KY Kentucky State sales tax rates

STATEWIDE SALES TAX RATE

ECONOMIC SALES THRESHOLD

$100,000

TRANSACTIONS THRESHOLD

200

Do you need to collect sales tax in Kentucky?

You’ll need to collect sales tax in Kentucky if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.

Do you have sales tax nexus in Kentucky?

The state of Kentucky considers a seller to have physical nexus if you have any of the following in the state:

Owned or leased property that is utilized or located in the state.
An employee or independent contractor present in the state
Goods in a warehouse
Services completed in the state
Computer software used by a third party in the state
Participating in trade or craft shows and festivals in the state for 15 days or more per year

Kentucky considers a seller to have physical nexus if you have any of the following in the state:

Owned or leased property that is utilized or located in the state.
An employee or independent contractor present in the state
Goods in a warehouse
Services completed in the state
Computer software used by a third party in the state
Participating in trade or craft shows and festivals in the state for 15 days or more per year

Do you have economic nexus in Kentucky?

Effective July 1, 2018, Kentucky considers vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Kentucky’s economic nexus guidance for sellers here and you can read more about economic nexus in every state here.

Is what you’re selling taxable?

Services in Kentucky are sometimes taxable. Check with the Kentucky Department of Revenue if you are unsure whether the service you provide is taxable.

Tangible products are taxable in Kentucky, with a few exceptions. These exceptions include prescription medicine, farm equipment and construction equipment.

Is SaaS taxable in Kentucky?

SaaS is taxable in Kentucky as of January 1, 2023.

Collecting Sales Tax

Kentucky doesn’t have local sales tax rates, only a statewide tax rate of 6%. So you would simply charge 6% sales tax to buyers in Kentucky.

This is true whether you are based in Kentucky or whether you are based in another state and have sales tax nexus in Kentucky.

Should you collect sales tax on shipping charges in Kentucky?

As long as the product you are selling is taxable, you should generally charge sales tax on shipping charges to buyers in Kentucky.

When are Returns Due?

When you file and pay Kentucky sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Kentucky?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Kentucky, you will be required to file and remit sales tax either monthly, quarterly or annually (calendar year or fiscal annual).

Kentucky sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.