Kentucky: Sales Tax Handbook
What purchases are exempt from the Kentucky sales tax?
While the Kentucky sales tax of 6% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Kentucky.
Sales Tax Exemptions in Kentucky
In Kentucky, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.
Several exceptions to the state sales tax are goods and machinery which will be sold to farmers, any machinery which is intended for new and expanded industries, any oil and gas extraction machinery. Also exempt are security lighting products, wrapping and packaging materials, certain containers, and any property which is used in the publication of newspapers.
Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Kentucky:
These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.
Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":
Are services, shipping, installation, etc taxable in Kentucky?
The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Kentucky sales tax see the Kentucky sales taxability FAQ page.
Other tax-exempt items in Kentucky
This table lists a number of additional categories of goods and services that are exempt from Kentucky's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Kentucky.
|Food and Meals|
|Grocery Food||EXEMPT *|
|Leases and Rentals|
|Motor Vehicles||EXEMPT *|
|Manufacturing and Machinery|
|Utilities & Fuel||EXEMPT *|
|Medical Goods and Services|
|Medical Devices||EXEMPT *|
|General Occasional Sales||EXEMPT|
|Motor Vehicles||EXEMPT *|
|Optional Maintenance Contracts|
|General Optional Maintenance Contracts||EXEMPT *|
|Transportation Services||EXEMPT *|
|Software and Digital Products|
|Custom Software - Delivered on Tangible Media||EXEMPT|
|Custom Software - Downloaded||EXEMPT|
|Customization of Canned Software||EXEMPT *|
* See notes in category taxability page for details
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