Calculate Kentucky city and county occupational taxes and compare net take-home pay across Louisville, Lexington, Covington, and 200+ jurisdictions.
Kentucky local occupational taxes are payroll license fees levied directly on gross earnings by more than 200 cities and counties. Rates range from 0% in unincorporated rural areas up to 3.15% in stacked Northern Kentucky jurisdictions like Covington. On a $70,000 salary, working in Louisville (2.20%) costs $1,540 annually in local taxes, while working in Lexington (2.25%) takes $1,575, directly reducing your take-home pay independently of state and federal brackets.
Kentucky · 2026 tax year · salaried or hourly
Kentucky’s 3.5% flat tax plus any city / county payroll tax.
Occupational taxes in Kentucky are based on physical work location rather than home residence, meaning commuters pay the city where their job site is situated.
Louisville (Jefferson County) distinguishes residents (2.20%) from non-residents (1.45%), as the 0.75% differential represents a county school board tax charged only to residents.
In Scott, Jessamine, Boyle, Kenton, and Boone counties, county occupational fees stack on top of municipal city rates, creating a combined local rate on pay stubs.
Unlike federal and state income taxes, local occupational taxes generally do not allow standard deductions or personal exemptions; they apply directly to gross wages.
1Enter your regular salary or hourly wages and choose your regular pay schedule (weekly, bi-weekly, semi-monthly, or monthly).
2Select your physical workplace jurisdiction from our database of Kentucky cities and counties, or select Custom Rate to enter a specific municipal percentage.
3Examine the Local Occupational Tax line item to see the exact per-paycheck dollar deduction and its full-year cumulative impact.
Kentucky state income tax is a uniform 3.5% flat tax collected by the Department of Revenue in Frankfort, applying after a $3,360 standard deduction. In contrast, local occupational taxes are separate license fees imposed by individual municipalities and counties, ranging from 0.5% to over 3% on gross wages without standard deductions.
Under Kentucky law, occupational license fees apply to where the work is physically performed. If you work 100% remotely from your home in rural Shelby County for an employer based in Louisville, you generally owe tax to your home jurisdiction (or 0% if none exists), not Louisville. Hybrid workers must track hours worked across each location.
Cities like Covington, Florence, and Newport reside within counties (Kenton and Boone) that levy their own county-wide occupational taxes on top of city fees. If your municipality does not have a credit offset agreement with the county, both rates are withheld concurrently.
In the vast majority of Kentucky jurisdictions, pre-tax 401(k), 403(b), and 457 retirement contributions do NOT reduce local occupational tax taxable wages. While retirement deferrals shield your income from federal and Kentucky state taxes, occupational fees are assessed on full Medicare wages.
Notify your payroll or human resources department immediately with your correct work site address. If excess local tax was erroneously withheld, you will need to file an annual refund claim (such as Form W-3 / reconciliation) directly with the specific city or county tax commission.