Kentucky State Income Tax Nexus
State income tax nexus refers to the level of connection between a business and the state of Kentucky that creates an obligation for the business to pay Kentucky state income tax. See how to get yourself ready for this!
TAX KNOWLEDGE
1/9/20251 min read
What Creates Nexus in Kentucky?
A business has nexus in Kentucky if it has any of the following:
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Physical presence in the state (offices, stores, warehouses)
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Employees or representatives working in Kentucky
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Property (owned or leased) in Kentucky
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Economic presence exceeding certain thresholds
Economic Nexus Standards
Kentucky follows economic nexus standards where a business has nexus if it has either:
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Sales exceeding $100,000 to Kentucky customers, or
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200 or more separate transactions with Kentucky customers
Public Law 86-272 Protection
Some businesses may be protected from Kentucky income tax under Public Law 86-272 if their only business activity in Kentucky is the solicitation of orders for tangible personal property, where such orders are approved and shipped from outside the state.
Key Considerations
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Once nexus is established, businesses must register with the Kentucky Department of Revenue
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Regular filing requirements apply even during periods of minimal or no activity
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Nexus can be created through temporary or seasonal presence in the state
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Different nexus standards may apply for other Kentucky taxes
