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Kentucky Occupational Tax Rates 2026

More than 200 Kentucky cities and half of the state’s 120 counties levy a local occupational (payroll) tax on wages earned within their borders. Rates range from 0% in unincorporated rural areas to 2.5% in some cities. This table lists verified 2026 rates for the most populous jurisdictions.

Last reviewed: July 2026. Rates are subject to annual ordinance changes — always confirm with your employer’s payroll department or your local government.

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City / AreaCounty2026 RateNotes
CovingtonKenton County2.45%City rate
NewportCampbell County2.50%City rate; county levies 0.7% separately on unincorporated areas
FlorenceBoone County2.00%City rate
ErlangerKenton County2.00%City rate
IndependenceKenton County1.50%City rate
Fort MitchellKenton County1.50%City rate
Fort WrightKenton County1.50%City rate
WilderCampbell County1.50%City rate
AlexandriaCampbell County1.00%City rate
Boone County (unincorporated)Boone County0.50%County rate only
Kenton County (unincorporated)Kenton County0.71%County rate only
Campbell County (unincorporated)Campbell County0.70%County rate only
Louisville / Jefferson CountyJefferson County2.20%Merged city-county government; single rate applies
JeffersontownJefferson County1.45%Jefferson County portion; Louisville Metro rate may also apply depending on location
ShivelyJefferson County1.50%City rate
St. MatthewsJefferson County1.50%City rate
Lexington / Fayette CountyFayette County2.25%Urban-county government
NicholasvilleJessamine County1.50%City rate
GeorgetownScott County1.00%City rate
WinchesterClark County1.50%City rate
RichmondMadison County2.00%City rate
BereaMadison County1.50%City rate
Mt. SterlingMontgomery County1.50%City rate
FrankfortFranklin County1.95%City rate
ElizabethtownHardin County1.95%City rate
RadcliffHardin County2.00%City rate
BardstownNelson County1.50%City rate
ShelbyvilleShelby County1.50%City rate
DanvilleBoyle County1.70%City rate
StanfordLincoln County1.50%City rate
Bowling GreenWarren County1.75%City rate
GlasgowBarren County1.50%City rate
CampbellsvilleTaylor County1.50%City rate
GreensburgGreen County1.00%City rate
ColumbiaAdair County1.50%City rate
OwensboroDaviess County1.35%City rate
MadisonvilleHopkins County1.50%City rate
HendersonHenderson County1.50%City rate
HopkinsvilleChristian County1.50%City rate
PaducahMcCracken County2.00%City rate
MurrayCalloway County1.50%City rate
MayfieldGraves County1.50%City rate
FultonFulton County1.50%City rate
AshlandBoyd County1.50%City rate
PikevillePike County1.00%City rate
HazardPerry County1.50%City rate
MiddlesboroBell County1.50%City rate
CorbinWhitley/Knox County1.00%City rate
LondonLaurel County1.00%City rate
HarlanHarlan County1.50%City rate
SomersetPulaski County1.50%City rate
MonticelloWayne County1.00%City rate
MoreheadRowan County1.50%City rate
MaysvilleMason County1.50%City rate
Most rural counties (unincorporated)Various0%Many unincorporated county areas have no occupational tax

How Kentucky Occupational Taxes Work

Kentucky occupational taxes are levied by local governments — cities and counties separately — under authority granted by KRS Chapter 92 and KRS Chapter 68. Unlike Kentucky’s 3.5% flat state income tax, which is applied after a $3,360 standard deduction, occupational taxes are typically applied to gross wages (before most deductions) earned within the taxing jurisdiction.

The tax is usually withheld by your employer and remitted quarterly. If you work in multiple jurisdictions during the year, you may owe different local rates for each location. Remote workers generally owe tax where they physically perform work.

Some jurisdictions allow a credit against their rate when tax has already been paid to another local government. Check with your employer or a tax professional if your situation is complex.

Frequently Asked Questions

Which Kentucky city has the highest occupational tax?

Newport (Campbell County) is at the top with a 2.5% city rate. Covington follows at 2.45%, Lexington at 2.25%, and Louisville at 2.20%.

Do I pay occupational tax where I live or where I work?

Where you work. If you live outside Louisville but drive to work there daily, you owe Louisville’s 2.2% on wages earned in the city.

Is the occupational tax on top of Kentucky state tax?

Yes — both taxes are independent. A Louisville worker pays state tax (3.5% after the $3,360 deduction) and the Louisville occupational tax (2.2% of gross wages) on the same paycheck.

Is the Louisville Metro occupational tax based on gross wages?

Yes. It applies to gross compensation, and per the Form OL-3 instructions, amounts deferred under Section 401(k), 403(b), or 457 plans must be included in the wage base. Your pre-tax retirement contributions lower your federal and Kentucky income tax, but they do not reduce the Louisville occupational tax.

Are self-employed workers subject to occupational tax?

Most jurisdictions apply the occupational tax to net profits from self-employment at the same rate as wages. You typically file a business net profits return directly with the local government rather than having an employer withhold it.

What if my city is not on this list?

Contact your city or county finance department, or ask your employer’s payroll team. The Kentucky Department of Revenue also publishes an occupational license tax directory.

Calculate Your Take-Home Pay With Local Tax

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City Calculators with Pre-Selected Local Rates

These city-specific calculators pre-load the correct local occupational tax rate so you get an accurate estimate instantly.