Electricity Laws and Incentives in Kentucky

The list below contains summaries of all Kentucky laws and incentives related to electricity.

Laws and Regulations

Alternative Fuel Vehicle (AFV) Acquisition Requirements

By January 1, 2026, the Kentucky Finance and Administration Cabinet (Cabinet) must increase the use of ethanol, biodiesel, and other alternative transportation fuels and replace at least 50% of light-duty state fleet vehicles with new AFVs or vehicles equipped with low-emission technology. The Cabinet must compile annual reports by December 1 detailing the progress made towards these requirements, including a life-cycle cost assessment, vehicle replacement timeline, and targets for increased alternative fuels in state agency vehicles.

(Reference Kentucky Revised Statutes 45A.625)

Alternative Fuel and Conversion Definitions

Clean transportation fuels include propane, compressed natural gas (CNG), liquefied natural gas (LNG), electricity, and other transportation fuels determined to be comparable with respect to emissions. Propane is defined as a hydrocarbon mixture produced as a by-product of natural gas processing and petroleum refining and condensed into liquid form for sale or use as a motor fuel. CNG is defined as pipeline-quality natural gas that is compressed and provided for sale or use as a motor vehicle fuel. LNG is defined as pipeline-quality natural gas treated to remove water, hydrogen sulfide, carbon dioxide, and other components that will freeze and condense into liquid form for sale or use as a motor vehicle fuel.

A bi-fuel system is defined as the power system for motor vehicles powered by gasoline and either CNG or LNG. Bi-fuel systems are considered clean fuel systems. Conversion is defined as repowering a motor vehicle or special mobile equipment by replacing its original gasoline or diesel powered engine with one capable of operating on clean transportation fuel or retrofitting a motor vehicle or special mobile equipment with parts that enable its original gasoline or diesel engine to operate on clean transportation fuel.

(Reference Kentucky Revised Statutes 186.750)

Electric Vehicle (EV) Charger Tax

EV charger owners and lessees must pay both an excise tax and surtax fee, with the surtax fee only applicable if the EV charging station is located on state property. In 2025 the rates of both are of $0.032 per kilowatt hour of electricity used to charge EVs. The tax will be added to the selling price charged by the station operator. If the station operator provides free electricity, they will be responsible for paying the tax on stations installed after June 30, 2022. The station operator must report total kilowatt hours distributed, tax amount collected, and provide payment to the state monthly. The Kentucky Department of Revenue must compare the tax rate to the most current quarterly National Highway Construction Cost Index 2.0 (NHCCI 2.0) by December 1 annually. The tax rate is adjusted annually to match the NHCCI 2.0 change, up to a maximum 5% annual increase or decrease, by January 1 annually.

(Reference Kentucky Revised Statutes 138.477)

Electric Vehicle (EV) Fee

In addition to standard vehicle registration fees, EV and plug-in hybrid EV owners must pay an annual fee in 2025 of $126 and electric motorcycle owners must pay an annual fee of $63. These fees are adjusted annually based on the National Highway Construction Cost Index 2.0.

(Reference Kentucky Revised Statutes 138.475)

Fueling Station Zoning Requirements

Local governments may not implement zoning processes or ordinances that prohibit or limit the operation of retail filling stations at locations where businesses of similar uses may be located, including in locations that allow the operation of electric vehicle chargers.

(Reference Kentucky Revised Statutes 224.20-770)

Public Utility Definition

An entity that owns or operates an electric vehicle charging station is not defined as a public utility.

(Reference Kentucky Public Service Commission Case No. 2018-00372)

Vehicle Sales Requirements

No agency in the State of Kentucky, including the Kentucky Transportation Cabinet, may adopt or enforce standards relating to control of emissions from new motor vehicles that are equivalent to the California vehicle emission standards and compliance requirements set forth in the California Air Resources Board Advanced Clean Cars II regulation.

(Reference Kentucky Revised Statute 100.326)

State Incentives

Diesel Emission Reduction Grants

The Kentucky Division for Air Quality provides U.S. Environmental Protection Agency (EPA) Diesel Emissions Reduction Act (DERA) funding for the replacement of school buses in Kentucky. Funding for up to 25% of eligible project costs is available for public and private schools that reduce diesel emissions by replacing a school bus that is model year 2009 or older with a bus that is a model year 2021 or newer diesel or alternative fuel bus. New buses must be equipped with an EPA-certified engine configuration that meets the latest EPA emissions standards. Grants will be awarded on a competitive basis. For more information, including current funding opportunities and how to apply, see the Kentucky DERA State Grant Program website.

EV Charger Grants

The Kentucky Energy and Environment Cabinet (EEC) will offer a 50% cost match for the purchase of Level 2 and direct current fast chargers. This program is funded by Kentucky’s portion of the Volkswagen Mitigation Trust. Eligible applicants include Kentucky state and local government agencies. For more information, including program guidelines, grant amounts, and application periods, see EEC’s Kentucky and the Volkswagen Settlement page.

Kentucky’s National Electric Vehicle Infrastructure (NEVI) Planning

The U.S. Department of Transportation’s (DOT) NEVI Formula Program required the Kentucky Transportation Cabinet to submit an annually updated EV Infrastructure Deployment Plan (Plan) for fiscal years 2022 through 2026 to their FHWA Division Office, describing how the state intended to distribute NEVI funds and their physical and cybersecurity strategies, and including a Community Engagement Outcomes Report. The submitted plans must address updated NEVI Guidance.

For more information about Kentucky’s NEVI planning process, see Kentucky’s Plan website.

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