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
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
