Sales Tax Nexus in Kentucky: What Online Sellers Need to Know

The Short Answer

Kentucky triggers sales tax obligations at $100,000 in sales OR 200 transactions. The state rate is flat, with no local additions. The biggest development: Kentucky enacted HB 8 in 2022 (effective January 1, 2023), which dramatically expanded the state's sales tax to include SaaS and dozens of previously-exempt services. If you sell software or SaaS into Kentucky, you now owe sales tax.

Economic Nexus Threshold

• Dollar threshold: $100,000 in gross receipts from retail sales into Kentucky
• Transaction threshold: 200 or more separate transactions
• Either/Or: Meeting either triggers the obligation
• Effective date: October 1, 2018
• HB 8 expansion (SaaS + services): January 1, 2023

Does Kentucky Count Marketplace Sales Toward Your Threshold?

Marketplace facilitators collect and remit Kentucky sales tax on facilitated transactions. Marketplace sellers are generally relieved when the MF is collecting. Taxero confirms this during onboarding.

What Taxable Products Look Like in Kentucky

• State rate: Flat statewide — no local additions anywhere
• Groceries: Most non-prepared food largely exempt
• Clothing: Taxable
• SaaS and digital goods: Taxable since January 1, 2023 (HB 8). Kentucky made one of the most significant expansions of sales tax in recent US history — SaaS, cloud software, and dozens of business services became taxable. If you had Kentucky customers before 2023 and weren't collecting on SaaS sales, that gap exists. A VDA can resolve past liability.

The 2024 legislature (HB 360) made some clarifications to HB 8, removing certain marketing services from the taxable list, but SaaS remains taxable.

How to Register in Kentucky

Kentucky is an SST member:

• SST SSTRS: sstregister.org — preferred path
• Direct: Kentucky One Stop Business Portal at revenue.ky.gov
• Cost: Free

Filing Requirements

Monthly (most remote sellers) or quarterly. Due 20th of the following month. File Form 51A102 electronically.

What Happens If You Don't Register

Late filing: 2% per month, minimum $10. Interest applies. Kentucky's SST membership enables VDA options.

How Taxero Handles Kentucky

Kentucky's 2023 SaaS expansion is the most important thing to know about Kentucky compliance. Taxero tracks your Kentucky sales (including SaaS revenue) against both thresholds, applies the post-HB 8 taxability rules, and handles registration and monthly filings at the flat rate. For sellers who sold SaaS into Kentucky before 2023 and weren't collecting, we can walk you through the VDA process.

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