Lexington local tax
On $60,000 of wages, working in Lexington costs $1,350 a year in local occupational fees.
Levy by levy
Each levy is applied at its own wage cap. Adding the rates together and applying them once would give a different, wrong answer wherever the caps differ.
| Levy | Rate | Wages it applies to | Annual amount |
|---|---|---|---|
| Lexington-Fayette Urban County occupational fee | 2.25% | $60,000 | $1,350 |
| Total | $1,350 |
How Lexington and Fayette County interact
The city and county governments are merged, so a single consolidated levy applies rather than two stacked ones.
- Merged government, a single 2.25% levy: "Employees regardless of residency status -- 2.25% of wages."
- No wage cap.
Source: LFUCG — Division of Revenue, occupational license fees, verified 2026-09-03.
Lexington local tax: common questions
How much local tax do I pay working in Lexington?
On $60,000 of wages, $1,350 a year if you live in Lexington. That is a single levy, and each is capped at its own wage base rather than sharing one — which is why the total is not simply the rates added together.
Does Fayette County charge on top of Lexington?
The city and county governments are merged, so a single consolidated levy applies rather than two stacked ones.
Is this the same as Kentucky state income tax?
No. This is a local occupational licence fee, levied by the city, county or school board, and it is separate from Kentucky's state income tax. It is also not waived by Kentucky's reciprocity agreements with neighbouring states — Form 740-NP-R, the reciprocal-state refund return, instructs "Do not include local tax withheld."