January 2026: 0.85% (D- grade)
Kentucky inventionINDEX January 2026: 0.85% (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
| Month | inventionINDEX Score |
| January 2026 | 0.85% |
| Dec 25 | 0.92% |
| Nov 25 | 0.84% |
| Oct 25 | 0.86% |
| Sep 25 | 0.96% |
| Aug 25 | 0.86% |
| Jul 25 | 0.99% |
| Jun 25 | 0.95% |
| May 25 | 0.88% |
| Apr 25 | 1.00% |
| Mar 25 | 0.87% |
| Feb 25 | 0.98% |
| Jan 25 | 1.03% |
The Kentucky inventionINDEX entered 2026 on a subdued note, recording a score of 0.85% and a rating of D- for the month of January. This performance represents a noticeable decline from the December 2025 figure of 0.92% and continues a period of significant volatility observed throughout the preceding calendar year. While the index experienced a brief recovery in late 2025, the current trajectory suggests a cooling period in regional innovation activity. This downward shift highlights a challenging environment for local inventors and businesses seeking to maintain a steady pace of intellectual property development and commercialization.
Looking back over the sixty-month historical window, the January 2026 performance is particularly concerning when compared to the start of previous years. For instance, January 2023 saw a much stronger score of 1.09%, while even the start of 2021 began at a baseline of 1.00%. The current score is significantly removed from the five-year peak of 1.26% achieved in August 2021, which stands as the only A-rated period in the dataset. This long-term perspective reveals that the index is currently operating at the lower end of its historical range, though it remains slightly above the five-year low of 0.82% recorded in April 2023.
A higher inventionINDEX grade typically signals a robust ecosystem of creativity and technological advancement within the state. When the score trends toward the C+ to A- range, it reflects increased patent filings, higher levels of research and development investment, and a more competitive local economy. These positive outcomes often lead to job creation in high-tech sectors and attract essential venture capital to the region. A strong rating serves as a leading indicator of future economic prosperity, as the inventions of today often translate into the industrial leadership and commercial successes of tomorrow.
Conversely, the current low score and D- rating carry negative implications for the regional economic vitality. A depressed index suggests a potential stagnation in the pipeline of new ideas, which can lead to a reduced competitive edge against other states and global markets. If the score remains consistently low, it may indicate a lack of resources for innovators or a broader economic shift that prioritizes short-term stability over long-term research and development. Addressing these fluctuations is essential for ensuring that Kentucky remains a viable hub for invention and maintains its relevance in an increasingly technology-driven global marketplace.
Discussion:
In January, the Kentucky inventionINDEX scored a negative sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is in contrast to the prior 12 months, which experienced a slight upward 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.
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What is the R&D Tax Credit?
The Research & Experimentation Tax Credit (or R&D Tax Credit), is a general business tax credit under Internal Revenue Code section 41 for companies that incur research and development (R&D) costs in the United States. The credits are a tax incentive for performing qualified research in the United States, resulting in a credit to a tax return. For the first three years of R&D claims, 6% of the total qualified research expenses (QRE) form the gross credit. In the 4th year of claims and beyond, a base amount is calculated, and an adjusted expense line is multiplied times 14%. Click here to learn more.
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