Louisville, Kentucky tax rates stack in layers: a 3.5% flat state income tax, a 2.2% local occupational tax on wages earned in Jefferson County, a 6% state sales tax with no local add-on, and property taxes running around $0.94 per $100 of assessed value before district levies. Because Louisville and Jefferson County merged in 2003, these rates apply uniformly across the county, with one significant exception for properties inside the old city limits.
Kentucky State Income Tax
Every Louisville resident owes Kentucky’s flat individual income tax before any local taxes are figured. Effective January 1, 2026, the rate is 3.5%, down from 4% the prior year under House Bill 1 from the 2025 legislative session. There are no brackets. The same rate applies to all taxable income.
The standard deduction for individual filers in 2026 is $3,360.1Kentucky Department of Revenue. 2025 DOR UK Tax School State returns are due April 15.2Kentucky.gov. Kentucky Tax Filing Season Begins The state income tax sits on top of the local occupational tax, so Louisville workers pay both on the same wages.
Louisville Occupational License Tax
The occupational license tax is the local equivalent of an income tax and covers wages earned for work performed inside Jefferson County plus the net profits of businesses operating there. It’s governed by Chapter 110 of the Louisville Metro Code of Ordinances.3American Legal Publishing. Louisville/Jefferson County Metro Government Code of Ordinances – Chapter 110 Occupational License Tax
If you live in Jefferson County, the total rate on your gross wages is 2.2%, made up of three pieces:
- 1.25% to the Metro general fund
- 0.75% to Jefferson County Public Schools
- 0.2% to the Transit Authority of River City (TARC)
Commuters who work in the county but live outside it pay 1.45%, which is the Metro piece plus TARC.4LouisvilleKY.gov. Forms and Publications The JCPS portion doesn’t apply because they aren’t in the school district. Employers withhold and remit these amounts to the Louisville Metro Revenue Commission.
Individual returns are due April 15. Extensions to file are available but do not extend the payment deadline; interest and penalties keep accruing on the unpaid balance.5LouisvilleKY.gov. Revenue Commission
Property Taxes
Jefferson County property taxes are calculated per $100 of assessed value, and multiple taxing bodies each stack a rate on top. The Jefferson County Property Valuation Administrator sets each property’s fair market value as of January 1 each year. Based on the 2025 rate schedule from the Jefferson County Sheriff’s Office, the main components for real property are:6JCSOKY. Property Tax – Rates
- State of Kentucky: $0.106 per $100
- Louisville Metro Government: $0.118 per $100
- Jefferson County Public Schools: $0.717 per $100
Those three together come to roughly $0.94 per $100 of assessed value, with the school levy making up more than 75% of that combined rate. Fire districts, sanitation districts, and small incorporated cities within the county can push the total higher depending on where your property sits.
Urban Services District
Properties inside the old Louisville city limits fall within the Urban Services District, which funds street lighting, sidewalk maintenance, and curbside trash collection. In recent rate-setting years, the USD real property rate has topped 35 cents per $100 of assessed value.7LouisvilleKY.gov. Notice of Public Hearing on Proposed Louisville/Jefferson County Metro Government and Louisville Urban Services District Tax Rates Comparing homes inside and outside the old city boundary, that add-on changes the annual bill meaningfully.
Homestead Exemption
Homeowners who are 65 or older, or who are classified as totally disabled, qualify for Kentucky’s homestead exemption. For 2026, the exemption shields $49,100 of assessed value. You must own and occupy the home as your primary residence as of January 1, and only one spouse needs to meet the age requirement. Applications go through the Jefferson County PVA.
Assessment Appeals and Bill Timing
If you think your assessed value is too high relative to fair market value on January 1, you can contest it. Jefferson County uses a two-step process, starting with a PVA Online Conference request and, if unresolved, a hearing before the Local Board of Assessment Appeals.8Jefferson County PVA. PVA Online Conference and Appeals You can appeal any year, whether or not you got a reassessment notice.
Tax bills are mailed in the fall. Pay in November and you receive a small discount; after that, a penalty schedule increases the amount owed the longer you wait. The Jefferson County Sheriff’s Office handles collection.
Motor Vehicle Taxes
Kentucky taxes motor vehicles as personal property every year, separately from real estate. The state rate is 45 cents per $100 of assessed value. On top of that, the 2025 countywide general rate in Jefferson County is 16.6 cents per $100 and the school district rate is 58.5 cents per $100.9Kentucky Department of Revenue. Motor Vehicle Property Tax Rates 2025 Combined with the state portion, that’s about $1.20 per $100 of value before any city or fire district levies for your specific address.
Assessed values come from the NADA guide, so the bill drops each year as the vehicle depreciates.10Kentucky Department of Revenue. Motor Vehicle Usage Tax You’ll also owe a one-time 6% motor vehicle usage tax when you purchase or register a vehicle in Kentucky, calculated on the sale price or the NADA retail value, whichever is higher.
Sales and Use Tax
Kentucky charges a flat 6% sales and use tax on retail purchases statewide, and Louisville adds nothing on top.11Kentucky Legislative Research Commission. Kentucky Revised Statutes KRS 139.200 – Rate of Tax Cities and counties are not allowed to stack their own sales tax, so the rate is the same downtown, in the suburbs, or anywhere else in the state.
The tax covers most tangible goods and a growing list of services. Recent Kentucky Department of Revenue guidance confirms that landscaping, snow removal, power washing, janitorial services, and prewritten software access services all fall within the 6% tax.12Kentucky Department of Revenue. Sales Tax Facts Winter 2025-2026 Prescription medications and most unprepared grocery food are exempt.
Insurance Premium Tax
Louisville Metro levies a 5% tax on insurance premiums for policies held within Jefferson County. It applies to casualty, fire, inland marine, life, motor vehicle, and most other coverage types at a uniform 5%.4LouisvilleKY.gov. Forms and Publications Insurers pass this through to policyholders, usually as a line item.
Health insurance premiums are generally exempt countywide. The exception: properties within the Urban Services District are subject to a separate 5% fee on health insurance premiums under a different ordinance provision. Outside the USD but still in Jefferson County, health premiums are not subject to the local tax.
Transient Room Tax
Louisville Metro applies an 8.5% transient room tax to hotel stays, short-term rentals, and similar lodgings, calculated on the total rent including fees and service charges.13Louisville Metro Revenue Commission. TR1M – Transient Room Tax Electronic Form Instructions Tax Year 2025 Hotels with 51 or more rooms collect an additional 1.5% Tourism Improvement District assessment.
If you rent your home on Airbnb, VRBO, or a similar platform, the same transient room tax applies. You must register with the Louisville Metro Revenue Commission and obtain a tax reporting number before listing.14LouisvilleKY.gov. Short Term Rental Information Operating without valid registration carries escalating fines: $125 for a first offense, $250 for a second, $500 for a third, and $1,000 for each offense after that. Hosts also owe the occupational license tax on net rental income.
Penalties for Late Filing or Payment
Missing the deadline on a Louisville occupational tax return triggers a penalty of 5% of the unpaid tax for each month or partial month the return is late, capped at 25%. Even a return with no tax owed carries a minimum $25 penalty if filed late.15LouisvilleKY.gov. Frequently Asked Questions Interest accrues on unpaid balances from the original due date.
On the state side, unpaid Kentucky tax balances accrue interest at 9% annually for the 2026 calendar year.16Kentucky Department of Revenue. Penalties, Interest and Fees The Department of Revenue treats that interest as statutory, so it cannot be waived or appealed. State and local penalties run on separate tracks, and falling behind on both at once compounds quickly.