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Kentucky’s New Film Tax Credit Rules: A Game Changer for Entertainment Production

Unused Credits Now Roll Over—Starting 2026

The Kentucky legislature has greenlit a sweeping update to its film and entertainment tax credit program, designed to keep production dollars—and crews—local. Beginning in 2026, any unused portion of the $75 million annual tax credit will no longer vanish at year’s end. Instead, producers can carry forward unused credits into future years, giving them unprecedented financial flexibility.

For filmmakers, video game studios, and commercial producers, this means long-term stability—no more scrambling to spend every dollar in a single season. Instead, budgets can stretch across multiple projects, ensuring Kentucky remains a competitive hub for high-budget entertainment.

Expanding the Creative Frontier

The updated rules dramatically broaden what qualifies for the credit. Beyond traditional films and TV, the credit now extends to:

• Video games
• Music videos
• Commercials
• Other digital media productions

This expansion isn’t just bureaucratic tweaking—it’s a strategic push to attract a diverse slate of creators. By casting a wider net, Kentucky positions itself as a versatile destination for everything from indie filmmakers to AAA game developers.

Key Takeaways

✅ Unused tax credits now carry over (starting 2026) ✅ New qualifying projects (video games, music videos, commercials) ✅ Higher local spending requirements to boost Kentucky’s economy ✅ Aim: More jobs, more productions, more economic impact