What Is Exempt From Sales Tax in Kentucky: Groceries, Drugs, Utilities

Kentucky charges a flat 6% sales and use tax, but a long list of purchases is exempt from that tax: most groceries bought for home use, prescription medications and many medical devices, residential utilities, farm and manufacturing machinery, items bought for resale, and purchases made by qualifying nonprofits and government agencies.¹ Each exemption has its own conditions, and several require a form on file before the seller can leave the tax off your bill.

Groceries and Food for Home Consumption

Food and food ingredients sold for home use are not taxed. Bread, milk, produce, meat, frozen meals, dried pasta, and similar staples are exempt. Unflavored bottled water is also exempt, because Kentucky’s statute defines “soft drinks” as sweetened beverages and plain water carries no sweetener.²

Plenty of items on grocery shelves are still taxed at 6%:

Alcoholic beverages (0.5% alcohol by volume or more)
Tobacco products
Candy, meaning sugar or sweetener combined with chocolate, fruit, nuts, or flavorings in bar, drop, or piece form
Dietary supplements, including vitamins and protein powders
Soft drinks, meaning nonalcoholic sweetened beverages, though drinks that are more than 50% juice are excluded from that definition
Prepared food, meaning items sold hot, items the retailer has mixed from two or more ingredients, or food sold with utensils provided by the seller

The prepared food rule is where confusion starts. Bakery items sold without utensils, including bread, rolls, donuts, cookies, cakes, and tortillas, stay exempt even when the store made them that morning.² A sandwich from the same store, served on a plate with a fork, is taxable.

Prescription Drugs and Medical Equipment

Prescription medications are exempt whether a pharmacist fills them, a doctor administers them, or a manufacturer hands them out as free samples.³ Over-the-counter drugs are only exempt when a doctor actually writes a prescription for them. Grabbing ibuprofen off the shelf on your own means paying the 6%.

Insulin and diabetic supplies, including syringes, needles, and blood sugar testing materials bought for personal use, are exempt without any prescription.³

The exemption also covers several categories of medical hardware:

Prosthetic devices worn on or in the body to replace a missing part
Mobility-enhancing equipment such as wheelchairs and walkers, when a prescription is issued
Durable medical equipment such as hospital beds and oxygen concentrators, when a prescription is issued
Medical oxygen and delivery equipment for home use, including cylinders, cryogenic tanks, concentrators, tubes, and masks
Colostomy, urostomy, and ileostomy supplies bought for personal use

Repair and replacement parts for prosthetics, mobility equipment, and durable medical equipment share the same exempt status as the equipment itself.³

Residential Utilities

Electricity, natural gas, water, sewer service, and heating fuels like coal, wood, and fuel oil are exempt when used at a residence.⁴ Commercial and industrial utility accounts do not qualify.

Since January 2023, the exemption only applies if you’ve filed a Declaration of Domicile (Form 51A380) with your utility provider. The form shifted the basis for the exemption from the utility’s tariff classification to a personal declaration that you actually live at the address.⁵ If that form isn’t on file, your provider may be adding 6% to every bill.

If you own more than one home, you can claim the exemption on each property, but a separate Declaration of Domicile has to be filed for every separately metered account.⁵

Farm and Manufacturing Equipment

KRS 139.480 provides some of Kentucky’s broadest exemptions for industry and agriculture. Machinery used directly in manufacturing or processing goods for sale is exempt, and so is machinery bought for new or expanded industrial operations. Manufacturers also get relief on energy: fuels and energy used in the manufacturing process are exempt to the extent they exceed 3% of the cost of production.⁶

On the farm side, the exemption covers machinery used exclusively and directly to till soil, raise livestock or poultry for sale, or produce milk for sale. Seeds for human food crops or crops grown for sale, commercial fertilizer, and animal feed are also exempt. Livestock sold for breeding or dairy purposes between people regularly engaged in farming is exempt as well.⁶

Agriculture Exemption Number

Farmers can’t just tell the cashier they’re exempt. Kentucky requires an Agriculture Exemption Number, applied for through the Department of Revenue on Form 51A800, and that number has to appear on the exemption certificate presented at the point of sale.⁷ Numbers currently in circulation expire December 31, 2026, and renewals issued after that will be valid for four years. If you stop farming, you have 60 days to notify the Department of Revenue and cancel the number.⁸

Pollution Control Equipment

Manufacturing facilities can also exempt equipment whose primary function is controlling water, air, waste, noise, or substance pollution required by state environmental law. Qualifying means applying for a Pollution Control Tax Exemption Certificate (Form 61A217) and showing the equipment’s primary purpose is pollution control.⁹

Nonprofit and Government Purchases

Purchases made by qualifying nonprofit educational, charitable, and religious organizations are exempt, as are purchases by state and local government agencies. A nonprofit must hold 501(c)(3) status, and the goods or services have to be used solely within the organization’s educational, charitable, or religious function in Kentucky.¹⁰

The organization presents a valid Purchase Exemption Certificate at the register. In-state entities use Form 51A126; out-of-state entities use Form 51A127, and they qualify as long as they are also exempt from sales tax in their home state.¹¹ Misuse of these certificates triggers penalties and interest, so sellers are expected to verify them.¹⁰

Inventory Bought for Resale

Businesses that buy goods to resell don’t owe sales tax on those purchases, provided they document the exemption with a resale certificate. Kentucky accepts three: the Resale Certificate (Form 51A105), the Streamlined Sales Tax Certificate of Exemption (Form 51A260), and the Multistate Tax Commission’s Uniform Exemption/Resale Certificate.¹²

A single-purchase certificate covers one transaction and must itemize what’s being bought. A blanket certificate covers ongoing purchases of the same general type and stays valid as long as the nature of the business doesn’t change.¹² A seller who skips the paperwork and gets audited absorbs the tax.

Professional Services

Kentucky only taxes services specifically listed in KRS 139.200. Legal advice, accounting, medical consultations, engineering, and similar professional expertise are not on that list and carry no sales tax. A lawyer’s invoice comes with no sales tax; a bill from someone who repairs your appliance usually does, because repair services on tangible personal property have long been taxable.

Note that the taxable-services list grew substantially under House Bill 8, effective January 1, 2023. Landscaping, janitorial work, small animal veterinary care, pet grooming, photography, bodywork and massage, fitness instruction, cosmetic surgery, and prewritten computer software access services (most SaaS subscriptions) are now taxed at 6%.¹³ If a service you used to pay tax-free is now showing 6%, this is likely why.

What People Often Assume Is Exempt but Isn’t

A few categories commonly exempt in other states are fully taxable in Kentucky.

Clothing and apparel are taxed at 6%, with no everyday-wear carve-out.
Digital property, including downloads, streaming subscriptions, and software-as-a-service, is generally taxable after the 2023 expansion.¹³
Over-the-counter medications without a prescription.
Prepared food from a grocery deli counter, hot bar, or any item sold with utensils.

Getting a Refund If You Were Charged Tax on an Exempt Item

If a retailer charged you tax on something that should have been exempt, the refund runs through the retailer, not directly to the state. Bring the receipt back to the store and ask for the tax to be refunded. The retailer files a Sales and Use Tax Refund Application (Form 51A209) with the Department of Revenue, and once the DOR verifies the paperwork, the refund flows back through the retailer to you.¹⁴ Claims mailed directly to the DOR by consumers can’t be processed.

You have four years from the date the tax was paid to the state treasury to file a refund claim.¹⁵ Keep the receipt; you’ll need to show the purchase amount and the tax charged. After four years, the claim is gone.

1
Department of Revenue. Sales and Use Tax
2
Kentucky Legislative Research Commission. Kentucky Revised Statutes KRS 139.485 – Exemption of Food Items
3
Kentucky Legislative Research Commission. Kentucky Revised Statutes KRS 139.472 – Exemption for Certain Medical Items
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Kentucky Legislative Research Commission. Kentucky Revised Statutes KRS 139.470 – Exempt Transactions
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TAXANSWERS from the Kentucky Department of Revenue. Residential Utility Exemption Changes
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Kentucky Legislative Research Commission. Kentucky Revised Statutes KRS 139.480 – Property Exempt
7
Department of Revenue. Agriculture Exemption Numbers for Qualified Applicants
8
Department of Revenue. FAQs for Agriculture Exemption Number Program
9
LII / Legal Information Institute. 103 KAR 8:170 – Pollution Control Facilities Exemption
10
Kentucky Legislative Research Commission. Kentucky Revised Statutes KRS 139.495 – Application of Taxes to Resident Nonprofit Institutions
11
Department of Revenue. Out-of-State Purchase Exemption Certificate
12
LII / Legal Information Institute. 103 KAR 31:111 – Sales and Purchases for Resale
13
Department of Revenue. Kentucky Sales Tax Facts – June 2022
14
Department of Revenue. Instructions on Refunds for Sales and Use Tax
15
Kentucky Legislative Research Commission. Kentucky Revised Statutes – Refund of Taxes