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use tax

Use tax is a tax imposed by state taxing authorities on the purchase of goods outside the taxpayer’s state of residence when sales tax is not collected on the transaction. Use taxes are generally designed to discourage the purchase of goods that are not subject to sales tax.

In Kentucky, use tax functions as a counterpart to the state's sales tax, which is designed to ensure that the state collects tax revenue on purchases made by Kentucky residents, even when sales tax is not collected at the point of sale. This typically occurs when residents buy goods from out-of-state sellers, such as through online or catalog purchases. The Kentucky use tax rate is the same as the state sales tax rate, which is 6%. Residents are required to report and pay use tax on their Kentucky individual income tax return if they purchase taxable goods from out-of-state retailers that do not collect Kentucky sales tax. The intent behind the use tax is to level the playing field between in-state and out-of-state retailers, ensuring that purchases are taxed uniformly, regardless of where they are made.

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Taxes

use tax

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Kentucky State Code

Kentucky State Code

Taxes

use tax

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