KENTUCKY INVENTIONINDEX | SEPTEMBER 2025

September 2025: 0.96% (D+ grade)

Kentucky inventionINDEX September 2025: 0.96% (D+ grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Kentucky inventionINDEX Scores – Last 12 months

The Kentucky inventionINDEX for September 2025 stands at 0.96%, earning a D+ grade. This score indicates a negative sentiment, though it is slightly higher than the previous month’s 0.86% (D- grade) and also surpasses the average of the prior year. Observing the trends over the last 60 months, the index has fluctuated, with periods of both improvement and decline. For instance, while September 2025 shows a D+ grade, there have been instances of higher performance, such as August 2021 with an A- grade (1.26%) and December 2020 with a B+ grade (1.21%). These higher scores suggest stronger innovation output during those periods.

A higher inventionINDEX grade carries significant positive implications for a state’s economic health and recovery. A score above a C grade, for example, signifies positive sentiment, indicating robust innovation output driven by a healthy comparison between GDP growth and patent production growth. Such a positive outlook can attract investment, foster job creation, and stimulate further research and development, ultimately contributing to a more resilient and prosperous economy. States with consistently higher grades are better positioned to navigate economic challenges and experience sustainable growth.

Conversely, a lower inventionINDEX score, particularly those falling below a C grade, signals negative sentiment and can have detrimental effects. Scores like the D+ in September 2025 or the F grade in April 2023 (0.82%) suggest a slowdown in innovation, which could be attributed to various factors such as reduced R\&D capabilities, company closures, or a backlog in patent applications. These lower grades can indicate a less favorable economic environment, potentially leading to decreased investment, slower economic recovery, and a diminished capacity for future innovation.

Analyzing the historical data, Kentucky’s inventionINDEX has largely hovered in the C and D ranges over the past five years, with occasional dips into F and peaks into B and A- grades. While the September 2025 D+ grade represents a slight improvement from the previous month, it still falls within the negative sentiment category. Understanding these trends is crucial for policymakers and businesses to identify areas for improvement and implement strategies that can boost innovation, ultimately aiming for sustained higher grades that reflect a thriving economic landscape.

Discussion:

In September, the Kentucky inventionINDEX scored a negative sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Kentucky office provides R&D tax credit consulting and advisory services to Louisville, Lexington, Bowling Green, Owensboro, Covington, Richmond, Georgetown, Florence, Hopkinsville, and Elizabethtown.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.