6% sales tax is now in effect on dozens of new services in Kentucky

Louisville, Kentucky (WDRB) — Starting Sunday, Kentucky residents will see a sales tax on more than three dozen new goods and services.

While residents will pay less income tax in 2023, several items are now included in the current 6% sales tax to offset this loss of state revenue.

House Bill 8 passed earlier this year, raising the state income tax from 5% to 4.5%. For someone earning $60,000 in salary, they currently pay $3,000 in income taxes. At the new rate of 4.5%, the same person would pay $2,700.

Lawmakers then decided to include dozens of different new services in the state’s current 6% sales tax. Some of these now taxable industries include ride-sharing like Uber or Lyft, parking services, recreational sports, wedding venue rentals, and more.

Here is the full list of services that will now come with a 6% sales tax:

  1. Photography and finishes
  2. marketing
  3. Telemarketing
  4. Public opinion polls and research
  5. pressure
  6. Executive recruitment
  7. Website design and development
  8. host website
  9. fax
  10. private mailroom
  11. Bodyguard services
  12. Security system monitoring
  13. Special investigative services
  14. Practical server services
  15. Recovery of personal property
  16. Personal background check services
  17. Parking services
  18. Road and travel services
  19. time exchange services
  20. Short term space rental
  21. Plan and coordinate social events
  22. Leisure, recreation and sports education services
  23. Tuition and recreational camp fees
  24. Personal physical training
  25. Massage (non-medical)
  26. Plastic surgery
  27. Body modification (piercing, tattoo)
  28. testing services
  29. Decoration and interior design
  30. The family moves
  31. Specialist Design (Fashion)
  32. Jewelery services
  33. Commercial Refrigeration Labor and Services
  34. Work to repair or alter clothing, shoes, watches or jewelry
  35. Prescribed software access services

Find more detailed definitions of each category from the Kentucky Department of Revenue, here and here.

The Senate’s budget chief, Sen. Chris McDaniel, said he understands there is a lot to absorb, but the sales tax extension is designed to help lower Kentucky’s income tax.

“This is not a dramatic expansion of the sales tax,” said McDaniel, a Republican. “We tax consumption, not production. And we believe that when Kentuckians make money, these individuals are the best people to make decisions about how to spend that money. (People can) choose how they want to spend that money themselves instead of someone sitting hundreds of kilometers away in Frankfurt and choosing how to spend that money.”

But he admits it won’t exactly make up for the loss.

“At the end of the day, we’ve put a lot of effort into making sure it doesn’t create a huge hole in the Commonwealth budget, and there are several layers of checks and balances to make sure it can’t. ahead.”

Meanwhile, the Kentucky Center for Economic Policy is sounding the alarm.

“A lot of times what’s happening here is just a big hole in the budget,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy.

Bailey said the tax change hurts the poor and helps the rich.

“It’s really skewed to the very rich, and that’s part of the problem is that this revenue goes to our schools, health system, infrastructure and other needs,” he said.

But McDaniel disagrees.

“The bulk of their revenue is spent in areas that were, are, and will be tax-free, and those same people will, you know, have more money in their pockets,” McDaniel said. “So it’s just an absolute strawman argument.”

At the same time, there are still unanswered questions about some of the nuances of the law, especially about utility taxes for non-primary residences.

“The confusion about how it happened is always the problem,” said Kyle Noltmayer, a Kentucky homeowner. “Nobody’s quite sure about it and then they find out later and have to go back, so yeah, the confusion of it all.”

The tax will be related to water, gas and electricity for additional real estate such as rental units or apartments that you can rent out. It also starts on January 1, but there are certain exceptions.

“The intent is that if it’s a place where you live, those amenities are not taxed,” says Rep. Jason Nimes, R-D33.

When WDRB News asked the US State Department for an interview about the changes earlier this month, we were directed to a page of frequently asked questions for the lawmakers who wrote the tax change.

McDaniel said while it may take a few bump cycles, he hopes Kentuckians will adapt to the changes.

“The average Kentuckian won’t see any of this change, other than having a few extra dollars in his pocket each week that he can choose how to spend,” he said.

Copyright 2023 WDRB Media. All rights reserved.

Leave a Comment