5 Things Any Business Selling into Kentucky Should Do Before August 1
Kentucky is rewriting several sales tax rules at once, and the deadline is closer than most businesses realize. A wave of changes takes effect August 1, 2026, touching everything from economic nexus rules to a brand new tax on data brokering services. None of this is limited to companies based in Kentucky. If you sell goods, digital content, or data services to Kentucky customers from anywhere in the country, or the world, these changes apply to you. For companies in that position, the next two weeks are the window to get ahead of it, not react to it.
Here is what CSH recommends every affected business tackle before the deadline.
1. Reassess Your Nexus Footprint
Kentucky is dropping its 200-transaction economic nexus threshold, but the $100,000 gross receipts threshold stays in place. This rule exists specifically for remote sellers with no physical presence in Kentucky, so location offers no protection. Businesses that registered based on transaction volume alone should confirm whether they still meet the revenue threshold, and whether they can responsibly deregister if they do not.
2. Determine If You Are Now a "Data Broker"
This is the change with the most ambiguity and the most exposure. Companies that collect, aggregate, and analyze personal data for sale to third parties, while retaining possession of that data, must collect Kentucky sales tax starting August 1. The rule applies based on where the customer is, not where the company is, so a data analytics or ad-tech firm anywhere in the country can be pulled in if it serves Kentucky clients. The definition is broad enough to catch marketing platforms, analytics firms, and ad-tech companies that may never have considered themselves sellers of taxable services. Getting a clear read on this now avoids a painful conversation with an auditor later.
3. Audit Your Streaming and Digital Content Billing
Kentucky is applying sales tax to a wider range of streaming and on-demand content charges, including one-time purchases outside a subscription. If your billing systems were built around subscription-only tax logic, they may be under-collecting on a la carte purchases.
4. Review Drop Shipment Documentation
If your business relies on third parties to fulfill Kentucky orders, now is the time to confirm the right exemption certificates are on file. The rules allow specific forms for out-of-state retailers that are not required to register, but the paperwork has to be correct before an order ships, not after a notice arrives.
5. Check for Exemptions and Incentives You May Now Qualify For
Not every change adds tax. Religious institutions gain a new exemption, film productions get a reinstated credit, and commercial airports can access a new fuel tax rebate. If your organization touches any of these areas, this is worth a second look, since incentives like these rarely stay open indefinitely.
The Real Deadline Is Now, Not August 1
August 1 is when these rules take effect. It is not when preparation should start. Kentucky's tax code is shifting toward digital and data-driven activity faster than many businesses are tracking, and the cost of misreading a new category like data brokering is far higher than the cost of a conversation with an advisor.
CSH's state and local tax team is already helping clients work through exactly these questions. If your business sells into Kentucky, handles customer data, or operates in any of the industries affected by these changes, contact CSH today to schedule a review before the August 1 deadline arrives.
