2026 tax year · Kentucky
Local income tax in Kentucky
Lexington-Fayette is the most expensive of the Kentucky levies we hold, $1,800 on $80,000, on top of federal and state tax.
An occupational license fee on both wages and self-employed profit, charged by cities, counties and some school districts.
A city and a county can both tax the same income, and forgetting the credit between them overstates the bill.
What the Kentucky levies cost on $80,000
| Jurisdiction | How it is worked out | On $80,000 |
|---|---|---|
| Louisville / Jefferson County | 2.2% resident, 1.45% nonresident | $1,760 |
| Lexington-Fayette | 2.25% | $1,800 |
Does it reach self-employment profit?
Yes. In Kentucky the local tax reaches net profit from self-employment, not only wages. No employer withholds it, so it is on you to pay it, usually alongside your quarterly estimates, and it is routinely missed for exactly that reason.
What catches people out in Kentucky
Kentucky’s local occupational taxes reach the profits of sole proprietors and contractors explicitly, and they do so with no personal allowances or deductions of any kind. The rate applies from the first dollar.
A city and a county can both tax the same income. Where the county has more than 30,000 people, state law requires it to credit whatever you already paid to a city inside it. So you are not paying both in full. Adding a city rate and a county rate together without applying that credit is the easiest way to overstate a Kentucky bill, and it is a mistake made often.
These figures were checked in July 2026 against Kentucky city and state revenue sources, and we rate our confidence in them as medium. Local rates change by council vote and local referendum far more often than state rates do, so confirm yours with the city or county itself before relying on a number here.
What these words mean
- Sole proprietor
- Someone who works for themselves without forming a company. The default if you started working for yourself and never registered anything, you and the business are the same legal person for tax.
- Nonresident
- Someone who earns money in a place without living there. Most states and cities tax non-residents only on what they earned inside the boundary, and residents on everything.
Related
- Local income tax in every state
- 1099 taxes in Kentucky
- Paycheck in Kentucky
- Quarterly payments in Kentucky
- S-corp election in Kentucky
General information about how these taxes work, not tax advice. Local rates change by ordinance and referendum, confirm with your jurisdiction or a tax professional before acting on anything here.