Kentucky's sales and use tax rate is 6% of gross receipts or purchase price, and the Kentucky Department of Revenue says there are no local sales and use taxes in the state. So one rate applies everywhere in Kentucky, whichever city or county the sale happens in.
That makes rates simple to get right in Kentucky. The work is in knowing what's taxed, when out-of-state sellers have to register, and a 2026 change to how cash sales are rounded. Here's what the Department of Revenue says.
The Kentucky sales tax rate and what it covers
| Point | What the Department of Revenue says |
|---|---|
| Rate | 6% of gross receipts or purchase price |
| Local sales taxes | None in Kentucky |
| Sales tax applies to | Retail sales of tangible personal property, digital property and certain services |
| Use tax applies to | Tangible personal property and digital property bought for storage, use or consumption in Kentucky |
| Where the law sits | Kentucky Revised Statutes Chapter 139 and Kentucky Administrative Regulations Title 103 |
Digital property is in the base, so downloads and similar products aren't automatically outside the tax. If you sell services, check which ones are on the taxable list before assuming you're exempt.
Kentucky use tax, the back stop
The Department describes use tax as a back stop for sales tax. It generally applies to items bought outside Kentucky for use, storage or consumption inside the state. If your business buys equipment from an out-of-state seller who doesn't charge Kentucky tax, you owe the 6% use tax yourself. It's a common gap in small business records, so it's worth reviewing your out-of-state purchases each quarter.
When remote sellers must collect Kentucky sales tax
Under HB 487, effective 1 July 2018, a remote retailer must register and collect Kentucky sales and use tax if it has either:
- 200 or more sales into Kentucky, or
- $100,000 or more in gross receipts from sales into Kentucky, as of October 2026.
The thresholds are measured on the previous or the current calendar year, and the Department notes they match the ones confirmed in the US Supreme Court's Wayfair decision. Crossing either one is enough. Kentucky is also a member of the Streamlined Sales Tax Agreement, a compact of states that share common definitions and rules, which makes multi-state compliance a little simpler.
The 2026 rounding rule for cash sales
This one is new. In January 2026 the Department issued guidance on the penny shortage for cash transactions. From 15 July 2026, rounding cash transactions to the nearest five cents became a requirement under KRS 45.345 when pennies aren't available, rather than a suggestion. Here's how the Department explains it:
- Work out the tax to the nearest penny first. Rounding only happens after the tax is calculated.
- If the total, including tax, ends in one or two cents, round down to the nearest ten cents.
- If it ends in three or four cents, round up to the nearest five cents.
- If it ends in six or seven cents, round down to the nearest five cents, and if it ends in eight or nine cents, round up to the nearest ten cents.
The important bit for your books is KRS 139.210. The new language says that whatever way a customer pays, the retailer isn't relieved of the duty to collect and remit the correct amount of tax. Rounding a cash total doesn't change the tax you owe the state.
A worked example of Kentucky sales tax
Because there's no local tax, the arithmetic is the same everywhere in the state. A taxable sale of $50 carries $3 of Kentucky sales tax at 6%, whether the customer is in Louisville, Lexington or a small town. If the customer pays cash and pennies aren't available, you calculate the $3 exactly first, then round the cash total under the rules above. The tax you report stays at $3. The same 6% applies as use tax if your business brings in a $50 item from a seller who didn't charge Kentucky tax.
How to register and file in Kentucky
- If you're an LLC or corporation, register with the Kentucky Secretary of State first. Our guide to starting an LLC covers that step.
- Apply for your sales and use tax account through MyTaxes.ky.gov. Paper applications on Form 10A100 can take up to three weeks.
- Charge 6% on taxable sales everywhere in the state.
- File on the Department's original scannable forms if you file on paper. Forms 51A102, 51A102E, 51A103, 51A103E and 51A113 aren't available online or by fax, and copies can delay processing.
- Keep records of exempt sales and review your out-of-state purchases for use tax.
The Department has also brought in an online filing and payment mandate for sales and excise tax returns, so check whether your account must now file online.
State rules differ, and Maryland sales tax rules covers another state filing.
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Kentucky sales tax verdict
Kentucky's flat 6% with no local add-ons keeps rates simple. Get your registration in, apply the rate everywhere, watch the 200-sale and $100,000 thresholds if you sell in from outside, and set your till to round cash totals correctly without touching the tax itself. To compare, see how Virginia sales tax and Washington sales tax handle local rates.
Related: sales (this site).
Frequently asked questions
What is the Kentucky sales tax rate?
It's 6% of gross receipts or purchase price, and there are no local sales and use taxes in Kentucky.
Do Kentucky cities or counties add their own sales tax?
No. The Kentucky Department of Revenue says there are no local sales and use taxes in the state.
When does a remote seller have to collect Kentucky sales tax?
When it has 200 or more sales into Kentucky, or $100,000 or more in gross receipts from sales into the state, in the previous or current calendar year, as of October 2026.
How do Kentucky retailers round cash sales in 2026?
From 15 July 2026, cash totals must be rounded to the nearest five cents when pennies aren't available, after the tax is calculated to the nearest penny.
Are digital products taxed in Kentucky?
Yes. The Department of Revenue says sales tax applies to retail sales of digital property as well as tangible personal property and certain services.
Does rounding change the Kentucky sales tax I owe?
No. KRS 139.210 says the retailer must still collect and remit the correct amount of tax, whatever the customer's method of payment.
