Kentucky Sales Tax on Optional Maintenance Contracts Kentucky: Sales Tax Handbook

Kentucky:

Are Optional Maintenance Contracts 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 optional maintenance contracts in Kentucky, including parts purchased for use in performing service under optional maintenance contracts. To learn more, see a full list of taxable and tax-exempt items in Kentucky.


General Optional Maintenance Contracts
EXEMPT
In the state of Kentucky, it is exempt so long as the retailer separately states the charge for the contract in its books and records and on the customer's invoice.

Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts
TAXABLE
In the state of Kentucky, parts are considered to be taxable to the repairer.



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