Kentucky Sales Tax Calculator

Kentucky charges one 6% rate with no local sales tax

Kentucky's sales and use tax is 6% of the purchase price statewide, and no city or county adds a local sales tax, so Louisville, Lexington and Pikeville all charge the same rate. The Department of Revenue states it plainly: there are no local sales and use taxes in Kentucky.

The tax covers retail sales of tangible goods, digital property and a growing list of services. The use tax is the "backstop" for the same rate on items bought outside Kentucky and brought in for use, storage or consumption.

Services now taxed in Kentucky

Kentucky has added services to the sales tax base in several rounds since 2018, when extended warranty services became taxable, with larger expansions in later legislative sessions. That means a bill for a service in Kentucky may carry 6% sales tax even though you would not see tax on the same service in many other states. If you are unsure whether a service is taxable, ask the provider before you sign; they are responsible for collecting the tax if it applies.

Remote sellers must also collect. Since July 1, 2018, out-of-state retailers with 200 or more sales into Kentucky or $100,000 or more in gross receipts from Kentucky sales in a year must register and collect Kentucky sales tax.

What is exempt: food, prescriptions and medical equipment

Grocery food is exempt in Kentucky. The exemption excludes alcoholic beverages, tobacco, candy, dietary supplements, soft drinks and prepared food. Prepared food means food sold heated, two or more ingredients mixed by the retailer and sold as one item, or food sold with eating utensils such as plates, knives and forks. Bakery items, including bread, bagels, donuts, cakes, pies, muffins, cookies and tortillas, are carved out of the prepared-food rule.

Medical exemptions turn on whether a prescription exists:

• Drugs for the treatment of a human being that require a prescription under state or federal law
• Over-the-counter drugs, but only when a prescription is issued for them (since August 1, 2008)
• Not covered: grooming and hygiene products such as soap, shampoo, toothpaste, mouthwash, antiperspirant and suntan lotion, which do not count as over-the-counter drugs

Calculating Kentucky sales tax

Because there is no local layer, every Kentucky calculation uses 6%. Forward: a $850 sofa costs $51.00 in tax, $901.00 in total. Backward: a $63.60 receipt is $60.00 of goods and $3.60 of tax.

A quick mental shortcut: 6% is 6 cents per dollar, so $10 of taxable goods adds 60 cents. In a mixed basket, apply the rate only to taxable items. For a $40 grocery order that includes $8 of soft drinks and candy, the tax is $0.48.

Use tax and vehicles

If you buy from an out-of-state seller and pay less than 6% sales tax, you owe the difference as Kentucky use tax. Individuals report it on their Kentucky income tax return. For untaxed purchases under $1,000 each you may use the optional use tax table based on your Kentucky adjusted gross income; every untaxed purchase of $1,000 or more must be reported at its actual amount.

Motor vehicles are not charged sales tax. Instead, Kentucky levies a separate motor vehicle usage tax, also at 6%, on the privilege of using a vehicle on Kentucky highways. It is collected by the county clerk when ownership is transferred or when a vehicle is registered in Kentucky for the first time, so a car bought out of state is taxed when you bring it home and register it. Kentucky does not hold a sales tax holiday.

Kentucky versus surrounding states

Kentucky borders seven states, and its flat 6% rate is lower than Tennessee's 9.61% average and lower than Indiana's 7%. Because Kentucky has no local sales tax, the comparison is the same anywhere in the state, from Northern Kentucky near Cincinnati to Paducah near Illinois.

If you shop across the river in a state with a lower rate and bring the goods home, Kentucky use tax is due on the difference between what you paid and 6%. If you paid more than 6% in the other state, no Kentucky use tax is due.

Quick checks for a Kentucky receipt

Use these checks to spot a receipt that looks wrong:

• Tax should be exactly 6% of the taxable items, rounded to the cent. Anything higher is an error, because there is no local add-on.
• Unprepared grocery food, prescription drugs and prescribed over-the-counter drugs should show no tax.
• Soft drinks, candy and hot food should be taxed.
• A service invoice may legitimately include tax, because Kentucky now taxes dozens of service categories.