Kentucky Occupational Tax Calculator

Kentucky counties and cities levy an occupational license tax (also called a net profit license fee or wage tax) on wages earned within their jurisdiction under KRS 68.197 and KRS 91A.080. Every employer withholding wages in Kentucky must withhold the applicable local rate. The tax applies to gross wages earned in, or attributable to, the county. Rates vary by county, from 0.50% in Oldham County to 2.25% in Fayette County (Lexington).

Kentucky levies a flat 4.0% state income tax on taxable income. This rate applies to all filing statuses. The state income tax is separate from the county occupational tax. You owe both: first the county occupational tax on your wages, then state income tax on your taxable income after standard deductions. Source: Kentucky Department of Revenue (revenue.ky.gov).

Most Kentucky counties levy an occupational license tax, but rates and structures differ. Some counties have no occupational tax; others have both a county-level and a city-level tax, meaning your combined local rate could exceed the county rate shown here. Always verify the current rate and any applicable city tax with your county fiscal court or city government before filing.

Kentucky has 120 counties, and occupational tax rates are set individually by each county fiscal court. Of the 120 counties in this calculator, 20 have rates confirmed directly from county fiscal court records or KY DOR guidance. The remaining 100 counties are shown at a provisional rate of 1.00%. This provisional rate is a representative figure for planning purposes only. Verify your exact rate from your county fiscal court before remitting or withholding. This approach follows Tenet 3: unconfirmable figures are labelled as user-editable provisional inputs rather than presented as fact.

The terms are used interchangeably in Kentucky. For employees, the tax is withheld on gross wages (a wage tax). For self-employed individuals and businesses, the tax applies to net profit from business activity in the county (a net profit license fee). The rate is the same in most jurisdictions, but the base differs: employees pay on gross wages, while businesses pay on net profit.

Your total Kentucky tax burden has two components: (1) county occupational tax on gross wages, withheld by your employer at the county rate, and (2) Kentucky state income tax at 4.0% on taxable income after the standard deduction. This calculator computes both separately and shows a combined total, helping you understand your full Kentucky tax obligation. Federal income tax and any city-level occupational taxes are additional.

Jefferson County levies a 2.20% occupational tax. Note that Louisville Metro government consolidated city and county government in 2003. The 2.20% rate is the county-level rate for Jefferson County. Some Louisville Metro tax districts may have additional levies. Confirm with the Louisville Metro Revenue Commission for the rate applicable to your specific address.

Among the 20 counties with confirmed rates in this calculator, Fayette County (Lexington) has the highest rate at 2.25%. The Lexington-Fayette Urban County Government administers this tax. The rate applies to all wages earned within Fayette County. Source: Lexington-Fayette Urban County Government Division of Revenue.