Kentucky has one of the highest state sales tax rates but actually falls below average when considering local sales taxes and what’s exempt from tax.
What is the Kentucky sales tax rate?
Kentucky has a 6% statewide sales tax rate.
There is no additional sales tax at the county, city, or other local levels. Therefore, Kentucky’s effective sales tax rate is 6% in all locations.
What is subject to Kentucky sales tax?
Kentucky’s sales tax applies to:
- Tangible personal property unless specifically exempt
- Digital property
- Certain services
Sales tax normally applies at the point of retail. When a Kentucky resident makes a purchase without sales tax being collected (such as in another state or online) he or she may need to pay a Kentucky use tax equal to the sales tax rate.
Kentucky also has an annual personal property tax that applies to most items that you own.
Motor vehicles fall under the Motor Vehicle Usage Tax rather than a sales tax. The tax is normally 6% on both new and used car sales.
Sales Tax Exemptions
The main Kentucky sales tax exemptions include groceries and prescription drugs.
Groceries does not include prepared food and certain other items like candy.
Over-the-counter drugs are usually subject to sales tax.
Services Subject to Sales Tax
The following are examples of services usually subject to Kentucky sales tax:
- Short-term (less than 30 days) accommodations or room rentals
- Tickets to many types of entertainment venues except for race tracks
- Non-residential sewer and natural gas services
- Communications services (including prepaid calling)
- Most repair, installation, and maintenance services
- Landscaping and lawn care
- Janitorial services
- Pet care including veterinarians, grooming, and boarding
- Laundry services and linen supply
- Diet and weight loss services
- Tanning services
What do businesses need to do to collect and pay Kentucky sales tax?
In most cases, businesses need to file a monthly business sales tax return by the 20th of the month for the previous month. Some businesses with low sales volume may be allowed to file quarterly or annually.
As of October 2021, all businesses generally must file and pay sales tax returns online. The Department of Revenue waives this requirement in limited circumstances such as problems with internet access.
Many new businesses have to complete a business registration that includes enrollment for collecting sales tax, employment tax, and other business taxes. If you’re not required to complete the Kentucky Tax Registration Application, you can obtain a sales tax permit through Kentucky Business One Stop.
If you need a sales tax exemption certificate for resale, agriculture, nonprofit status, or other reasons, you can find the forms here.
Kentucky Sales Tax Nexus
Kentucky generally considers out-of-state businesses making online sales to Kentucky residents to have nexus if they have either:
- 200 or more sales into Kentucky
- $100,000 or more in gross receipts from sales into Kentucky
Having nexus means that the business must register with Kentucky and collect and pay Kentucky sales tax on Kentucky sales.
Other Kentucky Taxes
- Kentucky Income Tax
- Kentucky Property Tax
Related: Sales Tax for Electronics