except those exempt from taxation under KRS 141.040, shall make a return stating specifically the *422 items of…”
GTE v. Revenue Cabinet, Commonwealth of Kentucky (1994) ky · cites it 2× “200(1) requires that Every corporation doing business in this state, except those exempt from taxation under KRS 141.040, shall make a return stating specifically the items of income and the items claimed as deductions allowed by this chapter.”
Atlantic Coast Line R. Co. v. Commonwealth (1946) kyctapphigh · cites it 2× “The court cannot ignore the provision in KRS 141.040, levying the tax upon net incomes, that the computation shall be upon “the portion thereof taxable within this state, determined as provided in this chapter.”
City of Cincinnati v. Commonwealth Ex Rel. Reeves (1942) kyctapphigh · cites it 2× “” Kentucky Statutes, Section 4281b-14, Paragraph 3, KRS 141.040. A large portion of appellants’ brief is devoted to an attempt to demonstrate that the Kentucky Income Tax Law was not intended to apply to the income of municipal corporations from whatever source derived.”
Department of Revenue v. Early & Daniel Co. (1982) ky · cites it 2× “010{14)(b), KRS 141.040 and KRS 141.120. Predicated upon our decision in Square D Company v.”
Ruby Construction Co. v. Department of Revenue (1978) kyctapp “Ruby, in computing the amount of Kentucky income tax owed by it pursuant to KRS 141.040, calculated its tax liability by offsetting its Indiana losses against its Kentucky gains, thereby arriving at a “net income” figure in the amount of $45,220.”
Square D Company v. Kentucky Board of Tax Appeals (1967) kyctapphigh “010(11) defines “taxable net income” (of corporations) as “ ‘net income’ derived from business done, property located, activities or sources in this state * * When a corporation is engaged in integrated business activities both within and without Kentucky and it is impossible or…”
Brown v. Department of Revenue ex rel. Carpenter (1977) kyctapp · cites it 4× “KRS 141.040 provides that every corporation shall pay a tax to be computed upon the corporation’s taxable net income.”
Corning Glass Works v. Department of Revenue (1981) kyctapp “-120, minus federal income tax as defined in subsection (8) of this section; KRS 141.040. Every corporation organized under the laws of this state, every corporation having its commercial domicile as defined in paragraph (b) of subsection (1) of KRS 141.”
Davis v. Department of Revenue of the Finance & Administration Cabinet (2006) kyctapp · cites it 2× “010(11) provides that " '[n]et income' in the case of taxpayers other than corporations means adjusted gross income as defined in subsection (10) of this section, minus the standard deduction allowed by KRS 141.”
Davis v. DEPT. REV. OF FIN. & ADMIN. CAB. (2006) kyctapp · cites it 2× “010(11) provides that "`[n]et income' in the case of taxpayers other than corporations means adjusted gross income as defined in subsection (10) of this section, minus the standard deduction allowed by KRS 141.081, or, at the option of the taxpayer, minus the deduction allowed…”
Commonwealth Ex Rel. Luckett v. Radio Corp. of America (1944) kyctapphigh “The pertinent parts of our income tax statute read: KRS 141.040: ■ “Every corporation organized under the laws of this state and every foreign corporation doing business in this state, * * * shall pay for each taxable year a tax * * * upon the entire net income of the…”
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— Ky. Rev. Stat. § 141.040(1) — 2 cases
Davis v. Department of Revenue of the Finance & Administration Cabinet (2006) kyctapp “010(11) provides that " '[n]et income' in the case of taxpayers other than corporations means adjusted gross income as defined in subsection (10) of this section, minus the standard deduction allowed by KRS 141.”
Davis v. DEPT. REV. OF FIN. & ADMIN. CAB. (2006) kyctapp “010(11) provides that "`[n]et income' in the case of taxpayers other than corporations means adjusted gross income as defined in subsection (10) of this section, minus the standard deduction allowed by KRS 141.081, or, at the option of the taxpayer, minus the deduction allowed…”
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