How Kentucky Sales Tax Works and What You Pay

Kentucky sales tax is a 6 percent tax on most goods you buy, collected at the point of sale by the retailer and sent to the state

When you buy something in Kentucky, the retailer adds 6 percent to your total before you pay. That 6 percent goes to the Kentucky Department of Revenue. Some cities and counties add their own local sales tax on top of the state rate, so your actual tax can range from 6 percent to as high as 6.75 percent depending on where you shop. The retailer is responsible for collecting the tax and sending it to the state — you do not file anything yourself or send money separately.

Kentucky does not tax groceries, prescription medications, or medical devices, which is why your receipt at a grocery store shows no sales tax but your receipt at a drugstore for non-prescription items does. The state also does not tax services — haircuts, car repairs, and plumbing work are not subject to sales tax, though parts or materials used in those services may be.

Key Takeaways

• Kentucky's base sales tax rate is 6 percent, but local taxes can raise it to 6.75 percent in some counties and cities.
• Groceries and prescription medications are not taxed in Kentucky, but prepared food and non-prescription items are.
• The retailer collects and remits the tax — you do not file a separate form or send payment to the state.
• Services like haircuts and repairs are not taxed, but materials and parts used in those services may be.

State rate versus local add-ons

The state rate of 6 percent applies everywhere in Kentucky. On top of that, individual cities and counties can impose their own local sales tax. Some counties add 0.5 percent, others add 0.75 percent. A few cities within those counties add an additional 0.25 percent or more. This means the total tax you pay depends on the exact city and county where you make the purchase.

For example, if you buy something in Louisville (Jefferson County), you pay 6 percent state tax plus 0.75 percent local tax for a total of 6.75 percent. If you buy the same item in a different county, the total might be 6.5 percent. The retailer's register is programmed to charge the correct rate for that location, so you do not need to calculate it yourself — the tax appears on your receipt.

What is and is not taxed

Food you take home to cook — meat, vegetables, bread, milk, eggs — is not taxed. Food you eat at a restaurant or buy already prepared, like rotisserie chicken or deli sandwiches, is taxed. Groceries bought with SNAP benefits (food stamps) cannot be taxed by law, and the register will not charge tax on those items.

Prescription medications filled by a pharmacist are not taxed. Over-the-counter medications like aspirin, cold medicine, and antacids are taxed. Medical devices prescribed by a doctor — diabetic test strips, hearing aids, prosthetics — are not taxed, but general health and beauty items like vitamins, shampoo, and toothpaste are taxed.

Clothing and shoes are taxed in Kentucky. Diapers and feminine hygiene products are taxed. Gasoline is taxed, though the state fuel tax is separate from sales tax. Utilities like electricity and water are not subject to sales tax.

How the tax appears on your receipt

Your receipt shows the subtotal (the price before tax), the tax amount, and the total you owe. The tax line usually says "Sales Tax" or "Tax" and shows the dollar amount and sometimes the rate. If you buy items that are not taxed — like groceries — those items appear on the receipt without tax added to them, while taxed items show the tax next to them.

If you buy a mix of taxed and non-taxed items in one transaction, the register calculates tax only on the taxed items. You do not need to ask the cashier to separate them or do anything special — the register handles it automatically based on what you are buying.

Sales tax for online and out-of-state purchases

If you order something online from a retailer that has a physical location in Kentucky or meets certain sales thresholds, Kentucky sales tax is added to your order. If you order from an out-of-state retailer with no Kentucky presence, the retailer may not charge Kentucky sales tax at checkout. However, Kentucky law requires you to pay "use tax" on those purchases — a tax equal to the sales tax rate that would have applied if you bought the item in Kentucky.

In practice, most individual shoppers do not pay use tax on personal purchases because the state does not have a practical way to collect it from each person. Businesses, however, are expected to track and report use tax on their business purchases. If you are buying for a business, you should understand your use tax obligations.

Tax-exempt purchases and resale certificates

Certain organizations — nonprofits, schools, government agencies, and religious institutions — can make purchases without paying sales tax if they provide a tax-exempt certificate. A business buying items to resell can also avoid sales tax by providing a resale certificate to the wholesaler or distributor, since the tax will be collected when the end customer buys the item.

If you work for a tax-exempt organization or run a business, you will need to register with the Kentucky Department of Revenue and obtain the appropriate certificate. The retailer or wholesaler will ask for this certificate before processing a tax-free sale. Without the certificate, tax is charged.

Where the sales tax money goes

The sales tax collected by retailers goes to the Kentucky Department of Revenue. The state uses this money to fund schools, infrastructure, and other state services. Local sales tax collected in a city or county goes to that local government to fund schools, police, fire departments, and other local services. The breakdown of how much goes to the state versus local government depends on the local tax rate in your area.

Retailers are required to send the sales tax they collect to the state on a regular schedule — usually monthly, though some retailers with very small sales may report quarterly. The retailer does not keep this money; it is held in trust for the government.

Frequently Asked Questions

Do I pay sales tax on everything I buy in Kentucky?

No. Groceries, prescription medications, and medical devices are not taxed. Services like haircuts and repairs are not taxed, though materials used in those services may be. Prepared food and restaurant meals are taxed. The retailer's register is programmed to know which items are taxed and which are not.

Why is the sales tax different in different cities?

Kentucky allows cities and counties to add their own local sales tax on top of the 6 percent state rate. Each local government decides whether to add a local tax and at what rate. This is why the total tax you pay depends on where you shop.

What is use tax and do I have to pay it?

Use tax is a tax on items you buy from out-of-state retailers who do not charge Kentucky sales tax. You are legally required to pay it, but the state does not actively collect it from individual shoppers. Businesses are expected to track and report use tax on their purchases.

Can I get a refund of sales tax I already paid?

No. Sales tax is final once you pay it. If you return an item and get a refund, the retailer refunds the full amount including the tax. If you believe you were charged tax on an item that should not have been taxed, contact the retailer to dispute the charge on your receipt.

How do I know the exact sales tax rate where I live?

You can find your local sales tax rate on the Kentucky Department of Revenue website by entering your city or zip code. Your receipt also shows the tax rate applied to your purchase. If you want to know the rate before you shop, the Department of Revenue website has a rate lookup tool.