Kentucky
As an e-commerce seller, you will need to collect sales tax in Kentucky if you have:
(1) Gross receipts exceeding $100,000 or 200 or more separate transactions in the previous or current calendar year (economic nexus), or
(2) Physical presence in Kentucky (physical nexus).
Below, we will highlight some of the basic provisions of Kentucky sales tax law.
What is the tax rate range for Kentucky?
State: Kentucky’s general sales tax rate is 6%.
Local: Kentucky does not have local sales tax jurisdictions.
Do you have physical or economic nexus in Kentucky?
Physical nexus. Certain business activities create physical nexus for retail merchants in Kentucky. If you have physical nexus, you are required to collect and remit sales tax on all taxable sales that are shipped to Kentucky. Examples of business activities that can create physical nexus in Kentucky include:
- Maintaining an office, place of distribution, sales location, sample location, warehouse, storage place, etc. in Kentucky
- Having any representative, agent, salesman, canvasser, or solicitor operating in Kentucky under the authority of the retailer or its subsidiary for the purpose of selling, delivering, or the taking of orders for any tangible personal property, digital property, or any services subject to tax
- Leasing or renting property in Kentucky
Economic nexus. Remote sellers and marketplace facilitators that have gross receipts (taxable and nontaxable) exceeding $100,000 or 200 or more separate transactions in the previous or current calendar year are required to collect and remit Kentucky sales or use tax. Additional information on economic nexus requirements:
- Remote sellers count transactions made through a marketplace facilitator in determining if it has economic nexus
- Marketplace facilitators must include both transactions made on its own behalf and transactions facilitated for sellers in determining if it has economic nexus in Kentucky
Remote Retailers and Marketplace Providers
What are examples of sales of taxable items?
- Tangible personal property, unless specifically exempted
- Certain services
- Clothing
- Digital property (but generally not audio-visual works)
- Software as a service (SaaS) - tax treatment changed on 1/1/23 due to the passing of HB 8, page 4 of 2022 Sales and Excise Tax Legislation Overview provides the definition of prewritten computer software access services.
What are examples of sales of nontaxable/exempt items?
- Food (except candy, dietary supplements, soft drinks, and prepared foods)
- Prescription drugs
- Certain agricultural items
Are there any sales tax holidays?
Currently, Kentucky does not have any sales tax holidays.
Is Kentucky a member of the SST (Streamlined Sales Tax)?
Currently, Kentucky is a full member of the Streamlined Sales Tax Governing Board (SST).
How to get a sales tax permit / links to register in this state?
You can register online at:
Streamlined Sales Tax Registration System
Rates
Kentucky is a one-rate state, there are no local jurisdictions that impose a sales tax.
