States collect consumer taxes from a number of sources, including retail sales, tobacco products, alcoholic beverages, and other goods and services. Some states don't collect a sales tax but typically find other ways of generating revenue, such as professional licensing fees or vehicle registrations. Taxes on cigarettes, liquor, and other products that are considered contrary to public health are subject to an excise tax (sometimes called a "sin" tax) in order to curb their use and/or raise funds to pay for public outreach programs. Gasoline taxes, meanwhile, are used to pay for highway improvements. The federal government also collects excise taxes on gasoline and cigarette sales.
Consumer Taxes in Kentucky at a Glance
The state of Kentucky collects a six percent sales tax, which is relatively low but similar to sales tax rates in other states. The use tax -- also at six percent -- applies to purchases made in other states and then brought across the border for use in Kentucky. For example, if you buy a car in Alabama to take advantage of lower taxes and drive it back to your primary residence in Kentucky, you may be obligated to make up the difference with a use tax.
While Kentucky's beer tax is similar to that in other states, the state famous for its Bourbon whiskey has a very low tax rate on distilled spirits. Kentucky also is famous for its annual Kentucky Derby and has a large horse racing industry -- but casinos are not allowed in the state and there are no special taxes on gambling (horse track winnings are taxed just like other income). However, racetracks in the state have been lobbying for the legalization of casinos as a way to compete with other states that allow the practice.
The current rates for Kentucky's main consumer taxes are listed in the following table. See FindLaw's Tax Law section for more articles and resources.
|Sales Tax||6% §§139.200|
|Cigarette Tax||60¢ per pack of 20 cigarettes §138.140|
|Gasoline Tax per Gallon||21.2¢ plus 5¢ user fee and 1.4¢ state cleanup fee (9% of average wholesale price plus supplementary highway user motor fuel tax, computed quarterly) §138.220|
|Use Tax||6% §§139.310|
|Liquor Tax||Beer $2.50 per barrel (31 gallons); Wine 50¢ /gal.; Spirits $1.92/gal. (or 25¢ per gallon if 6% or less alcohol) §§243.720|
Note: State laws are constantly changing and may affect the rates of taxation in Kentucky. Be sure to contact a Kentucky tax attorney or conduct your own legal research to verify the state law(s) you are researching.
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Kentucky Consumer Taxes: Related Resources
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