Kentucky Dropshipping Sales Tax Guide — 2026

Dropshipping into Kentucky raises three distinct tax questions. First, you (the retailer) have to collect and remit Kentucky sales tax on your retail sales if you exceed $100,000 or 200 transactions. Second, your dropship supplier may charge YOU sales tax on the wholesale invoice if they have Kentucky nexus and you can't present a valid resale certificate. Third, the marketplace (if any) handles its own tax on facilitated transactions.

Kentucky applies 6.00% as the base state rate; no local add-ons apply.

• If you have a Kentucky sales tax permit, you can usually issue your dropshipper a KY resale certificate to avoid being charged sales tax on the wholesale invoice.
• Some states (notably California, Florida, Massachusetts, Tennessee, and a few others) require the buyer to hold an IN-STATE registration before issuing a resale certificate — a home-state certificate isn't enough.
• Streamlined Sales Tax (SST) states accept the uniform Multistate Certificate; others have their own forms.

• Treating your dropshipper's nexus as if it obligates them to collect from the end customer — no, they invoice you at wholesale; you invoice the customer at retail. Only the retail transaction is subject to collection duty.
• Forgetting that your retail revenue into Kentucky still counts toward the economic nexus threshold, independent of the dropshipping arrangement.
• Not keeping resale certificates on file — your supplier will charge you tax (and you'll have already collected from the customer), eroding margin.

Kentucky sales tax nexus and economic nexus threshold: through July 31, 2026, a remote retailer must register and collect Kentucky sales tax once it has $100,000 or more in gross receipts from sales into Kentucky OR 200 or more separate sales into Kentucky in the previous or current calendar year — meeting either test triggers the requirement (Kentucky Department of Revenue Wayfair guidance, HB 487; collections required beginning October 1, 2018). Effective August 1, 2026, House Bill 757 (2026 Regular Session, enacted over the Governor's veto) removes the 200-transaction test for both remote retailers and marketplace providers, leaving a $100,000 sales-only threshold that counts tangible personal property, digital property, and services delivered, transferred electronically, or provided to a Kentucky purchaser; sellers registered solely because of transaction volume should review whether they can deregister under Kentucky's trailing-nexus rules. Kentucky's marketplace facilitator law (HB 354) has been effective since July 1, 2019 — Amazon, Etsy, eBay, and Walmart collect and remit Kentucky sales tax on facilitated sales, registering once for all third-party sellers per KRS 139.450 (procedure clarified by HB 249, effective July 1, 2021). Kentucky levies a flat 6% statewide sales tax with no local sales taxes, so the rate is identical at every Kentucky delivery address. HB 757 also extends Kentucky sales and use tax to data brokering services beginning August 1, 2026. Direct-to-consumer sales outside any marketplace remain the seller's own collection responsibility once nexus is met.

Read the full Kentucky overview for thresholds, filing frequency, marketplace facilitator rules, and registration links. Use the nexus calculator to check whether you have crossed the threshold. For background on the post-Wayfair economic nexus framework, see the pillar guide.

• Kentucky · E-commerce
  General e-commerce sales tax rules
• Kentucky · Thresholds
  Economic and transaction nexus thresholds
• Kentucky · Marketplace Facilitator
  Marketplace facilitator law for the state