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, you will see this 6 percent 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 2.5 percent depending on where you live. Your total sales tax bill is the state rate plus whatever local rate applies in your area. A purchase in Louisville, for example, is taxed at 7 percent total (6 percent state plus 1 percent local), while a purchase in Lexington is taxed at 6 percent (state only, as of now).
The sales tax applies to tangible goods — items you can touch and take home. Clothing, groceries, furniture, electronics, and gasoline all have sales tax. Services like haircuts, car repairs, and plumbing do not. Digital products like e-books, streaming subscriptions, and downloaded software are generally not taxed, though this can vary by retailer.
Key Takeaways
- Kentucky's base sales tax is 6 percent, and many cities and counties add 0 to 2.5 percent on top of that.
- Sales tax applies to physical goods but not to services like repairs, haircuts, or professional labor.
- Groceries and prescription medications are exempt from sales tax in Kentucky.
- Online purchases are taxed the same way as in-store purchases if the retailer has a physical presence in Kentucky or meets federal thresholds for collecting tax.
- Your total tax rate depends on your city and county, so two purchases in different Kentucky towns may have different tax amounts.
What Is and Is Not Taxed in Kentucky
Food you buy at a grocery store is not taxed in Kentucky. This includes bread, milk, meat, vegetables, and canned goods. However, prepared food — items from a restaurant, deli counter, or hot food bar — is taxed at the full rate. If you buy a rotisserie chicken from a grocery store's prepared foods section, you pay sales tax. If you buy a raw chicken to cook at home, you do not.
Prescription medications are also exempt from sales tax. Over-the-counter medicines like aspirin or cold medicine are taxed. Medical equipment such as wheelchairs, crutches, and diabetic supplies may be exempt depending on the specific item and how it is classified.
Clothing is taxed in Kentucky. There is no clothing exemption, so shoes, shirts, pants, and coats all have sales tax added. This differs from some neighboring states that exempt clothing purchases.
Local Sales Tax Rates by City and County
Kentucky allows cities and counties to set their own local sales tax rates within state limits. The state collects the 6 percent, and local governments collect their portion. This means your actual tax rate depends on exactly where you make the purchase.
Jefferson County (which includes Louisville) has a 1 percent local rate, bringing the total to 7 percent. Fayette County (which includes Lexington) currently has no additional local rate, so purchases there are taxed at 6 percent. Other counties like Boone, Campbell, and Kenton in the northern part of the state have rates between 0.5 and 2 percent.
If you live near a county line, you may notice different prices at stores just a few miles apart. Some people cross county lines to make large purchases in areas with lower tax rates, though this is only practical for items you can carry or have delivered. You cannot avoid tax by having something shipped to a lower-tax county if you live in a higher-tax one — the tax is based on where you take possession of the item.
How Sales Tax Works on Online and Mail Orders
Online retailers must collect Kentucky sales tax if they have a warehouse, office, or other physical location in the state. Amazon, Walmart, Target, and most large retailers meet this requirement and charge Kentucky tax on orders shipped to addresses in the state.
Smaller online sellers may not collect Kentucky sales tax at checkout. However, Kentucky law requires you to pay use tax on purchases where sales tax was not collected. Use tax is the same rate as sales tax and is meant to level the playing field between local and out-of-state sellers. In practice, most individuals do not report use tax on their personal returns, though technically they are required to do so.
If you order something online and pick it up in a Kentucky store, you pay sales tax at the time of pickup based on the store's location. Mail orders and shipments are taxed based on the delivery address.
Who Collects and Where the Money Goes
The retailer — the store or online seller — collects sales tax from you and sends it to Kentucky's Department of Revenue. Retailers file sales tax returns monthly or quarterly depending on their volume. The state keeps the 6 percent portion and distributes the local portion to cities and counties based on where the sale occurred.
Sales tax revenue funds state and local services. In Kentucky, this includes schools, roads, police and fire departments, and other public programs. The local portion specifically supports city and county budgets.
Sales Tax on Specific Items You Might Buy
Gasoline is taxed at the full 6 percent state rate plus local tax. The tax is included in the price per gallon you see on the pump. Diesel fuel is also taxed the same way.
Vehicles are taxed on the purchase price. When you buy a car, truck, or motorcycle, sales tax is calculated on the selling price and collected at the time of sale or registration. Trade-in value does not reduce the taxable amount in Kentucky — you pay tax on the full purchase price.
Alcohol is taxed at the regular sales tax rate. Beer, wine, and liquor sold in stores have sales tax added. Alcohol served in bars and restaurants is also taxed as part of the prepared food rate.
Utilities like electricity, natural gas, and water are not subject to sales tax in Kentucky. However, if you buy a generator, space heater, or other appliance, that purchase is taxed.
Frequently Asked Questions
Do I pay sales tax on used items?
Used items sold by a business are taxed the same as new items. If you buy a used car from a dealership, you pay sales tax. If you buy a used item from an individual in a private sale, there is no sales tax. The difference is whether a retailer or business is involved.
What if I buy something in another state and bring it to Kentucky?
You do not pay Kentucky sales tax on items purchased in another state. However, if that state did not charge sales tax, you may owe Kentucky use tax on the item. This is rarely enforced for personal purchases, but the law technically requires it.
Are there any sales tax holidays in Kentucky?
Kentucky does not have an annual sales tax holiday like some states do. There are no designated periods when clothing, school supplies, or other items are tax-free. Tax rates remain the same year-round.
How do I find out my exact local sales tax rate?
Your local rate depends on your city and county. You can contact your county clerk's office or city government to confirm the current rate. The Kentucky Department of Revenue website also lists rates by county, though local rates can change, so calling ahead is the most reliable method.
Is sales tax added before or after discounts?
Sales tax is calculated on the final price after discounts, coupons, and markdowns are applied. If an item is on sale for 20 percent off, you pay sales tax on the reduced price, not the original price.