Kentucky's sales tax rate and what it covers

Kentucky charges a 6 percent sales tax on most goods you buy in the state. This is the base rate set by the state government. When you buy something at a store, restaurant, or online retailer shipping to Kentucky, that 6 percent gets added to your bill at checkout.

Some Kentucky cities and counties add their own local sales tax on top of the state rate. These local taxes range from 0 to 2 percent depending on where you live. So your actual sales tax rate could be anywhere from 6 percent to 8 percent, depending on your location. You can find your exact local rate by entering your zip code on the Kentucky Department of Revenue website or asking a local business.

Not everything is taxed at the full rate. Groceries—food you buy to cook at home—are taxed at only 2 percent in Kentucky, not 6 percent. This includes items like milk, bread, vegetables, and meat. Restaurant meals and prepared foods are taxed at the full rate because they are considered prepared food, not groceries.

Key Takeaways

  • Kentucky's base sales tax is 6 percent, but your actual rate depends on your city or county, which may add 0 to 2 percent more.
  • Groceries are taxed at only 2 percent, while restaurant meals and prepared foods are taxed at the full rate.
  • Clothing and shoes have no sales tax in Kentucky, which can make a difference on larger purchases.
  • Online purchases are taxed the same way as in-store purchases if the seller has a Kentucky presence or meets federal thresholds.
  • You can find your exact local sales tax rate by zip code on the Kentucky Department of Revenue website.

What items are exempt from Kentucky sales tax

Kentucky exempts certain items from sales tax entirely. Clothing and shoes have no sales tax, which means you pay the listed price with no tax added. This applies to regular clothing, work uniforms, and footwear. Accessories like belts, hats, and gloves are also tax-free.

Prescription medications are not taxed in Kentucky. Over-the-counter medicines like pain relievers and cold medicine are taxed at the full rate, but anything that requires a prescription slip from a doctor is exempt. Medical equipment like wheelchairs, canes, and diabetic supplies may also be exempt, though the rules vary by item.

Some services are not taxed. Haircuts, dental work, and medical services do not have sales tax added. However, if you buy a product at those locations—like shampoo at a salon or toothpaste at a dentist's office—that product is taxed normally.

How local sales tax works in your area

Kentucky allows cities and counties to set their own additional sales tax on top of the state's 6 percent. These local rates are set by local government and can change, though changes are rare. Some counties have no local tax at all, while others add up to 2 percent.

The local tax applies to the same items as the state tax, with the same exemptions. If groceries are taxed at 2 percent statewide, they stay at 2 percent even if your county adds local tax—the local rate does not explore to groceries. The same is true for clothing and prescription medications.

You can look up your exact rate by zip code on the Kentucky Department of Revenue website. Enter your address and it will show you the state rate plus any local additions. This matters most for large purchases like furniture or appliances, where the difference between 6 percent and 8 percent can be several dollars.

Sales tax on online and out-of-state purchases

If you order something online and have it shipped to a Kentucky address, you owe Kentucky sales tax on that purchase. This applies whether the seller is based in Kentucky or somewhere else. The seller is responsible for collecting the tax and sending it to Kentucky, so the tax should appear on your receipt or invoice.

Some smaller online sellers may not collect Kentucky sales tax because they do not have a physical location in the state and their sales volume is below federal thresholds. In those cases, Kentucky residents are technically responsible for paying the tax themselves when they file their state income tax return, though few people do. If you are unsure whether tax was collected, check your receipt.

If you buy something in another state and bring it back to Kentucky, you do not owe Kentucky sales tax on it—you already paid tax in the state where you bought it. However, if you order something from out of state and have it shipped to Kentucky, Kentucky tax applies.

Who collects and pays Kentucky sales tax

The business selling you the item is responsible for collecting sales tax from you and sending it to the Kentucky Department of Revenue. You do not send the tax directly to the state—it comes out of your total bill at the register or checkout. The business keeps records of all sales tax collected and files a return with the state, usually monthly or quarterly depending on how much tax they collect.

If a business fails to collect or pay sales tax, the Kentucky Department of Revenue can audit them and impose penalties. This is why you should always get a receipt—it shows what tax was charged and proves the business collected it.

Special situations and exceptions

Nonprofit organizations and government agencies may be exempt from paying sales tax on certain purchases, but this does not affect what you pay as a consumer. If you are buying something for personal use, you pay the full tax regardless of who you are.

Resale certificates are used by businesses that buy items to resell them. If you have a resale certificate, you can buy items without paying sales tax because the tax will be paid when the item is sold to the final customer. This only applies to businesses, not individuals.

Farm equipment and certain agricultural supplies may have reduced tax rates or exemptions in Kentucky, but these are specific to farming operations and require documentation. If you operate a farm, contact the Kentucky Department of Revenue to learn what applies to your situation.

Frequently Asked Questions

What is the total sales tax rate in my Kentucky city?

Your total rate is Kentucky's 6 percent base rate plus any local tax your city or county adds. To find your exact rate, go to the Kentucky Department of Revenue website and enter your zip code. Local rates range from 0 to 2 percent, so your total could be anywhere from 6 to 8 percent.

Why are groceries taxed differently than restaurant food?

Kentucky taxes groceries at 2 percent because they are considered necessities for home cooking. Restaurant meals and prepared foods are taxed at the full 6 percent (plus local tax) because they are considered prepared food, not raw groceries. This distinction is set by state law.

Do I have to pay sales tax on clothes I buy online?

No. Clothing and shoes have no sales tax in Kentucky, whether you buy them in a store or online. The seller should not charge you tax on these items. If they do, contact them to request a refund of the tax charged.

What happens if a business does not collect sales tax from me?

The business is breaking the law and could face penalties from the Kentucky Department of Revenue. As a consumer, you are not responsible for reporting this. However, if you notice a business is not charging tax when it should, you can report it to the Kentucky Department of Revenue.

Are there any items that are taxed at a rate other than 2 or 6 percent?

No. In Kentucky, items are either taxed at 2 percent (groceries), 6 percent (most goods and services), or 0 percent (exempt items like clothing and prescriptions). There are no other rates. Your local tax is added on top of these rates, not instead of them.