The NLTR Office · Reviewed by Katherine M. Johnson, CPA, CTRS
The Kentucky occupational license tax: who charges it, and at what rate
Kentucky's occupational license tax is charged by cities, counties and school boards rather than by the state, three of them can reach the same income at once, and the Department of Revenue does not administer any of it.
Kentucky's occupational license tax is charged by cities, counties and school boards rather than by the state, three of them can reach the same income at once, and the Department of Revenue does not administer any of it.
If a bill has arrived from a city or county you have never filed with, this is what it is. It is not a mistake and it is not a scam. Kentucky local government funds itself substantially this way, and a worker or a business in Central Kentucky can owe two or three separate occupational taxes on the same money, to three separate offices, with no credit between them.
Rates below were checked on 26 August 2026 and they move on the local fiscal year. Where we could not confirm a rate from the jurisdiction's own materials, the cell says so rather than guessing.
Key takeaways
- 1It is a local tax. The Department of Revenue "does not administer local occupational, net profits or gross receipts taxes."
- 2It has two halves: a percentage of wages, withheld by the employer, and a net profits license fee on business profit.
- 387 Kentucky counties levy one, per the Kentucky Association of Counties, at rates from 0.50 percent to 2.5 percent with a median of 1 percent — and that figure counts counties only, not the cities and school boards that levy separately.
- 4A city tax and a county tax commonly both apply to the same income. KRS 68.197(7) makes a credit mandatory in the general case and there are exceptions to it — worth asking your county tax office about rather than assuming either way.
- 5Filing the net profits return is what renews the business license in most jurisdictions.
The short answer
The occupational license tax is a local Kentucky tax on wages earned in a jurisdiction and on business net profits apportioned to it, levied by cities, counties and school districts. The Department of Revenue does not collect it. In Central Kentucky a worker commonly pays two, and inside Georgetown or Lexington, three.
The two halves
The wage half
The wage half is a percentage of gross compensation for work physically performed in the jurisdiction, withheld by the employer and remitted on the jurisdiction's schedule. It is not an income tax: there are no deductions, no personal exemptions and no filing threshold. Kentucky's uniformity statutes define compensation to add back salary reductions for 401(k), 403(b), 457 and cafeteria plans, so the local base is often larger than federally taxable wages.
The net profits half
The net profits half is an annual fee on business profit apportioned to the jurisdiction, usually by payroll and sales. It reaches corporations, partnerships, LLCs, sole proprietors and landlords, and several jurisdictions attach a minimum fee due even in a loss year. In most places filing that return is what renews the business license — which is why a missed filing turns into a license problem rather than only a tax one.
Central Kentucky rates, checked 26 August 2026
| Jurisdiction | Wages | Net profits | Notes |
|---|---|---|---|
| Scott County | 1.00% | 1.00% | $10,000 net-profit exemption |
| City of Georgetown | 1.00% | 1.00% | |
| Scott County Schools | 0.50% | 0.50% | Scott County residents |
| → inside Georgetown, combined | 2.50% | 2.50% | Three taxing bodies, one paycheque |
| Lexington-Fayette (LFUCG) | 2.25% | 2.25% | $100 minimum net-profits fee |
| Fayette County Public Schools | 0.50% | 0.50% | Fayette residents |
| → for a Fayette resident, combined | 2.75% | 2.75% | |
| Jessamine County | 1.00% | 1.00% | County-wide, including inside Nicholasville and Wilmore |
| City of Nicholasville | 1.50% | 1.00% | |
| → inside Nicholasville, combined | 2.50% | 2.00% | |
| Woodford County | 1.50% | not confirmed | Payroll rate from the county's own return. The net-profits figure we found rests on a 2008-vintage instructions file — confirm with the Tax Administrator |
| City of Versailles | 1.50% | 1.5% / 1.0% / 0.5% | Graduated: 1.5% on the first $2,000,000, 1.0% on the next $3,000,000, 0.5% above $5,000,000. $50 minimum |
| Bourbon County | 1.25% | 1.25% | Enacted 10 June 2024 |
| City of Paris | not confirmed | not confirmed | The city's own form shows 1.5% and a $75 annual license fee, but the form carries no revision date — confirm with City Hall |
| Franklin County | not confirmed | not confirmed | The county publishes 1%, with no effective date, and whether it applies inside Frankfort city limits is not resolved by the county's own materials — confirm with the Occupational Tax Office |
| City of Frankfort | not confirmed | not confirmed | The city publishes 1.95% with a $60 minimum, undated and without a second source — confirm with the city |
The combined figures are arithmetic, added from the rates above rather than published anywhere as a single number. Every rate is from the jurisdiction's own tax form or published page, cross-checked against the Kentucky Association of Counties' 2025 county data where a county rate exists.
The empty cells are the point. We could have filled them from payroll-vendor summaries. A wrong rate on a page like this is worse than a gap, because someone would rely on it.
Why three governments can tax the same paycheque
There is a statutory credit, there are exceptions to it, and whether a particular county owes you one is a question about that county rather than about Kentucky.
The general rule in KRS 68.197(7) is mandatory: persons who pay a county license fee and a city license fee within that county "shall be allowed to credit their city license fee against their county license fee," for fees imposed on or after 15 July 1986. The exceptions sit in the same section — no credit where the county's fee was authorized by a public question approved by the voters, and none for a fee increased or decreased under subsection (10)(c), in either case unless the county and the city agree one.
What we can tell you is what the jurisdictions themselves say applies. Jessamine County states it about as plainly as a government can: "Income earned within the City of Nicholasville, or the City of Wilmore is subject to the applicable city tax rate AND the county tax rate." The Georgetown/Scott County combined return has three columns and no credit line anywhere on it.
What we cannot tell you is why, for any given county — whether its fee was voter-authorized, whether another exception applies, or whether a credit exists and is simply not surfaced on the form. That is a per-county question we have not resolved. If you are paying two occupational taxes on the same income, it is worth asking the county tax office directly whether a KRS 68.197(7) credit applies to you. It may be a live question rather than a settled one, and nobody will raise it on your behalf.
The rate ceilings do explain the pattern. Counties of 30,000 or more levying under KRS 68.197 are capped at 1 percent — which is where Scott and Jessamine both sit. Smaller counties levying under home-rule authority have no such cap, which is why Woodford is at 1.50 percent and Bourbon at 1.25. Lexington-Fayette is a merged urban-county government operating under city authority, where no cap applies at all. A separate provision, KRS 68.197(9), lets a county that levied under home rule keep its rate after its population passes 30,000.
Who collects it, and who does not
Not the Department of Revenue. Its own guidance says so: "The Department of Revenue does not administer local occupational, net profits or gross receipts taxes."
Collection sits with whichever body the ordinance names, and the arrangements differ between neighboring counties. Georgetown, Scott County and Scott County Schools share a single revenue commission and one combined return. Jessamine County collects the county tax and Nicholasville's net profits fee, while Nicholasville collects its own payroll tax. Franklin County and the City of Frankfort run entirely separate offices.
The practical consequence is the one that catches people: resolving a Kentucky state tax balance does nothing about a local one, and a business can be fully current with the Department of Revenue and delinquent with two cities.
What happens if you do not file
Kentucky's uniformity statute sets a floor that applies to every tax district: 5 percent of the tax due for each calendar month or fraction, capped at 25 percent, minimum $25, plus 12 percent per annum simple interest, with a fraction of a month counted as a whole month. The liability becomes "a personal debt of the taxpayer to the tax district."
Note that the local interest rate of 12 percent is higher than the state's, which is 9 percent for 2026.
And the penalties do not consolidate. A business inside Georgetown that stops filing meets three separate $25 minimums — city, county and schools — each with its own interest, because each is a separate tax district. The City of Frankfort states that failure to file the net profits return "results in the automatic revocation of the Occupation Business License." The Georgetown/Scott County Revenue Commission confirms that business licenses "are renewed by filing the annual Net Profit License Tax Return."
What we can't tell you
We cannot promise these rates are current on the day you read this. Local rates move on the fiscal year, 1 July, not the calendar year, and Bourbon County's fee did not exist before June 2024. Every figure here carries the date we checked it and the source it came from, so that you can check it yourself in a minute. That is the honest arrangement for a page like this, and it is why the empty cells stayed empty.
We also cannot tell you which jurisdiction your income belongs to. Apportionment for a business working across county lines is a real question with a real method, and it is not one this page can answer from a rate table.
And this page does not cover Louisville or Jefferson County, which operate under a different statutory authority with different rates and a different collector. The table is Central Kentucky because that is what this office deals with weekly. A table covering all 120 counties would be a worse page, not a better one — it would be less checked and it would go stale faster.
What to do next
- 1Work out every jurisdiction that reaches you. Where the work is physically performed for the wage half, and where the business has payroll and sales for the net profits half. Residence matters separately for the school board levies.
- 2Check your payroll setup against the table. Under-withholding local tax is common, it is the employer's problem, and it is cheaper to correct in the current year.
- 3File the net profits return even in a loss year if there is a minimum fee — and remember that in most of these jurisdictions the return is what renews the license.
- 4Confirm the rate with the office before you rely on it. Every jurisdiction above has a tax office and a phone number, and rates change on 1 July.
- 5Treat a local balance as its own problem. It is not administered by the Department of Revenue, it does not resolve with a state agreement, and it has its own penalty schedule.
Download: the Kentucky License Risk Checklist, by profession
Which licenses and permits a Kentucky tax problem can reach, by trade — including the local business license that a missed net profits return quietly revokes.
First name and email. Local rates move on 1 July, which is the single best reason to be on a list for a page like this one — it is how you find out that a rate you relied on has changed. One click to leave.
Frequently asked
If a local bill has arrived
Our office is in Georgetown, Kentucky, and Scott, Fayette and Franklin County filings are routine here rather than unusual. Every case is reviewed and worked by Katherine M. Johnson, CPA, CTRS.
Bring the bill and a recent payslip or profit figure. Most local questions are answerable in one call once we know which jurisdictions reach you.
If the answer is a form you can file yourself with the county office, we will tell you that.
A local-tax question is usually a one-call question, and a good number of them end with you filing a form yourself.
The cost of that call is something you will know before it begins.
Office hours are staffed; overnight an automated assistant takes a message.
Katherine M. Johnson, CPA, CTRS
Katherine M. Johnson is a licensed CPA with over 30 years of experience and a Certified Tax Resolution Specialist (CTRS). She personally handles every case — representing individuals and businesses before the IRS and state revenue departments nationwide.
More on Kentucky: the sales tax you already collected · how Kentucky collection differs from the IRS · the Kentucky section index. Local matters: Kentucky local tax resolution.
This article is general information about Kentucky local taxes, not tax advice for your situation. Local rates change on the fiscal year; confirm with the jurisdiction before relying on any figure here.
Next Level Tax Resolution is not affiliated with, endorsed by, or acting on behalf of the Internal Revenue Service, the Kentucky Department of Revenue, or any other government agency. No outcome is promised or implied; what any program or provision means for you depends on your own account.
The NLTR Office
Reviewed by Katherine M. Johnson, CPA, CTRS · Published: October 2026 · Last reviewed: August 2026
Sources: KRS 68.197 · KRS 92.281 · Kentucky Association of Counties 2025 county data · Georgetown-Scott County Revenue Commission · Lexington-Fayette Urban County Government · Jessamine County · City of Versailles · City of Frankfort · Kentucky Department of Revenue guidance. All checked 26 August 2026.
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