The Kentucky sales tax is a flat 6 percent charged statewide on most retail purchases, with no additional city or county tax added on top. It applies to physical goods, digital products like streaming subscriptions and e-books, and a specific list of services set by statute. Groceries for home use, prescription drugs, and residential utilities are among the categories that stay untaxed.
The 6 Percent Rate Applies Everywhere in the State
Kentucky imposes a single statewide sales tax of 6 percent on retail transactions.1Kentucky Legislative Research Commission. Kentucky Revised Statutes 139.200 – Imposition of Sales Tax The rate does not change with the size of the purchase, and businesses collect it at the point of sale before sending it to the Kentucky Department of Revenue.
What sets Kentucky apart from most states is that cities and counties cannot add their own percentage on top. The 6 percent you pay in Louisville is the same 6 percent you pay in Pikeville or Paducah.2Department of Revenue. Sales and Use Tax Some local governments do collect separate levies, such as a restaurant tax or a transient room tax on short-term hotel stays, but those are distinct charges that apply only to specific transactions.
What Kentucky Taxes
The sales tax covers tangible personal property (physical goods you can touch), digital property such as downloaded music, e-books, and streaming subscriptions, and a long list of services.3Justia. Kentucky Revised Statutes 139.260 – Presumption That All Gross Receipts and Tangible Personal Property, Digital Property, and Services Sold for Delivery in This State Are Taxable Starting in 2023, the state significantly expanded its tax base to include dozens of services that had previously been untaxed. Now-taxable services include:
- Home and property services: landscaping, lawn care, janitorial and cleaning services, and pest control
- Personal services: pet grooming, laundry and dry cleaning, non-medical cosmetic surgery, and limousine services
- Facility-based charges: parking lot and garage fees, campground fees, and fitness facility access
- Business services: executive recruitment, security and investigation work, and various repair services for personal property
Not every service is taxable. Kentucky taxes specific services listed in the statute rather than applying the tax to services generally. Medical care, legal services, accounting, and most financial services remain outside the tax base. A business trying to determine whether to collect tax should check the statutory list before assuming either way.
What’s Exempt
Groceries and Food
Food and food ingredients bought for home consumption are exempt.4Kentucky Legislative Research Commission. Kentucky Revised Statutes KRS 139.470 – Exempt Transactions The exemption covers produce, meat, dairy, bread, canned goods, and similar staples. Several items that might look like groceries do not qualify:
- Prepared food, meaning anything sold in a heated state, food combined from two or more ingredients by the seller, or food sold with utensils provided by the seller
- Soft drinks and candy
- Dietary supplements
- Alcoholic beverages and tobacco
Bakery items like bread, cookies, cakes, and pastries sold without utensils are still considered exempt groceries rather than prepared food.
Prescription Drugs and Medical Items
Prescription medications are fully exempt, whether filled at a pharmacy, administered by a doctor, or distributed as free samples. The exemption also covers insulin, diabetic testing supplies, prosthetic devices, mobility-enhancing equipment with a prescription, durable medical equipment like hospital beds, and medical oxygen with its delivery equipment.5Kentucky Legislative Research Commission. Kentucky Revised Statutes 139.472 – Exemption for Certain Medical Items Over-the-counter drugs are generally taxable unless a doctor writes a prescription for them.
Residential Utilities
Electricity, natural gas, water, and sewer service used at your primary residence are exempt. If you own or rent only one home, your utility bills stay untaxed. The exemption narrows if you have multiple Kentucky properties: only the utilities at your declared place of domicile qualify, and you may need to file a Declaration of Domicile form (Form 51A380) with your utility provider to keep the exemption in place.6Kentucky Department of Revenue. Residential Utility Exemption Changes Utilities for second homes, vacation properties, and rental properties you own are subject to the full 6 percent tax. Electricity used in farming operations is also not exempt.
Farm Equipment and Supplies
Farmers can buy qualifying machinery, equipment, and materials used directly in agricultural production without paying sales tax. Claiming the exemption requires an Agriculture Exemption Number from the Department of Revenue plus a completed Farm Exemption Certificate (Form 51A158) or the equivalent for farm facility construction (Form 51A159) presented at the time of purchase.7Kentucky Department of Revenue. FAQs for Agriculture Exemption Number Program The exemption number by itself does not make a purchase tax-free; it must be paired with the proper certificate.
Online Purchases and Out-of-State Sellers
Sellers based outside Kentucky must register for a sales tax account and collect the 6 percent tax once they exceed either of two thresholds in the current or previous calendar year: $100,000 in gross receipts from Kentucky sales, or 200 or more separate transactions delivered to Kentucky buyers.8Kentucky Department of Revenue. Remote Retailers and Marketplace Providers These rules have been in effect since July 1, 2019.
Online marketplaces such as Amazon, eBay, and Etsy face the same obligation. Kentucky treats these platforms as “marketplace providers” responsible for collecting and remitting tax on all sales they facilitate, regardless of whether the individual third-party seller would independently meet the thresholds. If you buy from a third-party seller on a major marketplace, the platform generally handles the tax at checkout.
Use Tax on Untaxed Purchases
Kentucky’s use tax is the companion to the sales tax. It applies when you buy taxable goods or digital property from an out-of-state seller that does not collect Kentucky tax, such as a small online retailer that falls below the remote seller thresholds. The rate is the same 6 percent.9Justia. Kentucky Revised Statutes 139.310 – Imposition of Excise Tax on Storage, Use, or Other Consumption
You are legally required to report and pay use tax on any taxable item you store, use, or consume in Kentucky when the seller did not collect the sales tax. Most individuals report it on their annual Kentucky income tax return. With marketplace facilitator laws now in place, the practical impact on everyday shoppers has shrunk because major online platforms collect the tax at checkout, but the obligation still exists for purchases from non-collecting sellers.
The 2026 Sales Tax Holiday
Kentucky’s legislature introduced a sales tax holiday through House Bill 175 during the 2026 session. As proposed, the holiday runs from the first Friday in August through the following Sunday each year. For 2026, that means August 7 through August 9. During that weekend, qualifying personal purchases are exempt from the 6 percent tax.10Kentucky Legislative Research Commission. HB 175 – An Act Relating to a Sales and Use Tax Holiday
Eligible items include most tangible personal property for personal use priced at $3,000 or less, with a lower cap of $200 for clothing and clothing accessories. The holiday does not cover alcohol, tobacco, motor vehicles, boats, prepared food, or any of the taxable services in the sales tax statute. Business purchases are also excluded.
Filing and Penalties for Businesses
Any business making taxable sales in Kentucky needs a sales tax account, which can be set up online at MyTaxes.ky.gov or through a paper Kentucky Tax Registration Application.11Department of Revenue. Business Registration The Department of Revenue assigns your filing frequency (monthly, quarterly, or annual) based on the amount of tax you expect to collect. Returns are generally due by the 20th of the month following each reporting period.
Missing a filing deadline or paying late triggers a penalty of 2 percent of the tax owed for every 30 days (or partial 30-day period) the return or payment is overdue, up to a maximum of 20 percent. Interest also accrues on unpaid tax, at 9 percent per year for 2026.12Department of Revenue. Penalties, Interest and Fees The same penalties apply to businesses that fail to collect tax they were required to collect.