Does Kentucky charge sales tax on services?
by July 27, 2023
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.
Here’s what merchants need to know about taxing services in the state of Kentucky, which has a 6% statewide sales tax rate.
Does Kentucky charge sales tax on services?
Services in Kentucky are generally not taxable, with a few exceptions:
- Admissions (including charges or fees to participate in an activity or event) for the right of entrance to a display, program, sporting event, music concert, performance, play, show, movie, exhibit, fair or other entertainment or amusement event or venue
- Labor and installation charges (only for services rendered in installing or or applying taxable tangible personal property, digital property or service sold at retail)
- Landscaping services, including but not limited to lawn care and maintenance services; tree trimming, pruning or removal services; landscape design and installation services; landscape care and maintenance services; and snow plowing and removal services
- Janitorial services, including but not limited to residential and commercial cleaning services, and carpet, upholstery, and window cleaning services
- Small animal veterinary services, excluding veterinary services for equine, cattle, swine, sheep, goats, llamas, alpacas, ratite birds, buffalo and cervids
- Pet care services, including but not limited to grooming and boarding services, pet sitting services, and obedience training services
- Industrial laundry services, including but not limited to industrial uniform supply services, protective apparel supply services, and industrial mat and rug supply services
- Non-coin-operated laundry and dry cleaning services
- Linen supply services, including but not limited to table and bed linen supply services and nonindustrial uniform supply services
- Indoor skin tanning services, including but not limited to tanning booth or tanning bed services and spray tanning services
- Non-medical diet and weight reducing services
- Limousine services, if a driver is provided
- Extended warranty services to cover tangible personal property or digital property that is taxable at retail to the warranty holder
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Kentucky sales tax, TaxJar’s guide to sales tax in Kentucky and the Kentucky Department of Revenue has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
