Kentucky Sales and Use Tax Changes for 2023

Effective January 1, 2023, the Kentucky sales and use tax will apply to over 30 additional service categories.

Businesses that provide these services are required to collect the 6% sales tax from their customers, unless otherwise noted.

These changes are the result of House Bill 8 that passed in 2022. The bill lowers income taxes from 5% to 4.5% but expands sales taxes to a variety of services to offset that loss in state revenue. For example, a person making $50,000 currently pays $2,500 in state income taxes. Under the new 4.5% rate, the same person would pay $2,250.

Businesses that the Department of Revenue thought may provide the additional service categories were contacted via mail in November, 2022. If you received a letter, it does not necessarily mean that these changes apply to you and likewise, if you did not receive a letter, that does not mean your company’s services are not subject to the sales tax.

Below is a full list of services that will now be required to collect the 6% sales tax from their customers:

  1. Photography and photo finishing
  2. Marketing
  3. Telemarketing
  4. Public opinion and research polling
  5. Lobbying
  6. Executive employee recruitment
  7. Website design and development
  8. Website hosting
  9. Facsimile transmission
  10. Private mailroom
  11. Bodyguarding
  12. Residential/nonresidential security system monitoring
  13. Private investigating
  14. Process server services
  15. Repossession of tangible personal property
  16. Personal background checks
  17. Parking
  18. Road and travel services
  19. Condo time-share exchange services
  20. Short-term rental of space
  21. Social event planning and coordination
  22. Leisure, recreational and athletic instructional services
  23. Recreational camp tuition and fees
  24. Personal fitness training
  25. Non-medical massage
  26. Cosmetic surgery
  27. Body modification (piercing, tattoos)
  28. Testing services
  29. Interior decorating and design
  30. Household moving
  31. Specialized design (fashion)
  32. Lapidary services
  33. Labor and services for commercial refrigeration
  34. Labor to repair or alter apparel, footwear, watches or jewelry
  35. Prewritten computer software access services

If you are in doubt if your business does or does not apply to this expanded tax law, please contact Lockshield Partners Accounting Services and any of our knowledgeable staff accountants can assist you.  

For more information regarding House Bill 8 and the Kentucky sales and use tax, click HERE for the June Kentucky Department of Revenue Sales Tax Facts newsletter, HERE for the September issue and HERE for a Guide to House Bill 8.

Tax advice is offered through Lockshield Partners Accounting Services. Lockshield Partners Financial Services and Lockshield Partners Accounting Services are separate entities.

Becky Thompson

Operations Manager