Kentucky Sales Tax
In Kentucky, a state sales tax is charged on the retail sale, lease, or rental of most goods and services. In addition, a use tax is imposed on the storage, consumption, or other use of tangible personal property (including digital property) purchased in the state or brought in for use from outside the state.
Kentucky Sales Tax is %6 and imposed on the retail sale of most goods and services, including food. There is no local sales tax. This differs from many other states that allow counties, cities, and other localities to impose taxes. Businesses that sell tangible products in Kentucky must register for a sales tax permit and collect and remit the tax on their sales. Out-of-state businesses may also be subject to sales tax collection obligations in Kentucky if they meet a certain annual sales threshold or engage in certain activities that create a virtual connection with the state (called economic nexus).
Filing Kentucky Sales Tax
Businesses that are obligated to collect sales tax must file reports and remit payments on a regular basis. Most states require reporting on a monthly basis, while others accept quarterly filings or even annually. Kentucky also allows taxpayers to opt-in for a less frequent filing schedule, depending on their sales volume.
When invoicing customers, it’s important to be able to accurately calculate the proper amount of sales tax to charge. Fortunately, online sales tax calculators and rate lookup tools make this process simple. It’s also helpful to know which items are subject to varying rates based on the county, city, or other local taxes that may apply in the state of Kentucky.
What is Exempt From Sales Tax in Kentucky?
Depending on what you sell and where you sell it, a variety of sales tax exemptions could apply to your business. This is why it’s important always to check local and state regulations to ensure you are properly charging sales tax.
Kentucky has a destination-based sales tax system, so you should charge sales tax based on the buyer’s location. This is a requirement of all states that have sales tax. To learn more about Kentucky’s tax rules, visit the Department of Revenue website.
Some services that are taxable in Kentucky include veterinary services, security systems for home and business, electric car charging stations, and water delivery services. However, there are a number of exempt services as well, such as professional services provided by lawyers and architects, services for horses and food animals, and electricity services for rural co-ops.
