Kentucky is a state located in the southern region of the United States, with an official name of Commonwealth of Kentucky. The state is famous for Kentucky Fried Chicken, mutton BBQ, diehard college basketball fans, a flourishing economy, and a favorable business environment for entrepreneurs and business persons, consequently attracting numerous people to settle throughout the year.
So if you are mulling over to start, relocate, or expand your business in Kentucky, it is vital to educate yourself with all the essentials for Kentucky Sales Tax.
To assist you in this, our experts have worked days and nights to bring a handy Kentucky Sales Tax guide along with a Kentucky Sales Tax calculator. So let's explore!
Businesses and Sellers involved in retail sales of tangible personal property, digital property, and sales of certain services and have Nexus in Kentucky are required to register for Kentucky Sales tax. They are required to collect, manage, and remit it to the Kentucky Department of Revenue while staying in compliance with state laws and avoid penalties and interest.
The sales tax determined on four factors:
To calculate Sales Tax in Kentucky, follow the steps below:
As a business owner, you are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in the Kentucky State. And to determine your Nexus in Kentucky, you must have any of the following:
The next step is to deduce the Sales Tax rate (State + County + City) applicable to your product once you have determined that your Nexus is with Kentucky. However, no city or county in KY levy additional local sales tax, so a statewide rate of 6% of sales tax would be applied all across the state.
After determining the sales tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.
Example # 1:
For instance, you sell a Ceiling Fan on your store in Erlanger, Kentucky, having a net cost of $62. The amount of Sales Tax that you have to pay on the Ceiling Fan would be:
Net Price (amount before Tax) of a Ceiling Fan: $62
Total Sales Tax rate: 0.00% (Erlanger) + 0.00% (Kenton County) + 6.00% (Kentucky State) = 6.00%
Total Sales Tax amount = $62 x 6% = $3.72
Gross Price (Amount after Tax) = 62 + 3.72 = $65.7
So the Sales Tax amount charged on the Ceiling Fan would be $3.72, raising the gross cost of it to $65.7.
Using our Sales Tax Calculator:
All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:
Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:
In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.
But there are also instances when you are required to deduce how much Sales tax you have actually paid on a product in Kentucky.
This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Kentucky Sales Tax Calculator can perform this calculation like a Pro.
The gross cost (amount after tax) of a Ceiling Light is $17, which you sell on your store in Newport, Kentucky. Now, if you want to deduce the amount of sales tax you have actually paid on it and the net cost (amount before tax) of a Ceiling Light, you can follow the steps below:
Gross Price (Amount after Tax) of Ceiling Light: $17
Total Sales Tax rate: 0.00% (Newport) + 0.00% (Campbell County) + 6.00% (Kentucky State) = 6.00%
Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]
17 = [Net Price x ((6/100) + 1)]
17 = Net Price x 1.06
$16 = Net Price
So the original Price (net price) of the Ceiling Light would be $16.
Using our Sales Tax Calculator:
You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:
Our calculator will automatically calculate the result and represents it in 3 different forms.
Answer: The State sales tax rate charged in Kentucky is 6%.
Answer: Prescription drugs, prosthetic devices as well as raw groceries and unprocessed foods are exempted from Kentucky Sales Tax.
Answer: Services that are charged with sales tax in Kentucky – KY includes admissions (to movies, themes parks, etc.), accommodations (with a duration of fewer than 30 days), prepaid calling services, landscaping, fitness and recreational sports, extended warranties, sewage and natural gas utilities, janitorial services, bowling, laundry, and numerous pet care veterinary services.
Answer: No, raw groceries and unprocessed foods are exempted from sales tax. However, prepared food, alcoholic beverages, candy, tobacco, dietary supplements, soft drinks, and food sold via vending machines, are taxed.
Answer: Yes, buyers who are not charged with Kentucky Sales tax by retailers while online and out-of-state purchases are required to pay Kentucky Use Tax at the rate of 6%.