​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.

​Yes, they can submit questions through the "Contact Us" tab on the TaxAnswers.ky.gov website, https://taxanswers.ky.gov/Pages/contact.aspx.

​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.

​Yes.

It should also be noted that recreational vehicles are now included in the definition for “motor vehicle” subject to motor vehicle usage tax even if the vehicle is nonmotorized (effective 03/24/2023). As defined in KRS 138.450 (24), “recreational vehicle” means any motor home, travel trailer, fifth-wheel trailer, pull-behind camper, or pop-up camping trailer, which (a) contains living quarters; and (b) is required to be licensed for use on the public highways.

This statutory change to the definition of a “motor vehicle” shifts the tax liability on the sale of recreational camper trailers from sales and use tax to motor vehicle usage tax. Therefore, retailers will no longer collect the six percent (6%) sales tax on the sale of these specific recreational camper trailers when selling to an in-state resident.

Instead, the six percent (6%) motor vehicle usage tax is due at the county clerk’s office at the time the recreational camper trailers are presented for licensing and titling as is the case with the sale of other motor vehicles. These types of recreational camper trailers will now be exempt from sales and use tax as provided under KRS 139.470(19).
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Kentucky motor vehicle usage tax is not due on sales of recreational trailers to out-of-state customers that take the vehicles out of state for registration in their home state. Likewise, the sale is exempt from the six percent (6%) sales tax, provided the customer is from a state that allows Kentucky residents to make the purchase of the recreational camper trailers without payment of that state’s sales tax. This treatment is similar to how motor vehicles sold to out of state residents were handled prior to this law change.


​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.

Sales and Excise Taxes