Kentucky Sales Tax on Software and Digital Products Kentucky: Sales Tax Handbook

Kentucky:

Are Software and Digital Products subject to sales tax?

While Kentucky's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of software and digital products in Kentucky, including canned software - delivered on tangible media, canned software - downloaded, custom software - delivered on tangible media, custom software - downloaded, customization of canned software and digital products. To learn more, see a full list of taxable and tax-exempt items in Kentucky.


Canned Software - Delivered on Tangible Media
TAXABLE
Sales of canned software - delivered on tangible media are subject to sales tax in Kentucky.

Canned Software - Downloaded
TAXABLE
Sales of canned software - downloaded are subject to sales tax in Kentucky.

Custom Software - Delivered on Tangible Media
EXEMPT
Sales of custom software - delivered on tangible media are exempt from the sales tax in Kentucky.

Custom Software - Downloaded
EXEMPT
Sales of custom software - downloaded are exempt from the sales tax in Kentucky.

Customization of Canned Software
EXEMPT
In the state of Kentucky, so long as the prewritten software is being modified or enhanced for a specific customer and the charge for these changes is deemed reasonable and it is also separately stated on the invoice intended for the customer, and so long as the modification or enhancement is not defined as prewritten computer software.

Digital Products
TAXABLE
Sales of digital products are subject to sales tax in Kentucky.



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Source: http://www.salestaxhandbook.com/kentucky/sales-tax-taxability/software-and-digital-products