- Kentucky confirms that AI-powered software is generally taxable if it meets the definition of prewritten computer software.
- Sales tax applies regardless of how the software is delivered (downloaded, electronic, or online subscription).
- AI features do not make software “custom” or exempt from tax; only software specifically customized for one customer with separate charges may qualify for exemption.
- The presence of AI in software does not change its tax status under Kentucky law.
- Businesses and consumers should expect sales tax to apply to most AI-enabled software in Kentucky.
Source: salestaxinstitute.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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