Kentucky — Sales & Use Tax

Kentucky imposes a 6% sales tax on retailers' gross receipts from retail sales of tangible personal property and digital property made within the state, as well as specified services.

Source: KRS 139.200

The tax applies to tangible personal property regardless of delivery method, and to digital property whether the purchaser has a permanent right to use the property or conditional access based on continued payment.

Source: KRS 139.200(1)

Kentucky law presumes that all gross receipts and sales of tangible personal property, digital property, and services sold for delivery in Kentucky are taxable unless the retailer proves otherwise.

Source: KRS 139.260

No local sales taxes. Kentucky does not authorize local governments to impose additional sales or use taxes; the 6% state rate applies uniformly throughout the state.

Source: Kentucky DOR – Sales & Use Tax

Use tax. Kentucky also imposes a 6% complementary use tax on the purchase price of tangible personal property and digital property purchased for storage, use, or other consumption in Kentucky. The use tax functions as a backstop to the sales tax and generally applies when sales tax was not collected at the time of purchase, particularly for out-of-state purchases.

Source: Kentucky DOR – Sales & Use Tax

Sales and use tax laws are codified in Kentucky Revised Statutes Chapter 139 and implemented through Kentucky Administrative Regulations Title 103.

Source: Kentucky DOR – Sales & Use Tax

Kentucky significantly expanded its sales and use tax base effective January 1, 2023, through House Bill 8 (2022 Ky. Acts ch. 212), adding approximately 30 enumerated service categories to KRS 139.200(2). Prior to HB 8, Kentucky's 6% sales tax applied primarily to tangible personal property, digital property, and a limited set of services—transient room rentals, sewer services, admissions, telecommunications services, and natural gas distribution services under KRS 139.200(2)(a) through (f). The 2023 expansion subjects a broad range of personal and business services to tax for the first time.

Services made taxable effective January 1, 2023. KRS 139.200(2)(g) through (ax) enumerate the new taxable service categories. Key categories include landscaping, janitorial, small animal veterinary, pet care, industrial laundry, non-coin-operated laundry, linen supply, indoor skin tanning, fitness/recreational center, photography/photo finishing, cosmetic surgery, extended warranty, interior decorating, specialized design, telemarketing (with 2023 HB 360 expansion), website design, SaaS (prewritten computer software access), labor/services for commercial refrigeration equipment, repair/alter apparel and jewelry, rental of event/short-term business space, and car wash/detailing services. The full list continues through KRS 139.200(2)(ax) (see statute for detail).

Marketing services: initially taxable, then repealed. HB 8 originally enacted KRS 139.200(2)(r) imposing sales tax on 'marketing services', but HB 360 (2023) struck both the taxable classification and its statutory definition retroactively to Jan. 1, 2023. Marketing services are NOT subject to Kentucky sales and use tax.

[UPDATED] De minimis exemption for small service providers. KRS 139.470(23)–(24) provide a de minimis gross receipts exemption for retailers making sales "solely of a service listed under KRS 139.200(2)(g) to (ax)" (the newly taxable services). The original HB 8 threshold was $6,000 per year. House Bill 8 (2024 Reg. Sess., ch. 166, sec. 1, eff. January 1, 2025) raises this threshold to $12,000, effective for calendar year 2025 and thereafter. For calendar year 2024, the $6,000 applies; for 2025 forward, the exemption increases to $12,000. Once an entity exceeds the threshold in a calendar year, all gross receipts above the threshold are taxable that year, and in all subsequent years, all gross receipts are taxable even if the business falls back below the threshold. The exemption does not apply to retailers selling tangible personal property, digital property, or the older taxable services at KRS 139.200(2)(a)-(f).

Resale of newly taxable services. KRS 139.260 allows services in KRS 139.200(2)(g)-(ax) to be purchased for resale if supported by exemption documentation. Properly documented resale relieves the seller from the burden of proof regarding taxability for these services.

Exclusions and grandfathering. KRS 139.202 excludes certain transactions from the additional taxable services imposed by KRS 139.200(2)(q)-(ax), notably grandfathering contracts entered on or before Feb 25, 2022 (date of HB 8's introduction) from sales tax on newly taxable services. Lessors and lessees with qualifying contracts in force as of that date remain exempt.

Source: KRS 139.200; KRS 139.010; KRS 139.202; KRS 139.260; KRS 139.470; 2024 Ky. Acts ch. 166 (HB 8, sec. 1, eff. Jan. 1, 2025)

Updated to reflect de minimis exemption threshold increase for 2025 and subsequent years and 2024 legislative change.

Kentucky law requires remote sellers and marketplace providers to register, collect, and remit sales and use tax when they exceed a statutory economic nexus threshold in either the current or prior calendar year.

Economic nexus thresholds—current and upcoming law:

• Through July 31, 2026: A remote seller or marketplace provider is required to register and collect Kentucky sales and use tax if, in the immediately preceding or current calendar year, the seller makes:
• more than $100,000 in gross receipts from sales of tangible personal property, digital property, or services delivered into Kentucky, or
• 200 or more separate transactions into Kentucky.

• Effective August 1, 2026 (per HB 757, 2026 Regular Session): The 200-transaction threshold is eliminated. Only the $100,000 gross receipts threshold will apply for determining economic nexus in Kentucky. The statute was amended accordingly, and sellers meeting only the transaction threshold—but not the $100,000 gross receipts threshold—will no longer be required to collect Kentucky sales and use tax on that basis.

Registration deadline: Remote sellers and marketplace providers who cross the applicable threshold(s) must register and begin collecting no later than the first day of the calendar month that begins at least 60 days after the threshold is reached, per KRS 139.340(2).

Source: KRS 139.340 (pre-2026; text as amended by HB 757) Source: Kentucky HB 757 (2026 Reg. Sess.), Ch. 161, sec. 11, effective Aug. 1, 2026

Not yet human confirmed. Section revised to account for statutory change effective August 1, 2026, eliminating the transaction-count threshold and leaving only the $100,000 economic nexus test.

Marketplace provider collection duty (Kentucky)

Direct answer: Effective August 1, 2026, Kentucky law requires marketplace providers to collect and remit sales and use tax on all sales made through their platform—both their own sales and sales they facilitate for third-party sellers—if their gross receipts from sales of tangible personal property, digital property, or services delivered into Kentucky in the current or preceding calendar year exceed $100,000. The 200-transaction threshold is eliminated for both remote sellers and marketplace providers for sales occurring on or after that date. Prior to August 1, 2026, the duty applies if the provider exceeds either $100,000 in gross receipts or 200 separate transactions delivered into Kentucky in the relevant year. Threshold calculations combine the provider's own sales with all facilitated sales. Registration and collection must begin no later than the first day of the calendar month at least 60 days after the threshold is crossed. This marketplace provider duty has been effective in Kentucky since July 1, 2019, but the transaction-count pathway is eliminated as of August 1, 2026.

Why: This change codifies House Bill 757 (2026 Reg. Sess.), which amends the economic nexus statute to remove the 200-separate-transaction test, leaving only the $100,000 gross receipts standard. The amending act specifically applies to both remote sellers and marketplace providers/facilitators.

Source support:

• KRS 139.340 as amended by HB 757 (2026 Reg. Sess.), effective August 1, 2026 (authority_source).
• Text of House Bill 757, sec. 11, 2026 Reg. Sess., Kentucky General Assembly (supporting_source).

Caution / review status: Not yet human confirmed as of 2026-06-26. This reflects statutory changes enacted in 2026 and effective as of August 1, 2026. Practitioners should monitor for any regulatory or guidance updates from the Kentucky Department of Revenue.

Source: KRS 139.340; Kentucky HB 757 (2026 Reg. Sess.), Ch. 161, sec. 11, effective Aug. 1, 2026

Kentucky exempts from sales and use tax purchases of tangible personal property and digital property when the purchaser acquires them for resale and provides the seller with a valid resale certificate. The resale exemption is governed by KRS 139.270 and implemented by regulation 103 KAR 31:111.

Certificate requirement. A seller may rely on a resale certificate to substantiate an exempt transaction and shift the burden of proof to the purchaser. Under KRS 139.270, the certificate relieves the retailer or seller from the burden of proof if the retailer or seller obtains a properly completed certificate within ninety (90) days after the date of sale. If a seller fails to obtain a timely certificate, the seller bears the burden of proving the sale is exempt as a sale for resale.

Accepted forms. The resale certificate issued by the purchaser must be in one of the following forms: (1) "Resale Certificate" (Revenue Form 51A105), (2) "Streamlined Sales and Use Tax Agreement - Certificate of Exemption" (Revenue Form 51A260), or (3) the Multistate Tax Commission's "Uniform Sales and Use Tax Exemption/Resale Certificate - Multijurisdiction."

Single purchase vs. blanket certificates. A resale certificate may be either a "single purchase certificate" or a "blanket certificate." A single purchase certificate includes an itemization by the purchaser of the specific tangible personal property, digital property, or services to be purchased. A blanket certificate includes a general description of the kind of property or services to be purchased for resale in the regular course of business. A purchaser who has executed a blanket certificate is not required to execute additional certificates for individual purchases if there is no change in the character of the purchaser's operation and the purchases are of the kind usually purchased by the purchaser for resale.

Use by purchaser. Property or services purchased for resale but subsequently used or consumed by the purchaser become subject to sales and use tax. Under KRS 139.270(5), if the department later finds that the seller complied with certificate requirements but the purchaser used the property or service in a manner that would not have qualified for resale status, the department shall hold the purchaser liable for the remittance of the tax originally due and may apply penalties provided in KRS 139.990.

Burden of proof timing. Under 103 KAR 31:111, if a retailer or seller has not obtained a completed resale certificate in a timely manner according to KRS 139.270, the burden of proving that a sale is exempt as a sale for resale is upon the retailer or seller. The retailer or seller may offer proof to the department that the sale is not subject to tax. For example, the regulation clarifies that if a retailer receives a completed resale certificate from a restaurant business for silverware after the 120-day period required under KRS 139.270, the burden of proof is considered "not met" and the retailer remains liable for the tax, since the items are for use within the restaurant business rather than for resale. However, if the retailer receives a completed resale certificate in the course of a department audit for purchases of disposable utensils from the same restaurant business, the burden of proof is considered "met" because the product is of the type resold in the normal course of the restaurant business.

Source: KRS 139.270; 103 KAR 31:111

Kentucky assigns each sales and use tax permit holder a filing frequency based on the business's tax liability, with returns due on the 20th of the month following the reporting period. Businesses whose average monthly sales and use tax liability exceeds $50,000 must file on an accelerated basis, remitting tax by the 25th of each month for the period from the 16th of the previous month through the 15th of the current month. Taxpayers required to file on an accelerated basis continue this practice until notified otherwise in writing by the Department. When the due date falls on a weekend or state holiday, the return is due the next business day.

Source: 103 KAR 25:131

Kentucky exempts from sales and use tax machinery and appurtenant equipment that is incorporated for the first time into new or existing plant facilities (or that replaces existing machinery having a lesser productive capacity) and is directly used in a manufacturing or industrial processing operation. The exemption is codified at KRS 139.480(10) and interpreted by regulation 103 KAR 30:120, which establishes a four-part test that must be satisfied before machinery qualifies.

Four-part qualification test. Under 103 KAR 30:120, the following four requirements must be met:

1. It must be machinery. The regulation defines "machinery" broadly as "machines, in general, or collectively; also, the working parts of a machine, engine, or instrument; such as, the machinery of a watch." The definition does not require machinery to have working parts and be able to perform a function in and of itself. The machinery of a manufacturing operation includes all components making up the process, including fixed and nonmoving parts as well as moving parts.

1. It must be used directly in the manufacturing or industrial processing process. "Directly used in the manufacturing or industrial processing process" is defined by KRS 139.010(12), and "industrial processing" is defined by KRS 139.010(17). The machinery must be intimately involved in production to be considered used "directly" in the manufacturing process. The manufacturing process begins with the movement of raw materials from storage into a continuous, unbroken, integrated process, and ends when the product being manufactured is packaged and ready for sale.

1. It must be incorporated for the first time into plant facilities or licensed premises established in Kentucky. To meet this requirement, the machinery must be installed in Kentucky for the first time and incorporated into plant facilities in the state. This requirement can be satisfied by purchasing new machinery or by purchasing used machinery that has never been installed in a plant facility in Kentucky. Machinery that has been previously installed into manufacturing facilities in Kentucky may be subject to tax when subsequently sold by that manufacturer.

1. It must not replace other machinery (unless the replacement meets certain criteria). New machinery purchased to replace other machinery in the plant is subject to tax unless the new machinery performs a different function, manufactures a different product, or has a greater productive capacity (measured by units of production) than the machinery replaced. Modification of existing machinery that results in automation of non-automated functions without performance of a different function or manufacture of a different product does not qualify for exemption.

Scope of exemption. The exemption applies to the machinery itself, the appurtenant equipment necessary to the completed installation of the machinery, and the materials directly used in the installation of the machinery and appurtenant equipment. "Processing production" includes the processing and packaging of raw materials, in-process materials, and finished products; the processing and packaging of farm and dairy products for sale; and the extraction of minerals, ores, coal, clay, stone, and natural gas.

Installation and service labor. Pursuant to KRS 139.470(22), charges for labor or services to apply, install, repair, or maintain tangible personal property directly used in manufacturing or industrial processing are not subject to sales and use tax if the charges for labor or services are separately stated. Purchasers may issue Form 51A360 (Certificate of Exemption Labor or Services on Manufacturing Equipment) or Form 51A206 (Streamlined Sales and Use Tax Agreement-Certificate of Exemption) to claim the exemption for labor or service charges.

Exemption certificate. To claim the exemption at the time of purchase, manufacturers must provide the seller with a fully completed Form 51A111, Certificate of Exemption Machinery for New and Expanded Industry. The certificate may be executed by (1) a manufacturer or production processor, or (2) jointly by a contractor and the manufacturer or production processor when a contractor purchases, leases, or rents the property under contract.

Burden of proof. In all cases where a question arises concerning the exemption of machinery for new and expanded industry, the burden of proof that each qualification has been met is upon the one seeking the exemption.

Source: KRS 139.480(10); 103 KAR 30:120

Kentucky applies destination-based sourcing rules to determine the proper location of a retail sale for sales and use tax purposes. The sourcing rules under KRS 139.105 govern where a retailer must collect and remit tax on sales of tangible personal property, digital property, and taxable services. Proper sourcing is critical for retailers to determine whether Kentucky sales tax applies and, in states with local taxes, which local rate applies—though Kentucky imposes no local sales taxes.

General sourcing hierarchy. KRS 139.105(1)(a) establishes a three-tier hierarchy for sourcing retail sales not covered by the special rules for communications services, digital property, and florist wire sales:

1. Over-the-counter sales. When the purchaser receives tangible personal property, digital property, or service at a business location of the retailer, the sale is sourced to that business location.

1. Delivery to a specified address. When a purchaser or purchaser's donee receives tangible personal property, digital property, or service at a location specified by the purchaser, the sale is sourced to that specified delivery location.

1. Address unknown. When the retailer does not know the address where the tangible personal property, digital property, or service is received, the sale is sourced to the first known address in the following order of priority:

• The address of the purchaser;
• The billing address of the purchaser;
• The address of the purchaser's payment instrument; or
• The address from which the tangible personal property was shipped; from which the computer software delivered electronically or the digital property transferred electronically was first available for transmission by the retailer; or from which the service was provided (disregarding any location that merely provided the digital transfer of the product sold).

The hierarchy creates a clear preference for destination-based sourcing: the location where the customer receives the product or service controls in nearly all cases. For shipped goods, the delivery address governs. For electronically delivered digital property or services, the specified address (or, if not known, the purchaser's address or billing address) determines the sourcing.

Communications services. KRS 139.105(2) provides special sourcing rules for communications services, largely adopting the framework of the federal Mobile Telecommunications Sourcing Act. Sales of mobile telecommunications services are sourced to the customer's "place of primary use," defined as the residential or primary business street address where the customer's use of the service primarily occurs. Sales of post-paid calling services are sourced to the origination point of the telecommunications signal. Prepaid calling services are sourced to the location where the purchaser obtains the right to use the service (typically the retail location for a physical card, or the purchaser's address for online purchases). Ancillary services—such as caller ID, voicemail, and directory assistance—are sourced to the customer's place of primary use.

Digital property. For most digital property transactions, Kentucky applies the general three-tier hierarchy described above. Digital property transferred electronically is sourced to the delivery address if specified by the purchaser; if not specified, to the purchaser's address, billing address, or payment instrument address; and finally to the address from which the digital property was first available for transmission, disregarding the location that merely facilitated the digital transfer.

Florist wire sales. KRS 139.105(3) directs that florist wire sales must be sourced in accordance with an administrative regulation. Under 103 KAR 27:050, when a Kentucky florist receives an order and transmits instructions through a florist wire delivery association to a second florist (whether inside or outside Kentucky) for fulfillment and delivery, the originating Kentucky florist owes tax on the total receipts from the customer. When a florist conducts transactions by any means other than a florist wire delivery association, the sale is sourced to the destination where the tangible personal property is delivered, in accordance with the general destination-based rule of KRS 139.105.

Direct mail. KRS 139.777 governs sourcing of direct mail. For advertising and promotional direct mail, the sale is sourced based on the location of the recipients' delivery addresses if the purchaser provides the seller with a direct mail form substantiating those locations. If the purchaser does not provide a form, the sale is sourced under the general sourcing rules of KRS 139.105. For other direct mail (not advertising or promotional), the sale is sourced to the jurisdictions where the recipients' delivery addresses are located if the purchaser provides the seller with information showing the jurisdictions; otherwise, the sale is sourced under the general rules of KRS 139.105.

Use tax complement. KRS 139.105(1)(b) clarifies that the sourcing rules for sales tax do not affect a purchaser's separate obligation to remit use tax under KRS 139.310 when sales tax was not collected at the time of purchase. If a Kentucky purchaser buys tangible personal property, digital property, or a taxable service from an out-of-state seller that does not collect Kentucky sales tax (for example, because the seller lacks nexus or does not source the sale to Kentucky), the purchaser may owe Kentucky use tax on the transaction if the property is used, stored, or consumed in Kentucky.

Source: KRS 139.105; KRS 139.777; 103 KAR 27:050

Kentucky does not impose sales or use tax on professional services—such as legal, accounting, architectural, medical, or engineering services—unless those services are specifically enumerated as taxable in KRS 139.200(2). Only those services described in the statute are subject to sales tax; all others are excluded from the tax base regardless of whether the provider is located in or out of state.

Legal framework. KRS 139.200(2) lists all service categories on which the Kentucky sales and use tax is imposed, as most recently expanded by HB 8 (2022) and subsequent acts. This list includes certain specific business and personal services, but does _not_ include generic professional services such as legal, accounting, or architectural work. Kentucky's Department of Revenue regulation, 103 KAR 26:010, clarifies the treatment of professionals who provide nontaxable services: such persons are considered 'consumers,' not retailers, of any tangible personal property, digital property, or taxable services they purchase for incidental use in rendering those professional services. This means, for example, a law firm is the consumer (not the retailer) of office supplies or digital subscriptions it uses in providing legal advice; only the enumerated services themselves (if any) are subject to tax on the sales price charged to the customer.

There is no language in the statute or regulation that imposes tax on the sale of a service not specifically named in KRS 139.200(2). Kentucky courts and the Department of Revenue apply the tax strictly to the enumerated classes listed in the statute, following the rule that tax imposition statutes are strictly construed against the state.

Key exclusions.

• Common professional services _not_ enumerated and thus _not_ subject to sales or use tax include:
• Legal services (representation, advice, contracts, litigation)
• Accounting services (audits, tax prep, consulting)
• Architectural and engineering services
• Medical, dental, and most health care services not named in the statute

Practice note. If a professional service provider also sells tangible personal property or provides a service listed in KRS 139.200(2), it may incur sales or use tax collection obligations for those specific sales but not for the professional service itself.

Source: KRS 139.200; 103 KAR 26:010

Direct answer: Kentucky's $12,000 de minimis threshold for exemption from sales tax on newly taxable services under KRS 139.470(23) applies on a per legal entity basis—not per location—but the statute and published Kentucky Department of Revenue guidance are silent as to whether the threshold must be aggregated across commonly owned or affiliated entities (e.g., related businesses under common control).

Why: KRS 139.470(23) provides the exemption to "a retailer making sales solely of a service listed under KRS 139.200(2)(g) to (ax)" who does not exceed the de minimis gross receipts threshold in the calendar year. The statutory language references the "retailer," defined elsewhere in KRS Chapter 139 as a legal entity engaged in the business of making retail sales. There is no express statutory language or DOR regulation directing taxpayers to aggregate receipts between multiple locations of the same legal entity—meaning the gross receipts from all locations owned by the same entity would be combined for de minimis calculation. However, the statute is silent about aggregation among related but separately incorporated entities (e.g., two corporations, LLCs, or partnerships under common ownership). As of this writing, there is no published DOR guidance or regulation clarifying this point.

Source support:

• Authority for the threshold and general application: KRS 139.470(23) (statutory text refers to "the retailer").
• Authority for retailer definition: KRS 139.010(35) (defining retailer as a person engaged in business of selling at retail).
• Lack of published aggregation rule: No Kentucky DOR regulations or published notices as of June 2026 address threshold application across commonly owned but separate legal entities. Statute and DOR are silent.

Caution / review status: Not yet human confirmed. The application of the threshold to commonly controlled but separate businesses is unresolved by published authority as of 2026-06-16. Users facing this scenario should consider a written DOR request for specific facts.

Source: KRS 139.470; KRS 139.010

Direct answer:

Where both a marketplace provider and a third-party seller independently satisfy Kentucky's economic nexus thresholds, Kentucky law makes the marketplace provider solely liable for collecting and remitting sales and use tax on all sales it facilitates—regardless of the seller's separate nexus status. The third-party seller (marketplace retailer) is explicitly relieved of liability for collection or remittance on those specific marketplace-facilitated sales.

Why:

Under KRS 139.450(4)(b), once a marketplace provider is required to collect and remit Kentucky sales and use tax for a sale it facilitates, "the marketplace retailer shall be relieved of all liability to collect and remit the tax imposed by this chapter on the sale." The statute provides that the provider's collection and remittance obligation is absolute for facilitated transactions. Thus, there is no risk of double collection, nor is the third-party seller required (or allowed) to separately remit Kentucky sales tax on those sales—even if it independently exceeds nexus thresholds (e.g., $100,000 gross receipts or 200 transaction rule under KRS 139.340). The liability rests exclusively with the provider for the marketplace-facilitated portion of the seller’s receipts. The statute does not provide any carve-out, exception, or shared liability language for the scenario where both parties are over the nexus threshold.

If a seller makes sales outside the marketplace (e.g., on its own website), it must collect and remit tax on those direct sales if it meets economic nexus, but not on marketplace-facilitated transactions.

Source support:

• KRS 139.450(4)(b) (direct statutory language).

Caution / review status: Not yet human confirmed. This section is based on explicit statutory language as of 2026-06-16. There are no known published Kentucky Department of Revenue regulations or bulletins contradicting this provision as of this date.

Source: KRS 139.450

Kentucky’s statewide sales and use tax has undergone only a few rate changes since its inception in 1960, with all changes clearly documented by state sources and no local sales taxes authorized at any time.

Enactment and early rate:

• Kentucky first enacted its general sales and use tax effective July 1, 1960, at a rate of 3%. This initial rate and effective date are confirmed in the Commonwealth of Kentucky’s comprehensive reports and annual tax expenditure analyses.

Rate increases:

• The rate was first increased from 3% to 5% effective April 1, 1968. This increase applied to all taxable sales statewide, with no distinction for local rates.
• The most recent rate increase occurred effective July 1, 1990, when the rate was raised from 5% to 6%, where it remains. There has never been a reduction in the state rate since that time.

Major base expansions:

• In 1985, Kentucky expanded the sales tax base to include leases and rentals of tangible personal property. In 2001, interstate communications services became subject to sales tax, reflecting subsequent case and legislative developments.

No local option:

• Kentucky has never authorized local sales or use taxes. The statewide rate is applicable in every jurisdiction in the state without supplement or reduction.

Table — Kentucky Statewide Sales and Use Tax Rate History | Effective Date | State Rate | Major Changes | |----------------|------------|-----------------------------------| | 1960-07-01 | 3% | Tax enacted | | 1968-04-01 | 5% | Rate increase | | 1990-07-01 | 6% | Rate increase (current rate) |

For verification, see the Annual Comprehensive Financial Report (2003, p. 173), Kentucky Revenue’s Special Report on Tax Expenditure Analysis FY 2016-2018 (p. 24), and the cited statutes.

Source: Commonwealth of Kentucky Annual Comprehensive Financial Report 2003, p.173 Source: Kentucky Tax Expenditure Analysis FY 2016–2018, p.24

Not yet human confirmed. All effective dates and rate history are tied to state-published official sources as of 2026-06-22.