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Kentucky Tax Exemptions



What kind of tax exemptions are available to nonprofit corporations in Kentucky?

The state of Kentucky offers three types of tax exemption to qualifying KY nonprofit corporations: income, sales and use, and property tax exemption.

How does my nonprofit corporation qualify for exemption from Kentucky income taxes?

After incorporating you nonprofit organization with the state of Kentucky, to obtain any of the Kentucky tax exemptions you must complete the Kentucky Tax Registration Application. On the form, you will be asked about your nonprofit corporation. If you’ve already been granted 501 tax exempt status from the IRS, you can check the box indicating as much. This form will make sure the exempt status afforded you by the federal government is also given by the state of Kentucky. However, you do not necessarily need 501 status from the IRS to be granted tax exemption from the Kentucky. Provisions in the state law also help to grant income tax exemption to religious, educational, charitable, or like corporation not organized or conducted for the sake of money. KY nonprofits falling into this latter category also have a box they can check on the Kentucky Tax Registration Application.

How does my nonprofit corporation qualify for Kentucky sales and use tax exemption?

To qualify for sales and use tax exemption in Kentucky, first, your nonprofit corporation must have been granted 501c3 status by the IRS. The next distinction is that your KY nonprofit corporation must meet to qualify is that it has to be a resident educational, charitable, or religious entity. If your KY nonprofit corporation meets those qualifications, it will be exempt from tax on sales of tangible personal property, digital property, and services; however, the KY nonprofit organization must collect sales tax if it offers any of the aforementioned services. To qualify, you must complete the Kentucky Tax Registration Application.

How does my nonprofit corporation qualify for property tax exemption in Kentucky?

Kentucky law states that property owned by institutions of purely public charity is exempt from property taxes. The hard thing to prove, though, is that your 501c status from the federal government may help your case, but it won’t qualify you for this exemption. Typically, nonprofits in Kentucky that receive this exemption tend towards entities with religious affiliations, but not in every case. If you want to apply for this exemption, each county has its own application, so you must contact Property Valuation Administrator in the county in which you own property for the application.

For Kentucky Tax Information:

Kentucky Department of Revenue
501 High St
Frankfort, KY
Phone: (502) 564-3226
Website: www.revenue.ky.gov

This comprehensive guide to obtaining and maintaining 501c3 status from the IRS includes information on how to prepare your nonprofit to apply for 501c3 status, as well as information about the forms and fees required by the IRS.

This guide overviews and includes the special tax-exempt language a 501c3 nonprofit organization must include as part of its articles of incorporation. 

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