Credit card processing and merchant services in Kentucky
Kentucky charges one 6% sales tax everywhere, with no city or county add-ons. With tax that simple, the bigger question is what you pay to accept cards, and we can show you.
Card surcharges
Surcharging allowedKentucky has no surcharge statute we've found, so network rules apply: 3% on Visa, 4% on Mastercard, none on debit.
Sales tax
6%, no local sales tax
Last checked
October 6, 2026
Kentucky makes one part of taking cards easy. Sales and use tax is 6% of gross receipts or purchase price, and the Department of Revenue says plainly that there are no local sales and use taxes in the state. A shop in a small county seat and a shop in the state's biggest city charge the same rate, so your POS needs one general tax code plus whatever exemptions apply to what you sell.
That leaves processing costs as the lever worth pulling. A flat-rate plan charges the same percentage on every card, from a premium rewards card to a basic debit card, and debit is where that hurts. For cards from banks with $10 billion or more in assets, federal Regulation II caps interchange at 21 cents plus 0.05% of the sale, plus a 1 cent fraud adjustment. On a $40 sale that's 24 cents; under interchange-plus you'd pay that, network fees and a disclosed markup. A hypothetical flat 2.9% on the same sale is $1.16, whatever card the customer used.
Surcharging is legal here as far as state law goes; no Kentucky statute limits it that we know of. You follow Visa's 3% cap, Mastercard's 4% cap, the ban on surcharging debit, and the disclosure rules. If most of your customers pay by debit, a surcharge won't recover much, and a lower processing bill will matter more.
Clearo prices on interchange-plus with no long-term contract or cancellation fee, and every account has a dedicated rep. Our post on interchange-plus vs flat rate walks through the math, and a free statement review applies it to your own numbers.
What Kentucky merchants should know
One statewide sales tax rate
Kentucky's sales and use tax is imposed at 6% of gross receipts or purchase price, and the Department of Revenue says there are no local sales and use taxes in Kentucky. The tax law is in Kentucky Revised Statutes Chapter 139, with regulations in Title 103 of the Kentucky Administrative Regulations.
One general rate means one main tax code. Spend your setup time on any exemptions that apply to what you sell.
Credit card surcharges in Kentucky
We haven't found a Kentucky statute that bans or caps credit card surcharges, and the 2016 NCSL table lists none for Kentucky. The card network rules apply:
- Visa: up to your merchant discount rate or 3%, whichever is lower, with notice to your acquirer at least 30 days ahead.
- Mastercard: in Kentucky, the most you can add is your average effective merchant discount rate for Mastercard credit or 4%. Mastercard says it isn't currently requiring merchants to register their intent to surcharge.
- No surcharge on debit or prepaid cards, and disclosure at the entrance, at the point of sale and on the receipt.
Sources: National Conference of State Legislatures, Credit or debit card surcharges statutes (2016 table); Visa, U.S. Merchant Surcharge Q and A (PDF); Mastercard, Merchant surcharge rules (US); Mastercard, Merchant surcharge disclosure form page
Debit card interchange cap
Federal Regulation II limits the interchange that card issuers with $10 billion or more in assets, together with their affiliates, can receive on a debit transaction: 21 cents plus 0.05% of the sale, plus a 1 cent fraud-prevention adjustment for issuers that qualify. Smaller issuers are exempt.
On a $40 sale, the cap comes to 24 cents.
Sources: Federal Reserve, Regulation II: debit card interchange fees and routing; Federal Reserve, Regulation II interchange fee standards
Cities we cover in Kentucky
Payment services we provide
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Common questions
Do Kentucky cities or counties add sales tax?
No. The Department of Revenue says there are no local sales and use taxes in Kentucky, so the 6% state rate applies statewide. A second location in another county uses the same rate as your first. Exemptions still depend on the product, so check how your items are treated.
Can a Kentucky business add a credit card surcharge?
Yes. No Kentucky statute limits surcharges that we know of. Visa caps them at your merchant discount rate or 3%, Mastercard at your average effective rate or 4%, and both rule out debit and prepaid cards. With one 6% tax rate statewide, the surcharge line is the only difference between a cash receipt and a credit card receipt.
Why is debit cheaper to accept than credit?
Federal Regulation II caps the interchange large banks can charge on debit: 21 cents plus 0.05% of the sale, plus 1 cent for qualifying issuers. On a $40 sale that's 24 cents. Credit card interchange has no federal cap like that and is usually set as a percentage plus a small fixed fee, so it costs more as tickets grow.
Is interchange-plus better than a flat rate for a Kentucky store?
Often, especially if much of your volume is debit or your tickets are large, because you pay the actual interchange on each card plus a disclosed markup instead of one blended percentage. A flat rate can make sense at very low volume. Our comparison post walks through both with examples.
How do I get started with Clearo in Kentucky?
Send a recent processing statement for a free statement review. We'll show your effective rate and the fees worth questioning, then quote interchange-plus pricing with no long-term contract. Every account has a dedicated rep, and we work with Kentucky businesses remotely.
Other states we serve besides Kentucky
- Alabama
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- Washington, DC
- West Virginia
- Wisconsin
- Wyoming
Disclaimer: general information, not professional advice
This page is general educational information, not legal, tax, accounting or financial advice. Rules and rates vary by place and change, so confirm them with the official source and a qualified professional before you act. Full terms are in our Terms of Service.
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