Kentucky: The Bluegrass State

Kentucky borders the Midwest and Southern United States. The United States Census Bureau counts the “Bluegrass State” among the southern states. To the north, the Ohio River forms a natural boundary. The 100,000 km² state is surrounded by West Virginia, Virginia, Tennessee, Missouri, Illinois, Indiana and Ohio. According to ehuacom, the capital, Frankfort, is not one of the largest in the state of 4.5 million people.

Kentucky’s economy is diverse. The size, industry or location play a minor role, here every company is considered an important part of the business ecosystem. In the eyes of the state, all can create jobs, foster innovation and economic growth.

The combination of location, infrastructure and motivated workforce makes it possible for companies from every industry to settle in Kentucky and to operate successfully from here. The largest economic sectors are various manufacturing industries, the food and beverage industry and service industries, especially transport and logistics.

Kentucky Location Map

THE STATE AS SUPPORTER

Businesses appreciate the fast, efficient, and personalized service that Kentucky offers. The state is doing its best to work with you to find solutions that meet your needs.

The lowest cost of doing business in the entire United States (CNBC) is a major location advantage. Innovative and progressive tax incentive programs give companies the flexible financial support to start or expand their businesses.

Another location factor that speaks for Kentucky is the low electricity costs. You won’t find a location east of the Mississippi that offers industrial power at a better price. The price of electricity is almost 20 percent below the national average.

OUTSTANDING LOGISTICS

Two-thirds of the US population is within a day’s drive from Kentucky. The industrial and consumer market is correspondingly huge.

An excellent transport network ensures that your products get to their destination easily and efficiently. All transport options are available to you. By air, rail, road or water, the existing infrastructure will convince you. 20 interstates, other important freeways, a large rail network, inland waterway traffic on the Ohio and Mississippi Rivers and five commercial airports speak for themselves.

Nationally, Kentucky ranks second in air freight shipments. The state benefits from having two international and three global shipping hubs based here. The UPS World Port, DHL Americas HUB, Amazon Air Global Port and various FedEx Ground Hubs are distributed throughout the state and enable fast shipping to any destination worldwide.

WORKFORCE IS DEVELOPED TOGETHER

Kentucky offers free recruitment and training assistance to your company. The state also develops individual concepts for your personnel requirements. Almost 100,000 people are trained every year. More than 5,000 companies are thus helped.

Kentucky’s commitment to encouraging business innovation and small business creation is exemplified by a number of unique and effective programs available to both entrepreneurs and investors.

Not only the state does its part to ensure a qualified talent pool. College and university curricula are designed to meet the needs of the global economy. Innovative K-12 schools, apprenticeship programs, and state-of-the-art research universities and professional development programs make it clear that education is important in Kentucky.

INCOME TAX IN KENTUCKY

Kentucky charges a 5% income tax. In addition, federal income taxes are payable.

CORPORATE INCOME TAX IN KENTUCKY

Kentucky charges a 5% corporate income tax. In addition, federal corporation tax is payable.

SALES TAX IN KENTUCKY

There is no sales tax or Value Added Tax (VAT) in the USA based on the European model. Instead, in the United States, states, counties, and municipalities levy a local sales tax on the sale of products (but not services).

Sales tax rate in Kentucky

The sales tax in Kentucky is 6% at the state level. Municipalities or counties do not levy a sales tax.

Kentucky Nexus Laws & Sales Tax

Learn more about the Economic Nexus Laws in the context of Sales Tax here.

Effective Date

October 1, 2018

Transactions included:

Gross proceeds from sales of tangible personal property or digital property delivered or transmitted electronically into the Commonwealth. Taxable services are not included in the threshold.

Treatment of tax-exempt transactions:

Exempt sales are included; exempt services, on the other hand, are not included in the threshold value

Reason:

turnover or transaction volume

Sales/Transactions Threshold:

$100,000 or 200 transactions

Evaluation period:

The threshold applies to sales in the previous or current calendar year

Extra information:

  • Registration Requirements: Kentucky requires that a remote business register for collecting and remitting sales tax on the first day of the calendar month beginning no later than 60 daysafter crossing the Economic Nexus Threshold. See Rev. Stat. ann. §139.340(2)(g)(2) for more details.
  • Kentucky Sales and Use Tax Revenues by Remote Retailers
  • HB487

Kentucky Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

July 1, 2019

Economic Nexus Threshold:

More than $100,000 in sales in Kentucky or at least 200 separate transactions in the current or previous calendar year. When calculating the threshold:

  • Remote sellers include sales made through a marketplace starting July 1, 2019
  • Marketplace moderators include all sales made through the marketplace

Registration requirements:

  • Remote Multichannel Sellers: You must register with the Kentucky Department of Revenue (DOR) and collect Kentucky sales tax on sales not taxed by a marketplace provider once you cross the Economic Nexus threshold.
    • Sales made through a collecting marketplace may be deducted as an “Other Deduction” with the description “Sales Tax Collected by a Marketplace Provider”.
  • Remote Marketplace Sellers: Effective July 1, 2019, you no longer need to register with the Kentucky DOR even if you cross the Economic Nexus Threshold. Contact the Kentucky DOR for more information.
  • In-State Multichannel Sellers: You must register with the Kentucky DOR and collect taxes on sales that are not taxed by a marketplace provider.
    • Sales made through a collecting marketplace may be deducted as an “Other Deduction” with the description “Sales Tax Collected by a Marketplace Provider”.
  • State Marketplace Sellers: You must register. Contact the Kentucky DOR for more information.
    • Sales made through a collecting marketplace may be deducted as an “Other Deduction” with the description “Sales Tax Collected by a Marketplace Provider”.