Kentucky Short-Term Rental Laws and Transient Room Tax: 6% Sales Tax Plus 1% State Tax and Local Rules for Airbnb Hosts

If you rent a house, condo, or spare room on Airbnb or VRBO in Kentucky, you answer to two layers of rules. State tax law applies across the Commonwealth. City and county rules vary by location. Kentucky does not issue a statewide short-term rental license. It does layer several taxes on lodging, and it leaves zoning, registration, and operating permits to the local government where your property sits.

This guide covers the state taxes that apply to lodging, how local transient room taxes work, how platform collection differs from direct bookings, and what Louisville Metro and Lexington require. Use it as a starting point for your research, then confirm each figure with the agency named.

Kentucky Has No Statewide Short-Term Rental License

No state permit lets you operate a short-term rental in Kentucky. Local rules govern. Depending on where your property is, that can mean a zoning permit, a registration with the city or county, a business license, a minimum liability insurance amount, an inspection, or some combination of these. In some places, zoning may not allow short-term rentals in certain districts at all.

Because there is no statewide framework, the rules can change from one side of a city line to the other. State bills that would have preempted local short-term rental rules, SB 112 and SB 9, failed in 2026. Each city therefore sets its own rules for now.

How the Taxes Stack on a Kentucky Short-Term Rental

Lodging in Kentucky can carry three separate layers of tax. Each has its own legal basis and its own filing rules.

Layer	Rate	Legal basis	Notes
State sales tax on lodging	6%	KRS 139.200(2)(a)	Applies to the lodging charge.
Statewide transient room tax	1%	KRS 142.400	In effect since January 1, 2023. Covers platforms that arrange rentals.
Local transient room tax	Up to 3%, or up to 4% for an urban-county government	KRS 91A.390	Set locally. The rate varies by city and county.

Before any local tax, the state layers add up to 7% (6% sales tax plus 1% statewide transient room tax). Local transient room taxes come on top of that. Kentucky has no local sales taxes, so the 6% state rate is the only sales tax rate that applies to lodging.

Stays of 30 or more continuous days are excluded from these taxes. Track the length of every reservation, including extensions and back-to-back bookings, because a single booking can change your tax treatment. Confirm the exclusion details with the Department of Revenue before you rely on it.

Platform Collection Versus Direct Bookings

For participating hosts, Airbnb and VRBO collect and remit state and local transient taxes on bookings made through the platform. That covers most of the tax work for platform guests. It does not cover everything:

• Platform bookings: The platform collects and remits the state and local transient taxes for participating hosts. Check the tax settings in your account to see which taxes it handles for your address.
• Direct bookings: Guests who book by text, email, or your own website pay you directly. You are responsible for collecting and remitting the taxes on those stays.
• Registration and permits: Platform tax collection does not replace local zoning, registration, or license requirements. Those remain your obligation.

Filing Your Returns on MyTaxes

Transient room tax returns have been filed on the Department of Revenue's MyTaxes system since March 14, 2025. If you do not already have a Kentucky tax account, register your business with the Department of Revenue using Form 10A100 through MyTaxes.ky.gov. Visit revenue.ky.gov for forms, filing information, and guidance on which returns your rental requires.

Set up your filing schedule early. A missed return or payment on one tax can create problems on the others, and the Department of Revenue will not treat the platform's collection as a substitute for your own filings where you are responsible for them.

Entity Costs If You Operate Through an LLC

Many hosts hold a rental in a limited liability company. Forming an LLC is a filing with the Secretary of State, not a license, and it does not authorize you to operate a rental. Kentucky has no general statewide business license.

• Articles of Organization (Form KLC): $40 filing fee. New formations are filed through the Kentucky One Stop Business Portal. Processing is usually the same day received, but can take up to three business days. Online filings take effect on the date and time of filing.
• Name: The name must include "limited liability company," "limited company," "LLC," or "LC." It must be distinguishable from names already on record with the Secretary of State.
• Annual report: $15, due June 30 every year. The filing window opens January 1. Domestic entities that miss June 30 are administratively dissolved.
• Registered agent and office: You must continuously maintain a Kentucky registered office and registered agent. A post office box is not accepted as the registered office.
• Limited Liability Entity Tax (LLET): A $175 minimum applies if Kentucky gross receipts or gross profits are $3 million or less. LLC income passes through to members and is taxed at the 3.5% flat individual rate for 2026.

Kentucky has no franchise tax. Confirm the current LLET treatment for your entity with the Department of Revenue or a CPA before you assume the minimum applies.

Local Occupational License Taxes

Cities, counties, and school districts levy local occupational license taxes on payroll, net profits, or gross receipts. Whether a short-term rental triggers one depends on your local jurisdiction and how the rental is structured. Kentucky has 120 counties and about 420 cities, and each occupational license tax district runs its own forms and revenue office. Check the district for the city and county where your property is located.

Louisville Metro: Local Room Tax and Registration

Louisville Metro publishes an aggregate local transient tax of 8.5% of total rent for tax year 2025, according to the Louisville Metro Revenue Commission. Ask the Revenue Commission how that figure breaks down between local and state components, so your collection setup matches it exactly.

• Tax registration: Hosts register with the Louisville Metro Revenue Commission.
• Zoning and short-term rental registration: Check with Louisville Metro Planning and Design Services before you list the property.

Lexington: Permits, Fees, and Insurance

As of 2026, Lexington short-term rental hosts face several requirements at the same time:

• A Zoning Compliance Permit
• A business license
• An annual Special Fees License: $200 for the first unit and $100 for each additional unit
• $1,000,000 in liability coverage
• Fines of up to $500 per day for violations

For the local room tax rate, ask the LFUCG Division of Revenue. Do not assume the rate in Lexington matches Louisville or any other city.

Other Cities and Counties

If your property is outside Louisville and Lexington, do not assume the rules are lighter or absent. Many cities and counties in Kentucky set their own short-term rental standards. Start with the city or county planning or zoning office, then confirm the local transient room tax with the city or county revenue office. Ask whether an occupational license tax applies to your rental income.

Short-Term Rental Compliance Checklist

1. Confirm that zoning allows short-term rentals at your address and in your district.
2. Obtain every local registration, permit, and business license that applies, and confirm the required liability insurance amount.
3. Find the local transient room tax rate and confirm who collects it for each booking channel.
4. Confirm which taxes the platform collects for your listing, including the 1% statewide transient room tax on platform bookings.
5. Register your business with the Department of Revenue using Form 10A100 through MyTaxes.ky.gov, and set up your filing schedule.
6. Track platform bookings and direct bookings separately, and record the length of every stay.
7. If you use an LLC, budget the $40 filing fee, the $15 annual report due June 30, and the $175 LLET minimum where it applies.
8. Check the occupational license tax district for your city and county.

Official Resources

• Kentucky Secretary of State, Division of Business Filings: sos.ky.gov
• Business entity search: Kentucky business search
• Kentucky Department of Revenue: revenue.ky.gov
• Kentucky Small Business Development Center: kentuckysbdc.com

Disclaimer and When to Get Professional Help

This article is informational content, not legal or tax advice. Kentucky statutes, city ordinances, and agency rules change, and some of the figures above may be updated after publication. Confirm every fee, rate, and deadline with the agency named before you act on it.

Talk to a Kentucky attorney who knows local zoning and short-term rental ordinances before you buy, list, or restructure a property. Work with a CPA on tax treatment, especially if you own multiple properties, operate through an LLC, or face a dispute over room tax collection. Professional advice is worth the cost when the local rules are unclear or the stakes are high.