Is Kentucky occupational tax the same as state income tax?
No. Kentucky state income tax is imposed statewide. Occupational tax is a local payroll tax set by a city or county and usually withheld where the wages are earned.
Kentucky local payroll tax
Kentucky Local Occupational Tax Calculator
Calculate Kentucky city and county occupational tax on a paycheck and see how local payroll taxes change take-home pay.
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Kentucky · 2026 tax year · salaried or hourly
How much and how often you’re paid.
How are you paid?
Gross pay method
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Use flat 22% federal supplemental rate?
The IRS allows employers to withhold federal income tax from bonuses / supplemental wages at a flat 22% rate.
Required for accurate Social Security and Medicare surtax estimates mid-year.
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Updates as you type
Key points
Kentucky local occupational taxes are usually charged on gross wages earned in the city or county.
The rate can differ even when two workers have the same state and federal tax situation.
Work location usually matters more than home address for occupational tax withholding.
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What to check
1Enter gross pay and pay frequency.
2Select Louisville, Lexington, Covington, Bowling Green, Owensboro, or a custom local rate.
3Read the local tax line separately from federal, Kentucky state, Social Security, and Medicare.
Common questions
Can both a city and county tax apply?
In some Kentucky areas, multiple local rules can matter. Use the custom rate field when your payroll department or local ordinance gives you a combined effective rate.