🟢 No, Kentucky does not tax SaaS. Here's what SaaS founders and freelancers need to know about selling software to customers in Kentucky.
Kentucky does not tax SaaS. Its sales tax applies to tangible personal property and certain enumerated services.
Since SaaS is not taxable in Kentucky, you do not need to collect or remit sales tax on SaaS sales to customers there. This simplifies your compliance significantly.
However, keep in mind that tax rules evolve. States regularly reconsider their stance on taxing digital products and services. It's worth monitoring Kentucky's tax updates, especially if you have significant revenue from customers there.
Even though SaaS isn't taxed in Kentucky, other types of digital products (downloaded software, digital goods, streaming services) may have different treatment. Always verify the specific category of your product.
If you're selling from outside the US (EU, UK, or elsewhere) to customers in Kentucky:
Since Kentucky doesn't tax SaaS, you don't need to worry about sales tax collection here. Focus your compliance efforts on states that do tax SaaS.
No. Kentucky does not currently charge sales tax on SaaS. Kentucky does not tax SaaS. Its sales tax applies to tangible personal property and certain enumerated services.
The state sales tax rate in Kentucky is 6%. Local taxes may apply on top of this, varying by county and city.
Since Kentucky does not tax SaaS, economic nexus for SaaS sales tax is not a concern here. However, other tax obligations may still apply.
Since SaaS is not taxed in Kentucky, you do not need to add sales tax to your invoice. Simply invoice the net amount.
Since Kentucky does not tax SaaS, you do not need to collect sales tax on SaaS sales to customers there, regardless of where your business is based.
Free tax calculator for EU VAT, US sales tax, and UK VAT — built for indie founders and freelancers.
Open Tax Calculator →