Kentucky Scrapped the 200-Transaction Nexus Test and Taxed Data Brokering

If you sell into Kentucky — or you sell anything built on other people's personal data — your sales tax obligations changed on August 1, 2026, and the new rules are already in force. Kentucky House Bill 757 did two big things at once: it scrapped the 200-transaction economic nexus test that forced thousands of small remote sellers to collect Kentucky sales tax, and it made data brokering services taxable at the state's 6 percent rate. One change hands you relief; the other may hand you a brand-new collection duty you never had before. This guide walks through both, plus the compliance checklist that gets your books and registrations right under the new law.

What HB 757 Changed​

House Bill 757, enacted in April 2026, is an omnibus tax bill touching income tax, sales tax, and excise taxes. For remote sellers and service businesses, the two sales tax provisions that took effect August 1, 2026 matter most:

1. Economic nexus is now sales-only. The old test — more than $100,000 in Kentucky sales or 200 or more separate transactions delivered into Kentucky — is gone. The threshold is now simply more than $100,000 in gross receipts from Kentucky customers in the previous or current calendar year.
2. Data brokering services are now a taxable service. Kentucky taxes only specifically enumerated services, and data brokering just joined that list. Sellers of in-scope data services must collect the 6 percent state sales and use tax.

Both changes apply to remote retailers and marketplace providers alike. The Kentucky Department of Revenue confirmed the new rules in its Summer 2026 Sales Tax Facts guidance, so this is settled law, not a proposal to watch.

The 200-Transaction Repeal: Who Gets Relief​

The transaction-count test was always the trap for small sellers. Under the old rule, 200 sales of a $5 sticker shipped to Kentucky customers — barely $1,000 in revenue — created the same collection obligation as $100,000 in sales. Low average order value businesses (craft sellers, parts dealers, digital goods shops) tripped the 200-transaction wire without ever coming close to the dollar threshold.

That wire no longer exists. Now only the money counts: tangible personal property, digital property, or services delivered, transferred electronically, or provided to a purchaser in Kentucky, measured against the $100,000 line in the current or prior calendar year.

Kentucky is following a clear national trend. As of spring 2026, sixteen states — including California, Colorado, Illinois, North Carolina, Washington, and Wisconsin — had already dropped their transaction-count tests, and Kentucky's repeal takes another state off the shrinking list of jurisdictions that still count your invoices instead of your revenue.

Who still has to collect​

The repeal is not a blanket pass. You still have a Kentucky collection obligation if:

• Your gross receipts from Kentucky customers exceed $100,000 in the current or previous calendar year.
• You have physical presence in Kentucky — an office, warehouse, inventory, or employees working in the state. Physical presence creates nexus on its own, regardless of sales volume.
• You have nexus through another basis, such as affiliate relationships or marketplace activity that falls outside the facilitator rules.

And if you sell through a marketplace, remember the division of labor: the marketplace facilitator collects on the facilitated sales, but your own direct-channel sales into Kentucky still count toward your $100,000 threshold.

Can You Cancel Your Kentucky Registration?​

This is the question every seller who registered solely because of the transaction count should be asking right now. If your Kentucky sales are under $100,000, you have no physical presence in the state, and the 200-transaction test was your only basis for nexus, you may be able to cancel your Kentucky sales tax permit and stop collecting.

Before you do, work through these safeguards:

• Confirm no other nexus basis exists. Run the full nexus questionnaire, not just the economic test. Inventory in a Kentucky fulfillment center, a remote employee in Louisville, or trade-show activity can each independently require registration.
• Check the measurement period. The test looks at the current and previous calendar year. A strong prior year above $100,000 keeps you registered even if this year is slow.
• Keep collecting until the cancellation is accepted. File a final return and remit everything collected through your last day of obligation. Deregistering does not erase liability for periods when you were registered.
• Watch the threshold going forward. If Kentucky sales later cross $100,000, you must re-register. Build the monitoring into your monthly close rather than discovering it at year-end.
• Get it in writing. When in doubt, confirm your deregistration position with a tax professional or a ruling request to the Department of Revenue. A cancelled permit you actually still need is an expensive mistake to unwind.

Marketplace-only sellers get a related question: if you registered defensively years ago but every Kentucky sale now flows through a facilitator that collects, the same analysis applies — no independent nexus, no registration requirement.

Data Brokering Services: Kentucky's New Taxable Service​

The second change runs in the opposite direction, creating tax where none existed. Effective August 1, 2026, Kentucky imposes its 6 percent sales and use tax on data brokering services, defined by statute as:

The act of collecting, aggregating, and analyzing personal data for sale to a third party while possession of the personal data is maintained by the person providing the data brokering services or by the third party, wherever located, regardless of whether the charge is on a per-use, per-user, per-license, subscription, or some other basis.

Three features of that definition deserve attention:

• It is deliberately broad. The definition turns on what you do — collect, aggregate, and analyze personal data for sale — not on whether you call yourself a data broker. Businesses that monetize data incidentally to their main line, such as list sales, lead-gen appends, or analytics products built on customer data, need to evaluate whether a revenue stream falls inside the definition.
• Billing model does not matter. Per-use fees, seat licenses, and subscriptions are all expressly covered, so restructuring how you charge does not restructure the tax.
• Location of the data does not matter. The "wherever located" language keeps the tax from depending on where servers or buyers sit; the question is whether the service is provided to a Kentucky purchaser.

The one stated carve-out is for government: data brokering services provided by state agencies, cities, counties, and special districts are excluded.

What data-service sellers must do now​

If any of your revenue plausibly fits the definition, treat this as a live compliance project, not a wait-and-see item:

1. Map your revenue streams. Inventory every product or service that involves collecting, aggregating, or analyzing personal data sold to third parties. Flag the ones delivered to Kentucky purchasers.
2. Review existing contracts. Long-term agreements signed before August 1 may be subject to transitional treatment — and even where they are not, you need to know whether the contract lets you add tax on top of the stated price or forces you to absorb it.
3. Register and configure collection. If you lack a Kentucky sales tax permit, get one; then map the newly taxable service codes in your billing and tax engine so Kentucky invoices pick up the 6 percent automatically.
4. Document your scope decisions. If you conclude a particular analytics product is outside the definition, write down why, with the statutory language attached. Scope judgments on new service taxes are exactly what auditors revisit years later.

Buyers have a mirror-image duty: if a vendor fails to charge Kentucky tax on an in-scope data service, the purchaser owes consumer use tax directly to the state. Review your vendor invoices for Kentucky-sourced data services and self-assess where the seller did not collect.

The Rest of the Bill in Brief​

HB 757 is an omnibus measure, so two more sales-side changes are worth knowing even though they affect narrower audiences:

• Expanded religious-institution exemptions. The bill defines educational and charitable institutions, broadens the religious-institution definition, and extends sales and use tax exemptions to both their purchases and their sales made in furtherance of religious functions.
• Restructured gambling-adjacent excise taxes. Separate provisions rework the excise taxes on fantasy contest operators and prediction market operators, effective January 1, 2027. If you operate in that space, read the operative sections rather than relying on summaries — the taxable base changed, not just the rate.

The bill also updates Kentucky's income tax conformity date and decouples from several recent federal provisions, but that is a separate planning conversation for your income tax return.

Your Kentucky Compliance Checklist​

Pull the pieces together into one action list:

1. Measure Kentucky sales for the current and prior calendar years against the $100,000 line.
2. Re-test nexus from scratch — economic, physical, affiliate, and marketplace — under the post-August 1 rules.
3. Decide on registration: register if you newly trip the test (especially data-service sellers), hold steady if you were already over $100,000, and evaluate cancellation only if the repealed transaction test was your sole basis.
4. Update your tax engine with the new nexus rule and the new taxable service category.
5. Review data-service contracts for taxability, price-gross-up language, and transitional coverage.
6. File correctly going forward — final returns if you deregister, first returns if you newly register, and use-tax accruals on any untaxed data-service purchases.

Keep State-Level Revenue Visible in Your Books​

Both halves of HB 757 reward the same bookkeeping habit: knowing exactly how much revenue comes from Kentucky, and from which product lines. The sellers who can answer "what did we sell into Kentucky last year, and in how many transactions" in five minutes will breeze through the nexus re-test; the ones who cannot will spend weeks reconstructing it from bank deposits. Track sales by ship-to state as a matter of routine, keep taxable and exempt service revenue in separate accounts, and log every registration, deregistration, and final return with its confirmation — auditors love paperwork, and contemporaneous records beat reconstructed ones every time.

Keep Your Sales Tax Clean as the Rules Shift​

As Kentucky's overhaul shows, nexus rules and taxable-service lists keep moving, and the states rarely move them in the same direction at the same time. Maintaining clear, state-by-state financial records is what turns each new law from a fire drill into a checklist item. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data — no black boxes, no vendor lock-in. Get started for free and see why developers and finance professionals are switching to plain-text accounting.