Kentucky Changes Filing Thresholds and Adds Exemptions

Kentucky enacted legislation effective July 15, 2024, that expands sales tax exemptions and changes definitions and filing thresholds. Affecting multiple industries and tax types, this enacted legislation has the following impacts:

• Changes the sales tax filing threshold to $12,000 (previously $6,000) for businesses providing certain services.
• Creates a new, sales and use tax exemption for currency and bullion.
• Eliminates hybrid vehicles from the definition of electric vehicles to exclude them from certain fees.
• Moves out the expiration of the severance tax refund available to eligible coal processors who export coal out of North America to July 1, 2026 (previously July 1, 2024).
• Amends how bad debts and taxes are defined by motor vehicle tax laws.
• Includes definitions for designated city and gross receipts for local taxes on peer-to-peer car-sharing transactions.
• Extends the $2 tire fees imposed on retailers to July 1, 2026 (previously July 1, 2024).
• Implements a new, sales and use tax exemption for qualified data center projects.

Taxpayers engaged in sales to Kentucky customers should evaluate the effect of this new legislation on their respective tax processes noting the expanded opportunities for new exemptions, expanded expiration dates, and new compliance requirements and definitions. Kentucky Governor Andy Beshear’s signature was not required for this legislation that became law. (Ch. 166 [H.B. 8], Law 2024, effective July 15, 2024).