Kentucky Business License in 2026: Occupational License Taxes, State Registrations and Local Permits

Kentucky does not issue a general business license, but that does not mean there is nothing to file. The licence most Kentucky businesses actually deal with is local: an occupational license from the city or county, which comes with an occupational license tax on payroll and profits. This guide explains how those local taxes work, with the Louisville and Lexington rates and worked examples, then covers state tax registration, assumed names, the entity tax, trade licences and a 2026 change to the standard local tax forms. Figures were checked with each agency in October 2026.

Quick answer

Kentucky has no general state business license. You register with the Secretary of State (or the county clerk for sole proprietors), open tax accounts with the Department of Revenue, and get any trade licence you need. Locally, many cities and counties require an occupational license and charge an occupational license tax on wages and net profits: 2.2% in Louisville Metro and 2.25% in Lexington-Fayette.

• Sales and use tax permit: register on MyTaxes; no fee is listed

• No local sales taxes: one 6% rate statewide

• Louisville Metro requires registration with its Revenue Commission, not a licence

• LLCs owe the limited liability entity tax, minimum $175

Is there a state business license in Kentucky?

No. The Department of Revenue's own registration guide lists the steps a new business takes, and none of them is a general state licence. You set up the business legally, get an EIN, open state tax accounts, complete any specialty tax applications, and then, in the guide's words, check with other governments, because many cities and counties require a local business license or impose an occupational tax.

That last step is the one that catches people out. Kentucky's cities and counties fund much of their budgets through occupational license taxes rather than sales taxes, which the state does not allow them to levy. So while you can open a shop in Kentucky without a state licence, you will almost always register with at least one local tax office and file returns with it every year.

Occupational license taxes: the local layer

An occupational license tax is a charge for the privilege of working or doing business within a city, county or, in some places, a school district. Kentucky law in KRS 67.750 to 67.790 sets the framework, and each local government sets its own rate by ordinance. The tax usually has two parts:

• Payroll tax. A percentage of employees' wages, which the employer withholds from each paycheck and sends to the local tax office. Employers file withholding returns, often quarterly, and an annual reconciliation.
• Net profits tax. A percentage of the business's net profit from activity in that jurisdiction, filed on an annual net profits return. Sole proprietors, partnerships, LLCs and corporations all file it unless exempt.

Where both a city and its county levy the tax, a business may file with both, although some counties give a credit for city tax paid. A business that works in several places, such as a contractor or a consultant with clients across the state, apportions its net profits among the districts where it worked and files in each one that taxes it.

Most local governments also ask you to open an account, often called an occupational license, before you start. Some charge a small registration fee or an annual minimum tax. Rates, minimums, filing forms and due dates are set locally, so the first call any new Kentucky business should make is to the occupational tax office in each city and county where it will operate.

The 2026 change: standard forms across the state

Kentucky has hundreds of local tax districts, and most of them still require businesses to file on their own forms. The General Assembly amended KRS 67.767 in 2026 to push toward standard forms. Under the version in force from July 15, 2026, the Secretary of State must prescribe separate standard forms for a net profits return, a gross receipts return and a payroll return, with fillable PDF versions and instructions, after advice from an advisory committee of cities, counties, accountants and contractor groups. The committee had to meet first by August 31, 2026, and must finish the forms before June 1, 2027.

Once the forms are adopted, each tax district must, before July 1, 2029, either use the standard forms as its only electronic returns, accept them alongside its own forms, or opt out because it already runs its own online filing and payment system. A district that opts out must give the Secretary of State a link to its online system for the one-stop business portal. For a business filing in several counties, this should mean fewer forms by the end of the decade, but for 2026 you still file whatever each district requires.

Where a Kentucky business files

Step 1

Secretary of State or county clerk

Step 2

Department of Revenue (MyTaxes)

Step 3

City occupational tax office

Step 4

County occupational tax office

Step 5

Trade licence

if regulated

Louisville Metro: registration, not a licence

Louisville and Jefferson County merged into Louisville Metro in 2003, and the Louisville Metro Revenue Commission (LMRC) collects the occupational license tax for the whole county. The LMRC says plainly that there is no local business license required. Instead, a new business must register with the LMRC, with the Jefferson County Clerk's Office (for an assumed name or other local filings) and with the Commonwealth, ideally before it earns income. You can register online through the Revenue Commission's tax portal, EMINTS, or on the paper registration application, and you receive a tax account number.

The rate for business entities and resident individuals is 2.2% of net profits or compensation. That breaks down into 1.25% for Louisville Metro government, 0.2% for the Transit Authority of River City and 0.75% for the Louisville and Anchorage school boards. Non-resident individuals pay 1.45% because they do not pay the school board share.

The net profits return, Form OL-3, is due by April 15 for calendar-year filers. An automatic six-month extension is available through EMINTS, but an extension to file is not an extension to pay, and the LMRC expects 90 percent of the tax to be paid with the extension. If your net profit tax is over $5,000 for the year, you also make quarterly estimated payments, and underpayments carry interest of 12 percent a year. The Revenue Commission updated its regulations for the 2026 tax season, including a change affecting single-member LLCs, so owners of disregarded LLCs should read the current regulations before filing.

Some activities in Louisville still need a specific Metro permit, such as food service, alcohol, peddling and short-term rentals, and building work needs permits from Louisville Metro's planning and design services.

Lexington-Fayette: the occupational license fee

Lexington and Fayette County also form a merged government, the Lexington-Fayette Urban County Government (LFUCG). Its Division of Revenue charges an occupational license fee of 2.25% on the compensation of people who work in Fayette County and on business net profits from activity there.

To open an account, you file the city's business license application, Form 228 IP. Businesses then file Form 228, the net profit license fee return, every year, with quarterly estimated payments on Form 228 ENP where required, and can request more time on Form 228 EXT. Employers withhold the fee from wages and file Form 220-221 returns, which the city mails to registered businesses each January, plus an annual reconciliation on Form 222. Estimated payments, extensions and net profit returns can be filed through the city's online TaxPortal, and online payment for net profit filers was added in 2025.

Worked examples

A Louisville web consultant. Priya runs a single-member LLC from her home in the Highlands and earns $80,000 of net profit in 2026. She registered with the LMRC through EMINTS when she started. Her occupational license tax is $80,000 × 2.2%, which is $1,760. Because that is below $5,000, she does not have to make quarterly estimates and pays with her OL-3 by April 15. She also pays the state LLET minimum of $175 and Kentucky income tax on her profit at 3.5%.

A Lexington bakery with three employees. The bakery pays $100,000 in wages. It withholds 2.25%, or $2,250, from employees' pay over the year and sends it to LFUCG on its withholding returns; the employees bear that cost, not the business. The bakery's own net profit of $40,000 is taxed at 2.25%, giving $900 on Form 228. It also holds a sales and use tax permit for its retail sales, a food service permit from the health department, and charges 6% sales tax on taxable sales.

A Northern Kentucky remodeler. Jake's company is based in Covington and does jobs in several Kenton and Campbell County cities. He files with each city and county where he works that levies the tax, splitting his net profits by where the work was done. His plumbing subcontractor holds a state plumbing licence, while Jake, as a general remodeler, needs no state contractor licence but registers with each city's building department to pull permits.

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State registrations: Secretary of State and Department of Revenue

How you set up legally depends on your structure. Sole proprietorships and general partnerships do not register with the state; the Department of Revenue tells them to contact the county clerk. LLCs, corporations and limited partnerships file with the Secretary of State. An LLC's articles of organization cost $40 and its annual report costs $15, due by June 30. Our Kentucky LLC guide walks through the filing. The Kentucky Business One Stop portal links the Secretary of State filing to the rest of the start-up steps, and the amended KRS 67.767 makes it the place to find local tax forms and links once the standard forms are adopted.

Next you open tax accounts with the Department of Revenue, online through MyTaxes or on paper Form 10A100. The department says paper applications can take up to three weeks, so online is faster. Depending on your business, the registration covers:

Kentucky charges 6% sales tax with no local add-ons, and the list of taxable services has grown since 2023. From August 1, 2026, the tax also applies to data brokering services, and remote sellers register once their Kentucky sales exceed $100,000. Our Kentucky sales tax guide covers the services list, filing and the vendor compensation.

The limited liability entity tax is easy to miss because it applies even when you sell nothing taxable. LLCs and corporations with gross receipts or gross profits of $3 million or less pay only the $175 minimum. Employers also register with the Office of Unemployment Insurance.

Assumed names

If you trade under a name other than your legal name, Kentucky requires an assumed name filing. Sole proprietors and general partnerships file a certificate of assumed name with the county clerk in each county where they do business. Registered entities file with the Secretary of State for $20. If an LLC called "Bluegrass Painting LLC" trades as "Bluegrass Paint Pros", it files an assumed name certificate; Kentucky does not require newspaper publication. Our DBA guide compares the rules in other states.

Professional and trade licences

Many occupations need a state licence regardless of local rules. Licensing boards cover professions such as cosmetology and barbering, real estate, accountancy, nursing, engineering and insurance. Alcohol sales need a licence from the Department of Alcoholic Beverage Control as well as local approval, and food businesses need a permit from the local health department under the state food code.

Construction works differently from many states. The Department of Housing, Buildings and Construction licenses electricians and electrical contractors, plumbers, and HVAC contractors, along with fire protection trades. Kentucky has no state licence for general contractors, remodelers or roofers; instead, cities and counties, including Louisville Metro and Lexington-Fayette, register or license them and issue building permits job by job. If your work includes electrical, plumbing or HVAC, you or your subcontractor must hold the state trade licence.

Kentucky figures at a glance (2026)

2.2%

Louisville Metro occupational tax (entities and residents)

2.25%

Lexington-Fayette occupational license fee

6%

Sales tax, statewide, no local add-ons

$175

LLET minimum for LLCs

How to get set up in Kentucky

Getting legally set up in Kentucky

1. 1

   Register your business or name

   File LLC articles with the Secretary of State for $40, or, as a sole proprietor using a trade name, file an assumed name with the county clerk.

   Kentucky LLC guide
2. 2

   Get an EIN

   Free from the IRS; needed for entities and employers.

   EIN guide
3. 3

   Open state tax accounts

   Register on MyTaxes for sales and use tax, withholding and the corporation or LLET account.

   MyTaxes
4. 4

   Register with local occupational tax offices

   Open accounts with each city and county where you work, before you earn income.

5. 5

   Get any trade, health or alcohol licence

   Check your licensing board, HBC for electrical, plumbing and HVAC, and the local health department for food.

6. 6

   Calendar your local returns

   Net profits returns, payroll withholding returns and the LLET each have their own deadlines.

Common mistakes and how to fix them

The first mistake is believing "no business license" means no local filings. Kentucky's cities and counties find unregistered businesses through state records and employee W-2s. If you have been operating without registering, contact each occupational tax office, register, and file the missing returns; penalties and interest grow the longer you wait.

The second is filing only where you are based. Net profits are taxed where the work is done. A contractor or consultant working in several districts usually owes returns in each one that taxes the activity, with credits in some places for tax paid to another district.

The third is forgetting to withhold from employees. The payroll part of the occupational tax is withheld from wages like income tax. If you don't withhold it, the local government can collect it from the business.

The fourth is skipping the LLET because the LLC has no sales tax. Every LLC and corporation owes at least the $175 minimum, and unpaid entity tax can block a reinstatement later.

The fifth is assuming a sole proprietor's trade name needs no filing. Using an assumed name without filing with the county clerk breaks Kentucky's assumed name law and makes it harder to open a business bank account.

Official Kentucky links

• Kentucky DOR — Business Registration
• MyTaxesSales tax, withholding and LLET accounts
• Kentucky Business One Stop
• Secretary of State — Filing fees
• KRS 67.767 — Standard occupational license tax forms
• Louisville Metro Revenue Commission — FAQ
• Lexington-Fayette — Occupational license fee rates and forms

What to do next

Choose your structure with our Kentucky LLC guide, check the name with the LLC name checker and get an EIN. Open your state tax accounts on MyTaxes, and if you sell goods or taxable services, read the Kentucky sales tax guide and use our sales tax calculator. Then register with each local occupational tax office before your first paycheck or invoice. For how neighbouring states compare, see our Ohio and Tennessee guides or the business licenses overview.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Does Kentucky require a business license?

Kentucky has no general state business license. Instead, you register your entity with the Secretary of State or your name with the county clerk, open tax accounts with the Department of Revenue, and get any professional licence your trade needs. Most of what people call a Kentucky business license is local: many cities and counties require an occupational license and charge an occupational license tax on payroll and net profits.

What is an occupational license tax in Kentucky?

It is a local tax that Kentucky cities, counties and some school districts levy on the privilege of working or doing business there. It is usually a percentage of employees' wages, withheld by the employer, and a percentage of business net profits, filed on an annual return. Rates vary by place: Louisville Metro charges 2.2% for businesses and residents, and Lexington-Fayette charges 2.25%.

Do I need a business license in Louisville, Kentucky?

Louisville Metro does not issue a general local business license. The Revenue Commission says new businesses must instead register with the Louisville Metro Revenue Commission, the Jefferson County Clerk and the Commonwealth before they start earning income. You then file occupational license tax returns at 2.2% of net profits and withhold the tax from employees' pay. Specific activities still need Metro permits.

How do I get a business license in Lexington, KY?

Open an occupational license fee account with the Lexington-Fayette Urban County Government's Division of Revenue using its business license application, Form 228 IP. Businesses then pay 2.25% of net profits earned in Fayette County on Form 228 each year and withhold 2.25% from employees' wages. Returns and estimated payments can be filed through the city's online tax portal.

Is there a fee for a Kentucky sales tax permit?

The Department of Revenue does not list a fee for a sales and use tax permit. You register online through MyTaxes or on paper Form 10A100, which can take up to three weeks. You need the permit before selling taxable goods or services, and you charge the 6% state rate everywhere, because Kentucky has no local sales taxes.

Where do I file a DBA in Kentucky?

Sole proprietors and general partnerships file an assumed name certificate with the county clerk in the county where they do business. LLCs, corporations and other registered entities file a certificate of assumed name with the Secretary of State for $20. Either way, the filing does not create a separate legal entity or give liability protection.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Business Registration — Kentucky Department of Revenue · accessed 12 October 2026
2. 2.KRS 67.767 — Standard forms for occupational license tax returns — Kentucky General Assembly · accessed 12 October 2026
3. 3.OL-3D instructions (tax year 2025) — Louisville Metro Revenue Commission · accessed 12 October 2026
4. 4.Frequently Asked Questions — Louisville Metro Revenue Commission · accessed 12 October 2026
5. 5.Recent Updates — Louisville Metro Revenue Commission · accessed 12 October 2026
6. 6.Occupational license fee: rates and current forms — Lexington-Fayette Urban County Government · accessed 12 October 2026
7. 7.Filing Fees — Kentucky Secretary of State · accessed 12 October 2026
8. 8.Kentucky contractor licensing guide — Levelset (secondary) · accessed 12 October 2026