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AN ACT relating to sales and use tax exemptions. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 139.480 (Effective until January 1, 2025) is amended to read as 3
follows: 4
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 5
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 6
include the sale, use, storage, or other consumption of: 7
(1) Locomotives or rolling stock, including materials for the construction, repair, or 8
modification thereof, or fuel or supplies for the direct operation of locomotives and 9
trains, used or to be used in interstate commerce; 10
(2) Coal for the manufacture of electricity; 11
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 12
processing, mining, or refining and any related distribution, transmission, and 13
transportation services for this energy that are billed to the user, to the extent 14
that the cost of the energy or energy-producing fuels used, and related 15
distribution, transmission, and transportation services for this energy that are 16
billed to the user exceed three percent (3%) of the cost of production. 17
(b) Cost of production shall be computed on the basis of a plant facility, which 18
shall include all operations within the continuous, unbroken, integrated 19
manufacturing or industrial processing process that ends with a product 20
packaged and ready for sale. 21
(c) A person who performs a manufacturing or industrial processing activity for a 22
fee and does not take ownership of the tangible personal property that is 23
incorporated into, or becomes the product of, the manufacturing or industrial 24
processing activity is a toller. For periods on or after July 1, 2018, the costs of 25
the tangible personal property shall be excluded from the toller's cost of 26
production at a plant facility with tolling operations in place as of July 1, 27 UNOFFICIAL COPY 24 RS BR 1270
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2018. 1
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 2
tangible personal property shall be excluded from the toller's cost of 3
production if the toller: 4
1. Maintains a binding contract for periods after July 1, 2018, that governs 5
the terms, conditions, and responsibilities with a separate legal entity, 6
which holds title to the tangible personal property that is incorporated 7
into, or becomes the product of, the manufacturing or industrial 8
processing activity; 9
2. Maintains accounting records that show the expenses it incurs to fulfill 10
the binding contract that include but are not limited to energy or energy-11
producing fuels, materials, labor, procurement, depreciation, 12
maintenance, taxes, administration, and office expenses; 13
3. Maintains separate payroll, bank accounts, tax returns, and other records 14
that demonstrate its independent operations in the performance of its 15
tolling responsibilities; 16
4. Demonstrates one (1) or more substantial business purposes for the 17
tolling operations germane to the overall manufacturing, industrial 18
processing activities, or corporate structure at the plant facility. A 19
business purpose is a purpose other than the reduction of sales tax 20
liability for the purchases of energy and energy-producing fuels; and 21
5. Provides information to the department upon request that documents 22
fulfillment of the requirements in subparagraphs 1. to 4. of this 23
paragraph and gives an overview of its tolling operations with an 24
explanation of how the tolling operations relate and connect with all 25
other manufacturing or industrial processing activities occurring at the 26
plant facility; 27 UNOFFICIAL COPY 24 RS BR 1270
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(4) Livestock of a kind the products of which ordinarily constitute food for human 1
consumption, provided the sales are made for breeding or dairy purposes and by or 2
to a person regularly engaged in the business of farming; 3
(5) Poultry for use in breeding or egg production; 4
(6) Farm work stock for use in farming operations; 5
(7) Seeds, the products of which ordinarily constitute food for human consumption or 6
are to be sold in the regular course of business, and commercial fertilizer to be 7
applied on land, the products from which are to be used for food for human 8
consumption or are to be sold in the regular course of business; provided such sales 9
are made to farmers who are regularly engaged in the occupation of tilling and 10
cultivating the soil for the production of crops as a business, or who are regularly 11
engaged in the occupation of raising and feeding livestock or poultry or producing 12
milk for sale; and provided further that tangible personal property so sold is to be 13
used only by those persons designated above who are so purchasing; 14
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 15
used in the production of crops as a business, or in the raising and feeding of 16
livestock or poultry, the products of which ordinarily constitute food for human 17
consumption; 18
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 19
products of which ordinarily constitute food for human consumption; 20
(10) Machinery for new and expanded industry; 21
(11) Farm machinery. As used in this section, the term "farm machinery": 22
(a) Means machinery used exclusively and directly in the occupation of: 23
1. Tilling the soil for the production of crops as a business; 24
2. Raising and feeding livestock or poultry for sale; or 25
3. Producing milk for sale; 26
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 27 UNOFFICIAL COPY 24 RS BR 1270
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replacement parts which are used or manufactured for use on, or in the 1
operation of farm machinery and which are necessary to the operation of the 2
machinery, and are customarily so used, including but not limited to combine 3
header wagons, combine header trailers, or any other implements specifically 4
designed and used to move or transport a combine head; and 5
(c) Does not include: 6
1. Automobiles; 7
2. Trucks; 8
3. Trailers, except combine header trailers; or 9
4. Truck-trailer combinations; 10
(12) Tombstones and other memorial grave markers; 11
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 12
or handling. The exemption applies to the equipment, machinery, attachments, 13
repair and replacement parts, and any materials incorporated into the construction, 14
renovation, or repair of the facilities; 15
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 16
shall apply to the equipment, machinery, attachments, repair and replacement parts, 17
and any materials incorporated into the construction, renovation, or repair of the 18
facilities. The exemption shall apply but not be limited to vent board equipment, 19
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 20
and curtain systems. In addition, the exemption shall apply whether or not the seller 21
is under contract to deliver, assemble, and incorporate into real estate the 22
equipment, machinery, attachments, repair and replacement parts, and any materials 23
incorporated into the construction, renovation, or repair of the facilities; 24
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 25
and directly to: 26
(a) Operate farm machinery as defined in subsection (11) of this section; 27 UNOFFICIAL COPY 24 RS BR 1270
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(b) Operate on-farm grain or soybean drying facilities as defined in subsection 1
(13) of this section; 2
(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 3
this section; 4
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 5
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 6
section; or 7
(f) Operate on-farm dairy facilities; 8
(16) Textbooks, including related workbooks and other course materials, purchased for 9
use in a course of study conducted by an institution which qualifies as a nonprofit 10
educational institution under KRS 139.495. The term "course materials" means only 11
those items specifically required of all students for a particular course but shall not 12
include notebooks, paper, pencils, calculators, tape recorders, or similar student 13
aids; 14
(17) Any property which has been certified as an alcohol production facility as defined 15
in KRS 247.910; 16
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 17
direct operation of aircraft in interstate commerce and used exclusively for the 18
conveyance of property or passengers for hire. Nominal intrastate use shall not 19
subject the property to the taxes imposed by this chapter; 20
(19) Any property which has been certified as a fluidized bed energy production facility 21
as defined in KRS 211.390; 22
(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 23
modification, or expansion of a blast furnace or any of its components or 24
appurtenant equipment or structures as part of an approved supplemental 25
project, as defined by KRS 154.26-010; and 26
2. Materials, supplies, and repair or replacement parts purchased for use in 27 UNOFFICIAL COPY 24 RS BR 1270
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the operation and maintenance of a blast furnace and related carbon 1
steel-making operations as part of an approved supplemental project, as 2
defined by KRS 154.26-010. 3
(b) The exemptions provided in this subsection shall be effective for sales made: 4
1. On and after July 1, 2018; and 5
2. During the term of a supplemental project agreement entered into 6
pursuant to KRS 154.26-090; 7
(21) Beginning on October 1, 1986, food or food products purchased for human 8
consumption with food coupons issued by the United States Department of 9
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 10
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 11
continue participation in the federal food stamp program; 12
(22) Machinery or equipment purchased or leased by a business, industry, or 13
organization in order to collect, source separate, compress, bale, shred, or otherwise 14
handle waste materials if the machinery or equipment is primarily used for 15
recycling purposes; 16
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 17
production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-18
products, and the following items used in this agricultural pursuit: 19
(a) Feed and feed additives; 20
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 21
and 22
(c) On-farm facilities, including equipment, machinery, attachments, repair and 23
replacement parts, and any materials incorporated into the construction, 24
renovation, or repair of the facilities. The exemption shall apply to incubation 25
systems, egg processing equipment, waterer and feeding systems, brooding 26
systems, ventilation systems, alarm systems, and curtain systems. In addition, 27 UNOFFICIAL COPY 24 RS BR 1270
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the exemption shall apply whether or not the seller is under contract to 1
deliver, assemble, and incorporate into real estate the equipment, machinery, 2
attachments, repair and replacement parts, and any materials incorporated into 3
the construction, renovation, or repair of the facilities; 4
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 5
these embryos and semen ordinarily constitute food for human consumption, and if 6
the sale is made to a person engaged in the business of farming; 7
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 8
the breeding and production of hides, breeding stock, fiber and wool products, 9
meat, and llama and alpaca by-products, and the following items used in this 10
pursuit: 11
(a) Feed and feed additives; 12
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 13
and 14
(c) On-farm facilities, including equipment, machinery, attachments, repair and 15
replacement parts, and any materials incorporated into the construction, 16
renovation, or repair of the facilities. The exemption shall apply to waterer 17
and feeding systems, ventilation systems, and alarm systems. In addition, the 18
exemption shall apply whether or not the seller is under contract to deliver, 19
assemble, and incorporate into real estate the equipment, machinery, 20
attachments, repair and replacement parts, and any materials incorporated into 21
the construction, renovation, or repair of the facilities; 22
(26) Baling twine and baling wire for the baling of hay and straw; 23
(27) Water sold to a person regularly engaged in the business of farming and used in the: 24
(a) Production of crops; 25
(b) Production of milk for sale; or 26
(c) Raising and feeding of: 27 UNOFFICIAL COPY 24 RS BR 1270
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1. Livestock or poultry, the products of which ordinarily constitute food 1
for human consumption; or 2
2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 3
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 4
production of hides, breeding stock, meat, and buffalo by-products, and the 5
following items used in this pursuit: 6
(a) Feed and feed additives; 7
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 8
and 9
(c) On-farm facilities, including equipment, machinery, attachments, repair and 10
replacement parts, and any materials incorporated into the construction, 11
renovation, or repair of the facilities. The exemption shall apply to waterer 12
and feeding systems, ventilation systems, and alarm systems. In addition, the 13
exemption shall apply whether or not the seller is under contract to deliver, 14
assemble, and incorporate into real estate the equipment, machinery, 15
attachments, repair and replacement parts, and any materials incorporated into 16
the construction, renovation, or repair of the facilities; 17
(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 18
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 19
and the following items used in this pursuit: 20
(a) Feed and feed additives; 21
(b) Water; 22
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 23
and 24
(d) On-farm facilities, including equipment, machinery, attachments, repair and 25
replacement parts, and any materials incorporated into the construction, 26
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 27 UNOFFICIAL COPY 24 RS BR 1270
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petroleum gas, or natural gas used to operate the facilities. The exemption 1
shall apply, but not be limited to: waterer and feeding systems; ventilation, 2
aeration, and heating systems; processing and storage systems; production 3
systems such as ponds, tanks, and raceways; harvest and transport equipment 4
and systems; and alarm systems. In addition, the exemption shall apply 5
whether or not the seller is under contract to deliver, assemble, and 6
incorporate into real estate the equipment, machinery, attachments, repair and 7
replacement parts, and any materials incorporated into the construction, 8
renovation, or repair of the facilities; 9
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 10
production of hides, breeding stock, meat, and cervid by-products, and the 11
following items used in this pursuit: 12
(a) Feed and feed additives; 13
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 14
(c) On-site facilities, including equipment, machinery, attachments, repair and 15
replacement parts, and any materials incorporated into the construction, 16
renovation, or repair of the facilities. In addition, the exemption shall apply 17
whether or not the seller is under contract to deliver, assemble, and 18
incorporate into real estate the equipment, machinery, attachments, repair and 19
replacement parts, and any materials incorporated into the construction, 20
renovation, or repair of the facilities; 21
(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 22
vehicle, including any towed unit, used exclusively in interstate commerce for 23
the conveyance of property or passengers for hire, provided the motor vehicle 24
is licensed for use on the highway and its declared gross vehicle weight with 25
any towed unit is forty-four thousand and one (44,001) pounds or greater. 26
Nominal intrastate use shall not subject the property to the taxes imposed by 27 UNOFFICIAL COPY 24 RS BR 1270
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this chapter; and 1
(b) Repair or replacement parts for the direct operation and maintenance of a 2
motor vehicle operating under a charter bus certificate issued by the 3
Transportation Cabinet under KRS Chapter 281, or under similar authority 4
granted by the United States Department of Transportation. 5
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 6
brakes, engines, transmissions, drive trains, chassis, body parts, and their 7
components. "Repair or replacement parts" shall not include fuel, machine 8
oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 9
to the operation of the motor vehicle itself, except when sold as part of the 10
assembled unit, such as cigarette lighters, radios, lighting fixtures not 11
otherwise required by the manufacturer for operation of the vehicle, or tool or 12
utility boxes; 13
(32) Food donated by a retail food establishment or any other entity regulated under 14
KRS 217.127 to a nonprofit organization for distribution to the needy; 15
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 16
by a person regularly engaged in the business of farming and used in the treatment 17
of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 18
organisms, or cervids; 19
(34) (a) Building materials, fixtures, or supplies purchased by a construction 20
contractor if: 21
1. Fulfilled by a construction contract for a sewer or water project with: 22
a. A municipally owned water utility organized under KRS Chapter 23
96; 24
b. A water district or water commission formed or organized under 25
KRS Chapter 74; 26
c. A sanitation district established under KRS Chapter 220 or formed 27 UNOFFICIAL COPY 24 RS BR 1270
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pursuant to KRS Chapter 65; 1
d. A nonprofit corporation created under KRS 58.180 to act on behalf 2
of a governmental agency in the acquisition and financing of 3
public projects; 4
e. Regional wastewater commissions formed under KRS Chapter 5
278; 6
f. A municipally owned joint sewer agency formed under KRS 7
Chapter 76; or 8
g. Any other governmental agency; and 9
2. The building materials, fixtures, or supplies: 10
a. Will be permanently incorporated into a structure or improvement 11
to real property, or will be completely consumed, in fulfilling a 12
construction contract for the purpose of furnishing water or sewer 13
services to the general public; and 14
b. Would be exempt if purchased directly by the entities listed in 15
subparagraph 1. of this paragraph. 16
(b) As used in this subsection, "construction contract" means a: 17
1. Lump sum contract; 18
2. Cost plus contract; 19
3. Materials only contract; 20
4. Labor and materials contract; or 21
5. Any other type of contract. 22
(c) The exemption provided in this subsection shall apply without regard to the 23
payment arrangement between the construction contractor, the retailer, and 24
the entities listed in paragraph (a)1. of this subsection or to the place of 25
delivery for the building materials, fixtures, or supplies; 26
(35) (a) On or after February 25, 2022, the rental of space for meetings, conventions, 27 UNOFFICIAL COPY 24 RS BR 1270
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short-term business uses, entertainment events, weddings, banquets, parties, 1
and other short-term social events, as referenced in KRS 139.200, if the tax 2
established in KRS 139.200 is paid by the primary lessee to the lessor. 3
(b) For the purpose of this subsection, "primary lessee" means the person who 4
leases the space and who has a contract with the lessor of the space only if: 5
1. The contract between the lessor and the lessee specifies that the lessee 6
may sublease, subrent, or otherwise sell the space; and 7
2. The space is then sublet, subrented, or otherwise sold to exhibitors, 8
vendors, sponsors, or other entities and persons who will use the space 9
associated with the event to be conducted under the primary lease;[ and] 10
(36) Prewritten computer software access services sold to or purchased by a retailer that 11
develops prewritten computer software for print technology and uses and sells 12
prewritten computer software access services for print technology; and 13
(37) On or after August 1, 2024: 14
(a) Currency or bullion. 15
(b) As used in this subsection: 16
1. "Bullion": 17
a. Means bars, ingots, or coins, which are: 18
i. Made of gold, silver, platinum, palladium, or a 19
combination of these metals; 20
ii. Valued based on the content of the metal and not its form; 21
and 22
iii. Used, or have been used, as a medium of exchange, 23
security, or commodity by any state, the United States 24
government, or a foreign nation; and 25
b. Does not include medallions or coins that are incorporated into a 26
pendant or other jewelry; and 27 UNOFFICIAL COPY 24 RS BR 1270
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2. "Currency": 1
a. Means a coin or currency made of gold, silver, platinum, 2
palladium, or other metal or paper money that is or has been 3
used as legal tender and is sold based on its value as a collectible 4
item rather than the value as a medium of exchange; and 5
b. Does not include a coin or currency that has been incorporated 6
into jewelry. 7
Section 2. KRS 139.480 (Effective January 1, 2025) is amended to read as 8
follows: 9
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 10
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 11
include the sale, use, storage, or other consumption of: 12
(1) Locomotives or rolling stock, including materials for the construction, repair, or 13
modification thereof, or fuel or supplies for the direct operation of locomotives and 14
trains, used or to be used in interstate commerce; 15
(2) Coal for the manufacture of electricity; 16
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 17
processing, mining, or refining and any related distribution, transmission, and 18
transportation services for this energy that are billed to the user, to the extent 19
that the cost of the energy or energy-producing fuels used, and related 20
distribution, transmission, and transportation services for this energy that are 21
billed to the user exceed three percent (3%) of the cost of production. 22
(b) Cost of production shall be computed on the basis of a plant facility, which 23
shall include all operations within the continuous, unbroken, integrated 24
manufacturing or industrial processing process that ends with a product 25
packaged and ready for sale. 26
(c) A person who performs a manufacturing or industrial processing activity for a 27 UNOFFICIAL COPY 24 RS BR 1270
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fee and does not take ownership of the tangible personal property that is 1
incorporated into, or becomes the product of, the manufacturing or industrial 2
processing activity is a toller. For periods on or after July 1, 2018, the costs of 3
the tangible personal property shall be excluded from the toller's cost of 4
production at a plant facility with tolling operations in place as of July 1, 5
2018. 6
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 7
tangible personal property shall be excluded from the toller's cost of 8
production if the toller: 9
1. Maintains a binding contract for periods after July 1, 2018, that governs 10
the terms, conditions, and responsibilities with a separate legal entity, 11
which holds title to the tangible personal property that is incorporated 12
into, or becomes the product of, the manufacturing or industrial 13
processing activity; 14
2. Maintains accounting records that show the expenses it incurs to fulfill 15
the binding contract that include but are not limited to energy or energy-16
producing fuels, materials, labor, procurement, depreciation, 17
maintenance, taxes, administration, and office expenses; 18
3. Maintains separate payroll, bank accounts, tax returns, and other records 19
that demonstrate its independent operations in the performance of its 20
tolling responsibilities; 21
4. Demonstrates one (1) or more substantial business purposes for the 22
tolling operations germane to the overall manufacturing, industrial 23
processing activities, or corporate structure at the plant facility. A 24
business purpose is a purpose other than the reduction of sales tax 25
liability for the purchases of energy and energy-producing fuels; and 26
5. Provides information to the department upon request that documents 27 UNOFFICIAL COPY 24 RS BR 1270
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fulfillment of the requirements in subparagraphs 1. to 4. of this 1
paragraph and gives an overview of its tolling operations with an 2
explanation of how the tolling operations relate and connect with all 3
other manufacturing or industrial processing activities occurring at the 4
plant facility; 5
(4) Livestock of a kind the products of which ordinarily constitute food for human 6
consumption, provided the sales are made for breeding or dairy purposes and by or 7
to a person regularly engaged in the business of farming; 8
(5) Poultry for use in breeding or egg production; 9
(6) Farm work stock for use in farming operations; 10
(7) Seeds, the products of which ordinarily constitute food for human consumption or 11
are to be sold in the regular course of business, and commercial fertilizer to be 12
applied on land, the products from which are to be used for food for human 13
consumption or are to be sold in the regular course of business; provided such sales 14
are made to farmers who are regularly engaged in the occupation of tilling and 15
cultivating the soil for the production of crops as a business, or who are regularly 16
engaged in the occupation of raising and feeding livestock or poultry or producing 17
milk for sale; and provided further that tangible personal property so sold is to be 18
used only by those persons designated above who are so purchasing; 19
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 20
used in the production of crops as a business, or in the raising and feeding of 21
livestock or poultry, the products of which ordinarily constitute food for human 22
consumption; 23
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 24
products of which ordinarily constitute food for human consumption; 25
(10) Machinery for new and expanded industry; 26
(11) Farm machinery. As used in this section, the term "farm machinery": 27 UNOFFICIAL COPY 24 RS BR 1270
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(a) Means machinery used exclusively and directly in the occupation of: 1
1. Tilling the soil for the production of crops as a business; 2
2. Raising and feeding livestock or poultry for sale; or 3
3. Producing milk for sale; 4
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 5
replacement parts which are used or manufactured for use on, or in the 6
operation of farm machinery and which are necessary to the operation of the 7
machinery, and are customarily so used, including but not limited to combine 8
header wagons, combine header trailers, or any other implements specifically 9
designed and used to move or transport a combine head; and 10
(c) Does not include: 11
1. Automobiles; 12
2. Trucks; 13
3. Trailers, except combine header trailers; or 14
4. Truck-trailer combinations; 15
(12) Tombstones and other memorial grave markers; 16
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 17
or handling. The exemption applies to the equipment, machinery, attachments, 18
repair and replacement parts, and any materials incorporated into the construction, 19
renovation, or repair of the facilities; 20
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 21
shall apply to the equipment, machinery, attachments, repair and replacement parts, 22
and any materials incorporated into the construction, renovation, or repair of the 23
facilities. The exemption shall apply but not be limited to vent board equipment, 24
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 25
and curtain systems. In addition, the exemption shall apply whether or not the seller 26
is under contract to deliver, assemble, and incorporate into real estate the 27 UNOFFICIAL COPY 24 RS BR 1270
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equipment, machinery, attachments, repair and replacement parts, and any materials 1
incorporated into the construction, renovation, or repair of the facilities; 2
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 3
and directly to: 4
(a) Operate farm machinery as defined in subsection (11) of this section; 5
(b) Operate on-farm grain or soybean drying facilities as defined in subsection 6
(13) of this section; 7
(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 8
this section; 9
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 10
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 11
section; or 12
(f) Operate on-farm dairy facilities; 13
(16) Textbooks, including related workbooks and other course materials, purchased for 14
use in a course of study conducted by an institution which qualifies as a nonprofit 15
educational institution under KRS 139.495. The term "course materials" means only 16
those items specifically required of all students for a particular course but shall not 17
include notebooks, paper, pencils, calculators, tape recorders, or similar student 18
aids; 19
(17) Any property which has been certified as an alcohol production facility as defined 20
in KRS 247.910; 21
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 22
direct operation of aircraft in interstate commerce and used exclusively for the 23
conveyance of property or passengers for hire. Nominal intrastate use shall not 24
subject the property to the taxes imposed by this chapter; 25
(19) Any property which has been certified as a fluidized bed energy production facility 26
as defined in KRS 211.390; 27 UNOFFICIAL COPY 24 RS BR 1270
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(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 1
modification, or expansion of a blast furnace or any of its components or 2
appurtenant equipment or structures as part of an approved supplemental 3
project, as defined by KRS 154.26-010; and 4
2. Materials, supplies, and repair or replacement parts purchased for use in 5
the operation and maintenance of a blast furnace and related carbon 6
steel-making operations as part of an approved supplemental project, as 7
defined by KRS 154.26-010. 8
(b) The exemptions provided in this subsection shall be effective for sales made: 9
1. On and after July 1, 2018; and 10
2. During the term of a supplemental project agreement entered into 11
pursuant to KRS 154.26-090; 12
(21) Beginning on October 1, 1986, food or food products purchased for human 13
consumption with food coupons issued by the United States Department of 14
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 15
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 16
continue participation in the federal food stamp program; 17
(22) Machinery or equipment purchased or leased by a business, industry, or 18
organization in order to collect, source separate, compress, bale, shred, or otherwise 19
handle waste materials if the machinery or equipment is primarily used for 20
recycling purposes; 21
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 22
production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-23
products, and the following items used in this agricultural pursuit: 24
(a) Feed and feed additives; 25
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 26
and 27 UNOFFICIAL COPY 24 RS BR 1270
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(c) On-farm facilities, including equipment, machinery, attachments, repair and 1
replacement parts, and any materials incorporated into the construction, 2
renovation, or repair of the facilities. The exemption shall apply to incubation 3
systems, egg processing equipment, waterer and feeding systems, brooding 4
systems, ventilation systems, alarm systems, and curtain systems. In addition, 5
the exemption shall apply whether or not the seller is under contract to 6
deliver, assemble, and incorporate into real estate the equipment, machinery, 7
attachments, repair and replacement parts, and any materials incorporated into 8
the construction, renovation, or repair of the facilities; 9
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 10
these embryos and semen ordinarily constitute food for human consumption, and if 11
the sale is made to a person engaged in the business of farming; 12
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 13
the breeding and production of hides, breeding stock, fiber and wool products, 14
meat, and llama and alpaca by-products, and the following items used in this 15
pursuit: 16
(a) Feed and feed additives; 17
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 18
and 19
(c) On-farm facilities, including equipment, machinery, attachments, repair and 20
replacement parts, and any materials incorporated into the construction, 21
renovation, or repair of the facilities. The exemption shall apply to waterer 22
and feeding systems, ventilation systems, and alarm systems. In addition, the 23
exemption shall apply whether or not the seller is under contract to deliver, 24
assemble, and incorporate into real estate the equipment, machinery, 25
attachments, repair and replacement parts, and any materials incorporated into 26
the construction, renovation, or repair of the facilities; 27 UNOFFICIAL COPY 24 RS BR 1270
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(26) Baling twine and baling wire for the baling of hay and straw; 1
(27) Water sold to a person regularly engaged in the business of farming and used in the: 2
(a) Production of crops; 3
(b) Production of milk for sale; or 4
(c) Raising and feeding of: 5
1. Livestock or poultry, the products of which ordinarily constitute food 6
for human consumption; or 7
2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 8
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 9
production of hides, breeding stock, meat, and buffalo by-products, and the 10
following items used in this pursuit: 11
(a) Feed and feed additives; 12
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 13
and 14
(c) On-farm facilities, including equipment, machinery, attachments, repair and 15
replacement parts, and any materials incorporated into the construction, 16
renovation, or repair of the facilities. The exemption shall apply to waterer 17
and feeding systems, ventilation systems, and alarm systems. In addition, the 18
exemption shall apply whether or not the seller is under contract to deliver, 19
assemble, and incorporate into real estate the equipment, machinery, 20
attachments, repair and replacement parts, and any materials incorporated into 21
the construction, renovation, or repair of the facilities; 22
(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 23
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 24
and the following items used in this pursuit: 25
(a) Feed and feed additives; 26
(b) Water; 27 UNOFFICIAL COPY 24 RS BR 1270
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(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 1
and 2
(d) On-farm facilities, including equipment, machinery, attachments, repair and 3
replacement parts, and any materials incorporated into the construction, 4
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 5
petroleum gas, or natural gas used to operate the facilities. The exemption 6
shall apply, but not be limited to: waterer and feeding systems; ventilation, 7
aeration, and heating systems; processing and storage systems; production 8
systems such as ponds, tanks, and raceways; harvest and transport equipment 9
and systems; and alarm systems. In addition, the exemption shall apply 10
whether or not the seller is under contract to deliver, assemble, and 11
incorporate into real estate the equipment, machinery, attachments, repair and 12
replacement parts, and any materials incorporated into the construction, 13
renovation, or repair of the facilities; 14
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 15
production of hides, breeding stock, meat, and cervid by-products, and the 16
following items used in this pursuit: 17
(a) Feed and feed additives; 18
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 19
(c) On-site facilities, including equipment, machinery, attachments, repair and 20
replacement parts, and any materials incorporated into the construction, 21
renovation, or repair of the facilities. In addition, the exemption shall apply 22
whether or not the seller is under contract to deliver, assemble, and 23
incorporate into real estate the equipment, machinery, attachments, repair and 24
replacement parts, and any materials incorporated into the construction, 25
renovation, or repair of the facilities; 26
(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 27 UNOFFICIAL COPY 24 RS BR 1270
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vehicle, including any towed unit, used exclusively in interstate commerce for 1
the conveyance of property or passengers for hire, provided the motor vehicle 2
is licensed for use on the highway and its declared gross vehicle weight with 3
any towed unit is forty-four thousand and one (44,001) pounds or greater. 4
Nominal intrastate use shall not subject the property to the taxes imposed by 5
this chapter; and 6
(b) Repair or replacement parts for the direct operation and maintenance of a 7
motor vehicle operating under a charter bus certificate issued by the 8
Transportation Cabinet under KRS Chapter 281, or under similar authority 9
granted by the United States Department of Transportation. 10
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 11
brakes, engines, transmissions, drive trains, chassis, body parts, and their 12
components. "Repair or replacement parts" shall not include fuel, machine 13
oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 14
to the operation of the motor vehicle itself, except when sold as part of the 15
assembled unit, such as cigarette lighters, radios, lighting fixtures not 16
otherwise required by the manufacturer for operation of the vehicle, or tool or 17
utility boxes; 18
(32) Food donated by a retail food establishment or any other entity regulated under 19
KRS 217.127 to a nonprofit organization for distribution to the needy; 20
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 21
by a person regularly engaged in the business of farming and used in the treatment 22
of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 23
organisms, or cervids; 24
(34) (a) Building materials, fixtures, or supplies purchased by a construction 25
contractor if: 26
1. Fulfilled by a construction contract for a sewer or water project with: 27 UNOFFICIAL COPY 24 RS BR 1270
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a. A municipally owned water utility organized under KRS Chapter 1
96; 2
b. A water district or water commission formed or organized under 3
KRS Chapter 74; 4
c. A sanitation district established under KRS Chapter 220 or formed 5
pursuant to KRS Chapter 65; 6
d. A nonprofit corporation created under KRS 58.180 to act on behalf 7
of a governmental agency in the acquisition and financing of 8
public projects; 9
e. Regional wastewater commissions formed under KRS Chapter 10
278; 11
f. A municipally owned joint sewer agency formed under KRS 12
Chapter 76; or 13
g. Any other governmental agency; and 14
2. The building materials, fixtures, or supplies: 15
a. Will be permanently incorporated into a structure or improvement 16
to real property, or will be completely consumed, in fulfilling a 17
construction contract for the purpose of furnishing water or sewer 18
services to the general public; and 19
b. Would be exempt if purchased directly by the entities listed in 20
subparagraph 1. of this paragraph. 21
(b) As used in this subsection, "construction contract" means a: 22
1. Lump sum contract; 23
2. Cost plus contract; 24
3. Materials only contract; 25
4. Labor and materials contract; or 26
5. Any other type of contract. 27 UNOFFICIAL COPY 24 RS BR 1270
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(c) The exemption provided in this subsection shall apply without regard to the 1
payment arrangement between the construction contractor, the retailer, and 2
the entities listed in paragraph (a)1. of this subsection or to the place of 3
delivery for the building materials, fixtures, or supplies; 4
(35) (a) On or after February 25, 2022, the rental of space for meetings, conventions, 5
short-term business uses, entertainment events, weddings, banquets, parties, 6
and other short-term social events, as referenced in KRS 139.200, if the tax 7
established in KRS 139.200 is paid by the primary lessee to the lessor. 8
(b) For the purpose of this subsection, "primary lessee" means the person who 9
leases the space and who has a contract with the lessor of the space only if: 10
1. The contract between the lessor and the lessee specifies that the lessee 11
may sublease, subrent, or otherwise sell the space; and 12
2. The space is then sublet, subrented, or otherwise sold to exhibitors, 13
vendors, sponsors, or other entities and persons who will use the space 14
associated with the event to be conducted under the primary lease; 15
(36) Prewritten computer software access services sold to or purchased by a retailer that 16
develops prewritten computer software for print technology and uses and sells 17
prewritten computer software access services for print technology; 18
(37) On or after August 1, 2024: 19
(a) Currency or bullion. 20
(b) As used in this subsection: 21
1. "Bullion": 22
a. Means bars, ingots, or coins, which are: 23
i. Made of gold, silver, platinum, palladium, or a 24
combination of these metals; 25
ii. Valued based on the content of the metal and not its form; 26
and 27 UNOFFICIAL COPY 24 RS BR 1270
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iii. Used, or have been used, as a medium of exchange, 1
security, or commodity by any state, the United States 2
government, or a foreign nation; and 3
b. Does not include medallions or coins that are incorporated into a 4
pendant or other jewelry; and 5
2. "Currency": 6
a. Means a coin or currency made of gold, silver, platinum, 7
palladium, or other metal or paper money that is or has been 8
used as legal tender and is sold based on its value as a collectible 9
item rather than the value as a medium of exchange; and 10
b. Does not include a coin or currency that has been incorporated 11
into jewelry; and 12
(38)[(37)] Medicinal cannabis as defined in KRS 218B.010 when sold, used, stored, or 13
consumed in accordance with KRS Chapter 218B. 14