Kentucky Sales Tax Guide for SaaS and E-Commerce Businesses 2025

If you sell SaaS, digital products, or e-commerce goods in Kentucky, you are required to collect and remit sales tax. Beginning January 1, 2023, Kentucky expanded its sales tax base to include prewritten computer software access services, which covers most SaaS subscriptions.

This guide explains Kentucky’s current sales tax rules for SaaS and e-commerce, including rates, economic nexus thresholds, filing deadlines, penalties, and registration steps with the Kentucky Department of Revenue (KY DOR).

Last updated: September 2025

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Quick Reference: Kentucky Sales Tax (2025)

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Is SaaS Taxable in Kentucky?

Yes. Kentucky taxes Software-as-a-Service (SaaS) as of January 1, 2023, under the expansion of taxable services included in House Bill 8 (2022).

The Kentucky Department of Revenue confirmed this change in its Sales Tax Facts — June 2022 newsletter, which listed “prewritten computer software access services” as newly taxable.

What this means for businesses:

• All SaaS subscriptions (B2B and B2C) are subject to the 6% statewide sales tax.
• This applies regardless of whether the software is delivered via download or accessed entirely in the cloud.

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E-Commerce & Digital Goods Taxability in Kentucky

• Tangible goods: Taxable at 6%, with no local add-ons.
• Digital products: E-books, streaming media, and other digital goods are taxable if sold for use in Kentucky.
• Marketplace facilitator rules: Marketplaces like Amazon, Shopify, and Etsy must collect Kentucky sales tax on behalf of sellers. Marketplace transactions also count toward your economic nexus threshold.

See: KY DOR — Sales & Use Tax Overview

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Who Must Collect Kentucky Sales Tax?

Kentucky requires remote and in-state businesses to register and collect sales tax if they meet any of the following:

• Economic nexus: More than $100,000 in sales or 200+ transactions into Kentucky in the current or prior calendar year.
• Physical nexus: Having employees, offices, inventory, or contractors located in Kentucky.
• Marketplace facilitator rules: Marketplace sales count toward the nexus threshold, even if the platform handles tax collection.

See: KY DOR — Remote Retailers & Marketplace Providers FAQ

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Filing & Due Dates

• Filing frequency: Assigned by KY DOR (monthly, quarterly, or annually).
• Due date: Returns and payments are due by the 20th of the month following the reporting period.

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Penalties & Interest

Kentucky imposes penalties and interest for late filing or payment:

• Late filing penalty: Charged if sales tax returns are not submitted on time.
• Late payment penalty: Applies to balances not paid by the due date.
• Interest: Accrues daily on unpaid amounts until fully remitted.

See: KY DOR — Sales & Use Tax

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How to Register for Kentucky Sales Tax

1. Determine nexus (economic or physical).
2. Register online via the KY DOR Online Services portal.
3. Collect 6% sales tax on SaaS, digital products, and tangible goods.
4. File returns on your assigned schedule.
5. Remit payments by the due date.

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FAQs: Kentucky Sales Tax for SaaS & E-Commerce

Is SaaS taxable in Kentucky?
Yes. SaaS is taxable in Kentucky as of Jan 1, 2023, under HB 8.

What is Kentucky’s economic nexus threshold?
Remote sellers must register once they exceed $100,000 in sales or 200 transactions into Kentucky in the current or prior year.

Does Kentucky have local sales tax?
No. Kentucky applies a flat statewide 6% rate with no additional local taxes.

When are returns due?
By the 20th of the month following the reporting period.

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Official Kentucky Resources

• Kentucky Department of Revenue — Sales & Use Tax Overview
• Kentucky Legislature — House Bill 8 (2022 Regular Session)
• KY DOR Sales Tax Facts Newsletter (June 2022)
• KY DOR — Remote Retailers & Marketplace Providers FAQ

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