Kentucky vacation rental tax rates start at 7% for any short-term booking: a 6% state sales tax plus a separate 1% statewide transient room tax. A local transient room tax then stacks on top, running anywhere from nothing in some rural counties to 8.5% in Louisville Metro. Depending on where the property sits, hosts collect somewhere between roughly 8% and more than 15% of the rental charge in combined state and local taxes on stays shorter than 30 consecutive days.
The 6% State Sales Tax
Kentucky charges 6% sales tax on the gross receipts from renting rooms or accommodations to short-term guests. KRS 139.200 treats vacation rentals the same as hotels, motels, and campgrounds.1Justia Law. Kentucky Revised Statutes 139.200 – Imposition of Sales Tax The rate is statewide, and cities and counties cannot add their own sales tax on top.2Kentucky Department of Revenue. FAQ Sales and Use Tax
Gross receipts means the total amount the guest pays, including mandatory fees such as cleaning or pet fees. Stays of 30 consecutive days or longer are exempt from the sales tax. The 30-day clock resets if the guest checks out and returns later, so two separate two-week stays by the same guest do not qualify.1Justia Law. Kentucky Revised Statutes 139.200 – Imposition of Sales Tax
As the host, you are the retailer for this tax. You collect it from the guest and hold it in trust for the Commonwealth until you file. Failing to collect it does not get you off the hook; you still owe what should have been collected.3Kentucky Legislative Research Commission. Kentucky Revised Statutes 139.340 – Retailers Duty to Collect Tax
The 1% Statewide Transient Room Tax
KRS 142.400 adds a separate 1% statewide transient room tax on every occupancy of a suite, room, cabin, campsite, or similar accommodation. The base is the rent charged to the guest, excluding any other state or local taxes already on the bill.4Kentucky Legislative Research Commission. Kentucky Revised Statutes 142.400 – Statewide Transient Room Tax
This one is easy to miss. The Department of Revenue treats it as a distinct obligation with its own return, due by the twentieth of each month for the prior month’s rentals.5Kentucky Department of Revenue. Transient Room Tax Hosts who only file the sales tax return and skip this one face separate penalties.
Local Transient Room Taxes
Cities and counties can layer their own transient room tax on top of the 7% state total. KRS 91A.390 sets the framework. Most local governments can impose up to 3% for their tourist and convention commission, and an urban-county government like Lexington can go up to 4%. Some jurisdictions add further levies for convention center bonds or tourism promotion, which can push the local portion significantly higher.6Justia Law. Kentucky Revised Statutes 91A.390 – Room Tax, Special Transient Room Tax
Louisville Metro imposes a local transient room tax of 8.5%.7LouisvilleKY.gov. Transient Room Tax Some rural counties impose little or nothing. To find your rate, contact the city or county where the property is located. The 30-day exemption applies at the local level too.6Justia Law. Kentucky Revised Statutes 91A.390 – Room Tax, Special Transient Room Tax
What the Combined Rates Look Like
Take a $200 night in a county with a 3% local transient room tax:
- 6% state sales tax: $12.00
- 1% state transient room tax: $2.00
- 3% local transient room tax: $6.00
- Total: $20.00, a 10% effective rate
That same $200 night in Louisville carries $31.00 in tax, a 15.5% effective rate, because of the 8.5% local levy. The gap between locations is substantial, and knowing your local rate is not optional.
What Airbnb and VRBO Collect for You
Airbnb and VRBO currently collect and remit the 1% statewide transient room tax for participating Kentucky hosts. Since January 1, 2023, those platforms are also required to collect and remit local transient room taxes based on total rental charges, including their own service fees.5Kentucky Department of Revenue. Transient Room Tax
Platform collection does not necessarily cover every tax you owe. Whether the platform collects the 6% state sales tax depends on how Kentucky’s marketplace facilitator rules apply to your situation. Check your platform’s tax collection summary for Kentucky and compare it against the three taxes above. Any gap is yours to register for, collect from guests, and remit directly. Hosts who list on smaller platforms or take direct bookings should assume they handle all three.
Registering With the Department of Revenue
Before you collect a dollar in tax, register with the Kentucky Department of Revenue. The form is the Kentucky Tax Registration Application (Form 10A100), available online at MyTaxes.ky.gov or as a paper form.8Kentucky Department of Revenue. Business Registration Vacation rental hosts typically need at least two accounts: Sales and Use Tax and Transient Room Tax.9Kentucky Department of Revenue. Kentucky Tax Registration Application and Instructions The application asks for your Social Security Number or Federal Employer Identification Number, the physical address of each rental, your legal business name, and your start date.
Many cities and counties also require a local business license or short-term rental permit before you can legally operate. Requirements and fees vary, so check with your local government early.
Filing and Paying
Kentucky consolidates online filing at MyTaxes.ky.gov. You log in, enter rental income for the period, and pay electronically. The 1% state transient room tax is due monthly, with returns and payment owed by the twentieth of the month after each reporting period. The sales tax return may be assigned on a monthly or quarterly basis; the Department of Revenue reviews each account annually and adjusts your filing frequency based on prior-year tax paid. Save every confirmation receipt in case of an audit.
Penalties for Late Filing or Non-Payment
Kentucky’s penalties compound quickly and can hit from more than one direction at once on the same filing period.10Kentucky Department of Revenue. Penalties, Interest and Fees
- Late filing: 2% of the tax due for each 30 days (or part thereof) the return is late, capped at 20%. Minimum $10.
- Late payment or failure to collect: another 2% per 30 days, also capped at 20% with a $10 minimum. It runs alongside the late-filing penalty, so both can apply to one return.
- Failure to register: 10% of the permit fee, minimum $50.
- Failure to file at all: 5% of the estimated tax due per 30 days, up to 50% of the total assessed. Minimum $100.
- Collection fee: 25% added if the tax stays unpaid 60 days after the initial notice.
Interest runs on unpaid balances at 9% per year for 2026, and interest cannot be waived under any circumstances. Penalties can be waived for reasonable cause, such as a natural disaster or documented hardship, but that is the exception. Set filing reminders before the twentieth of each month and pay even if you are still sorting exact figures. An imperfect return filed on time costs far less than a perfect return filed late.10Kentucky Department of Revenue. Penalties, Interest and Fees