Sales tax on invoices in Kentucky

Kentucky taxes a construction contractor’s materials when it buys them, so you don’t bill sales tax on a construction contract. Landscaping, lawn care and janitorial services, pressure washing included, are taxable services, and Kentucky has no local sales tax.

Permit and who owes the tax

Kentucky’s sales tax is imposed on retailers, on their gross receipts from retail sales of tangible personal property and digital property and from furnishing the services the statute lists. Every retailer or seller must apply to the Kentucky Department of Revenue for a permit for each place of business.

If you work only as a construction contractor or subcontractor, you aren’t required to hold a retail sales tax permit and won’t be issued one; your Kentucky suppliers bill you Kentucky tax. The one exception is a contractor-retailer, which also makes retail sales: in the regulation’s example, a contractor-retailer that sells a freestanding refrigerator charges sales tax on it, plus any delivery or installation charges.

Construction contracts: tax on materials, not on the work

Under 103 KAR 26:070, a construction contract is one to erect, remodel or repair a building or other structure on land, or to replace, furnish or install materials or fixtures permanently to real property, whether lump sum, cost plus or time and materials. The building materials, fixtures and supplies you incorporate into real estate are taxed when they’re sold to you, whatever the contract type. A contract with a government, or with a religious, educational or charitable institution, doesn’t make those purchases exempt.

The regulation’s building trades include roofing, electrical work, plumbing, and central heating and air conditioning. Asked whether a plumbing or HVAC contractor must charge sales tax for its services, the Department of Revenue answers no, because improvements or repairs to real property aren’t taxable services. Someone who repairs tangible personal property isn’t a contractor under the regulation.

• Commercial refrigeration: labor and services to repair or maintain commercial refrigeration equipment and systems are a listed taxable service when no tangible personal property is sold in that transaction, including service calls and trip charges.
• Furnace repairs: a one-time repair to a furnace that’s a fixture to real property isn’t taxable, but repairs under an extended warranty contract are taxed through the contract’s periodic charges.
• Services you buy: contractors pay tax on landscaping, janitorial or other taxable services performed on their construction projects and can’t buy them for resale, because the finished project is realty, not a retail sale.

Landscaping and lawn care: taxable services

Kentucky’s statute lists landscaping services as taxable, including lawn care and maintenance; tree trimming, pruning or removal; landscape design and installation; and snow plowing or removal. Under 103 KAR 26:131, landscaping providers are retailers of those services: register, collect tax on the sales price, and remit it.

• What’s taxed: mowing, trimming, weed eating and fertilizing, and installing trees, shrubs or bushes together with the plants, mulch, fertilizer or chemicals you sell with the service.
• What’s not landscaping: vegetative management of highway and utility rights-of-way, and perpetual care of gravesites at a cemetery.
• Your purchases: property that stays with your customer can be bought for resale, and you collect tax on it from the customer. Property you use or consume, such as mowers, fuel and tools, is taxed when you buy it.
• Construction work: installing a retaining wall, a pond or an in-ground sprinkler system under a construction contract is contractor work, not a landscaping service. Separately stated labor to install or repair such fixtures isn’t part of your taxable receipts.

Kentucky’s bundling rule taxes one nonitemized price for taxable and nontaxable work in full. If a landscaper builds a retaining wall and plants shrubbery for a single contract price, the whole charge is taxable, unless the invoice states the wall’s construction charge separately from the shrubbery charges.

Janitorial work and pressure washing: taxable services

The statute’s janitorial services include residential and commercial cleaning, and carpet, upholstery and window cleaning. The Department’s examples include duct cleaning, water extraction, restoring wall-to-wall carpet, and cleaning walls, tile or grout. Removing and replacing real property, such as carpet and drywall, is contractor work and isn’t taxed.

Power washing and pressure washing of real property, such as sidewalks, homes, patios, porches, siding, retaining walls and business locations, are taxable as janitorial services. The chemicals, cleaning supplies and fuel you use up can’t be bought for resale; you pay tax on them when you buy them.

Small providers: the $12,000 threshold

Kentucky exempts receipts from the listed services, landscaping and janitorial included, in two cases: for a provider already selling them before January 1, 2025 whose receipts from them were under $12,000 in calendar year 2024, and for a provider that first began on or after that date whose receipts are under $12,000 in its first calendar year. Once receipts exceed $12,000 in a calendar year, everything over $12,000 is taxable that year and all receipts are taxable in later years. The exemption doesn’t apply if you also sell tangible personal property, digital property or the services in KRS 139.200(2)(a) to (f).

Tax line: shown separately, except on construction contracts

When a Kentucky retailer collects sales tax, it must display the tax separately from the sales price on the receipt or other proof of sale; the Department may relieve a retailer when that’s impracticable. It’s unlawful to advertise or state that you’ll assume or absorb the tax, or that you won’t add it to the selling price.

On a construction contract, don’t bill sales tax as a separate charge. In 103 KAR 26:070’s examples, a contractor installing a sidewalk and a contractor repairing a hot water heater installed in real property each pay tax on their supplies and materials and don’t bill the customer sales tax.

No local sales tax

There are no local sales and use taxes in Kentucky, so the state rate on this page applies everywhere in the state.