Who collects Kentucky sales tax on dropshipped orders?

You do, as the retailer. Your dropshipper invoices you at wholesale; you invoice the customer at retail. Collection duty follows the retail transaction — that's you.

Will my dropshipper charge me Kentucky sales tax on the wholesale?

Only if your dropshipper has Kentucky nexus AND you can't provide a valid KY resale certificate. Obtain resale certificates for every state where your dropshipper operates.

Does dropshipping trigger economic nexus in Kentucky?

Yes, your retail revenue into Kentucky still counts toward the $100,000 in gross sales OR 200 transactions threshold, independent of how fulfillment happens.

Can I use an out-of-state resale certificate for a dropshipper in Kentucky?

Usually yes — most states accept the Streamlined (SST form F0003) or MTC multijurisdiction resale certificate, so your KY dropshipper can take it instead of charging you tax on the wholesale invoice. But California, Florida, Hawaii, Illinois, Maryland, and Massachusetts reject an out-of-state certificate from the true retailer in a drop shipment and effectively require in-state registration (Florida also wants a transaction authorization number). Confirm Kentucky's current rule with its Department of Revenue. Verified 2026-06-27.

Kentucky Dropshipping Sales Tax Guide — 2026

Updated 2026-07-20

Reviewed by Nexus by State research team using official state tax sources. Last reviewed 2026-07-20.

Guide content last reviewed: 2026-07-20

If your Dropshipping business sells $100,000 or 200 transactions into Kentucky in a calendar year, you have economic nexus and must register, collect, and remit Kentucky sales tax.

Dropshipping sales tax in Kentucky

As of June 2026, a Kentucky drop shipment is a three-party sale: you collect Kentucky sales tax from your customer on the retail price once your sales into the state pass $100,000 or 200 transactions, while your supplier charges you tax on the wholesale invoice only when it has Kentucky nexus and you can’t give it a valid resale certificate.

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.

Resale certificates: which document each state accepts

If you hold a Kentucky sales tax permit, you can usually issue your dropshipper a KY resale certificate so it does not charge you sales tax on the wholesale invoice.
No Kentucky permit yet? Two multistate forms cover most states: the Streamlined Sales Tax Certificate of Exemption (SST form F0003), honored by all 24 SST member states, and the MTC Uniform Sales & Use Tax Resale Certificate, accepted by roughly 36 states.
A handful of states reject an out-of-state resale certificate from the true retailer in a drop shipment and effectively require in-state registration or extra paperwork — notably California, Florida, Hawaii, Illinois, Maryland, and Massachusetts. Florida also requires the supplier to obtain a transaction authorization number before honoring an MTC certificate. In those states a home-state certificate alone may not protect your supplier, so confirm the rule with that state’s Department of Revenue.

Sources: MTC Uniform Sales & Use Tax Resale Certificate (multijurisdiction) and the Streamlined Sales Tax Governing Board. date_retrieved: 2026-06-27. State acceptance changes — verify with the relevant state DOR before relying on a multistate certificate.

Common dropshipping mistakes in Kentucky

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 nexus note

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.

What to do next

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.

Compare related state rules

Indiana vs Kentucky sales tax
compare border-state thresholds and rates when suppliers or customers sit on both sides.

Dropshipping sales tax in other states

Compare Kentucky's dropshipping rules with nearby and similar states' dropshipping sales tax guides:

Frequently asked questions

Who collects Kentucky sales tax on dropshipped orders?: You do, as the retailer. Your dropshipper invoices you at wholesale; you invoice the customer at retail. Collection duty follows the retail transaction — that's you.
Will my dropshipper charge me Kentucky sales tax on the wholesale?: Only if your dropshipper has Kentucky nexus AND you can't provide a valid KY resale certificate. Obtain resale certificates for every state where your dropshipper operates.
Does dropshipping trigger economic nexus in Kentucky?: Yes, your retail revenue into Kentucky still counts toward the $100,000 in gross sales OR 200 transactions threshold, independent of how fulfillment happens.
Can I use an out-of-state resale certificate for a dropshipper in Kentucky?: Usually yes — most states accept the Streamlined (SST form F0003) or MTC multijurisdiction resale certificate, so your KY dropshipper can take it instead of charging you tax on the wholesale invoice. But California, Florida, Hawaii, Illinois, Maryland, and Massachusetts reject an out-of-state certificate from the true retailer in a drop shipment and effectively require in-state registration (Florida also wants a transaction authorization number). Confirm Kentucky's current rule with its Department of Revenue. Verified 2026-06-27.

Sources

date_retrieved: 2026-05-24

See how we verify threshold data and source dates in our Methodology & Sources.