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Karen meets her death in the second episode, amid her attempt to pull a "Carrie"-themed prank on Imogen. While Imogen is walking to the stage to accept the Spirit Queen crown, a vengeful Karen waits in the rafters, ready to dump red paint all over her former friend. There, in front of a gymnasium full of unsuspecting students, Imogen witnesses "A" push Karen to her death.
Again, it's clear "A" hates bullies, and based on the continued threatening of the Liars' mothers, the villain definitely believes in giving cruel perpetrators their "just desserts." This is a potential motive for killing Karen, who was a known bully at Millwood High. It isn't the only possible motive, though. Perhaps Karen saw something at the Adams house the night of Davie's death, and "A" wanted to ensure she kept quiet.