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 March 2026 reached 0.92%, resulting in a D+ rating. This figure represents a modest but steady improvement throughout the first quarter of the year, following a score of 0.85% in January and 0.88% in February. While this upward trajectory indicates a stabilization of innovative output, the state remains significantly below the C-grade baseline that characterizes more robust innovation cycles. This current standing suggests that while Kentucky is successfully moving away from the lower floor established during the winter, it has yet to regain the momentum required to challenge higher performance tiers.

Looking at the broader sixty-month historical horizon, Kentucky’s performance has been defined by a struggle to maintain mid-tier momentum. The current score of 0.92% sits well below the state’s historical peak of 1.26% and an A- rating achieved in August 2021. Since that high point, the index has predominantly fluctuated within the D and C categories, hitting a five-year low of 0.82% and an F rating in April 2023. These historical patterns reveal a state that frequently encounters resistance at the 1.00% threshold, often retreating into lower-tier territory before it can establish a sustainable growth trend in intellectual property production.

Achieving a higher grade, such as the A and B ratings seen sporadically in 2021 and 2023, brings substantial benefits to the regional economic landscape. An elevated inventionINDEX score typically serves as a primary indicator of a healthy patent pipeline and a more aggressive approach to technical research and development. When the state pushes into higher brackets, it signals to external investors and industrial partners that the local infrastructure is capable of commercializing new technologies effectively. This foster a virtuous cycle of talent attraction, as specialized researchers and entrepreneurs are more likely to relocate to regions where innovation is both quantified and consistently trending upward.

Conversely, a slide into lower ratings like the D and F grades carries concerning implications for Kentucky’s long-term competitiveness. A low score often points to a stagnation in the transition from lab-based research to protected intellectual property, or a lack of institutional support for emerging inventors. If the index remains depressed for an extended duration, the state risks a brain drain effect, where local talent migrates to more dynamic innovation hubs with better funding and infrastructure. Furthermore, a consistently low rating can dampen the enthusiasm of venture capital firms, making it increasingly difficult for early-stage startups to secure the capital necessary to scale their operations and drive the next generation of economic growth.

Discussion:

In March, 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 in contrast to the prior 12 months, which experienced an 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. 

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.