August 2025: 0.86% (D- grade)

Kentucky inventionINDEX August 2025: 0.86% (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

Based on the provided data, the Kentucky inventionINDEX has shown fluctuating performance over the past 60 months, reflecting a dynamic landscape of innovation. The historical scores range from a low of 0.82% in April 2023, which earned an F rating, to a high of 1.26% in August 2021, which was rated A-. The most recent score of 0.86% in August 2025, which received a D- rating, is well below the historical average. This current score indicates a significant decline when compared to the higher ratings observed in previous years, such as the period from September 2020 to December 2020 when scores consistently topped 1.00% and received B+ and C+ ratings.

A higher inventionINDEX score is a strong indicator of a thriving innovation ecosystem, bringing several positive outcomes. A score of 1.00% or higher, which typically earns a C or better rating, suggests robust activity in areas such as patent filings, research and development expenditures, and venture capital investment. For instance, the B and A- ratings seen in August 2023 and August 2021 correlate with scores above 1.14% and 1.26%, respectively. Such high performance can attract new businesses, foster job creation, and enhance economic competitiveness, positioning Kentucky as a desirable location for technologically driven industries and entrepreneurial talent. A high score signifies confidence in the state’s capacity for future growth and sustainable development.

Conversely, a lower inventionINDEX score carries negative implications for the state’s economic future. Scores below 0.90%, which often result in D or F ratings, signal a potential slowdown in innovation. The D- rating for August 2025, with a score of 0.86%, or the F rating in April 2023, with a score of 0.82%, suggests a possible decrease in new ideas and inventions. This can lead to a less competitive business environment, making it more challenging to attract external investment and retain skilled workers. Over time, a sustained period of low scores could hinder economic diversification and lead to a decline in overall prosperity, as the state may fall behind other regions that are more successful in fostering innovation.

In conclusion, the inventionINDEX serves as a crucial barometer for measuring the health of Kentucky’s innovation economy. While the historical data shows periods of strong performance and positive momentum, the recent decline in scores highlights the importance of continued focus on innovation-related policies and investments. Understanding the factors that lead to both high and low ratings is essential for policymakers and business leaders. By proactively addressing the challenges associated with lower scores and capitalizing on the opportunities presented by higher ones, Kentucky can strive to create a more stable and prosperous future.

Discussion:

In August, the Kentucky inventionINDEX scored a negative sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is similar 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.

Admin US