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​No, contractors are making improvements or repairs to real property, and improvements or repairs to real property are not services that are subject to sales tax.

However, contractors will still pay sales and use tax on their purchases of tangible personal property (i.e., materials) to complete their construction contracts. These transactions are not treated as retail sales under the current law and that treatment does not change under the new law.  Nothing in the new law changes the current tax treatment of construction contractor services or labor. Please see Kentucky Regulation 103 KAR 26.070 for more detail.

The rate for the new sales tax on services is 6%.

​Beginning July 1, 2018, when a dealership charges the customer for parts and labor on a vehicle repair job, the associated labor will also be taxable if the parts are taxable to the customer. The sales tax rate will be 6% for both charges.

​No, if there are no parts sold in the transaction, then there is no sales tax on a service job that only requires labor.  However, if an oil change is also provided at the same time as the labor only job, then the oil change portion of the repair order (the oil and labor associated with changing the oil) is taxable.  In that case, 6% Kentucky sales tax should be charged on the oil and the part of the labor associated with changing the oil, but not on the labor only services performed.

​Yes, charges to the customer for shop supplies are subject to the 6% Kentucky sales tax if they are part of a retail transaction.

​No, the dealer should issue a resale certificate when paying a subcontractor for repair work; however, the dealer must charge sales tax for the parts and labor when billed to the final customer.

​No, as long as it is truly an arm's length transaction and the dealer has no role in providing the parts used in the repair.

​Yes, effective July 1, 2018, both parts and labor are subject to the 6% Kentucky sales tax.

​Effective July 1, 2018, both parts and labor are subject to the 6% Kentucky sales tax.

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