Self-employed in Louisville, KY: taxes and retirement for 2026
What consultants, freelancers, content creators, entrepreneurs, gig workers, tipped workers and tradespeople in Louisville, KY need to know this year: local taxes, Kentucky income and estimated tax rules, and how to save for retirement without an employer plan.
Guides for Louisville
Louisville local rules
- Local income tax
- Louisville Metro Occupational License Tax (with Transit/TARC and School Boards taxes): 0.022% for residents, 0.0145% for nonresidents (effective Rates in the Revenue Commission regulations effective January 1, 2024, still in effect for 2026). Independent contractors pay the tax on net profits apportioned to Louisville Metro: residents owe 2.2% (1.25% Metro + 0.20% transit + 0.75% school boards) regardless of how much they earn there, while nonresidents owe 1.45% if they work in Louisville any part of four or more days in the year or earn $3,000+ in gross receipts there. Sole proprietors file an annual net-profits return with the Louisville Metro Revenue Commission.
- Louisville Metro net profits license tax (business side of the occupational license tax)
- Every business, including a sole proprietorship, pays 1.25% Metro + 0.20% transit tax on net profit from business activity in Louisville Metro, and resident individuals and business entities also pay the 0.75% school boards tax (2.2% total). Sole proprietors are not required to make the quarterly estimated payments that apply to other business entities owing more than $5,000.
- City business license
- Businesses that must file a net-profits return must apply to the Louisville Metro Revenue Commission for an occupational license tax account number before starting business; a sole proprietor can use one account number for all their business activities.
- Louisville Metro occupational license tax rule for tipped workers (Regulation 1.17)
- Waiters, waitresses, bellhops and others with tips are treated as employees for tips their employer withholds tax on, but as independent contractors for tips not withheld; those workers must register with the Revenue Commission, file an annual return and pay the occupational license tax on that tip income.
- Also worth knowing
- Louisville Metro's 2026-2027 budget book confirms the 1.25% Metro occupational tax on employee compensation and business net profits: https://louisvilleky.gov/sites/default/files/2026-09/2026_2027_Mayor_Craig_Greenberg_Executive_Budget_Book_ADA.pdf. Nonresident individuals do not pay the 0.75% school boards tax, which is why their rate is 1.45%. Rates are stored as decimals (0.022 = 2.2%). We found no Louisville app-based or freelance worker pay ordinance.
Kentucky rules that apply in Louisville
- State income tax (2026)
- Kentucky has a flat 3.5% state income tax for 2026. The rate fell from 4.0% to 3.5% for tax years beginning on or after Jan. 1, 2026 under HB 1 (2025 Regular Session): https://apps.legislature.ky.gov/record/25rs/hb1.html. The 2026 standard deduction is $3,360.
- State estimated tax
- Generally required if you expect to owe at least $500 for 2026 after withholding and refundable credits, and those will cover less than the smaller of 90% of 2026 tax or 100% of 2025 tax. Use 110% instead of 100% if 2025 AGI was over $150,000. Same dates as federal (April 15, June 15, and September 15, 2026, and January 15, 2027). Form 740-ES.
- Kentucky limited liability entity tax (LLET)
- Applies to every corporation and limited liability pass-through entity doing business in Kentucky, including single-member LLCs owned by an individual, which file Form 725 even if disregarded federally. A sole proprietor without an LLC is not a limited liability entity. The tax is the lesser of 0.095% of Kentucky gross receipts or 0.75% of Kentucky gross profits (phased in between $3 million and $6 million), with a $175 minimum. Entities with $3 million or less in gross receipts or gross profits pay only the $175. (Source is the 2023 Form 725 instructions, the latest at this URL; rates are set by KRS 141.0401.)
- Minimum wage (2026)
- $7.25 an hour; tipped cash wage $2.13 an hour. Kentucky's state rate matches the federal $7.25. Employers may pay $2.13 an hour to employees who customarily receive more than $30 a month in tips, as long as wages plus tips reach the minimum wage.
- Marketplace contractor law (KRS 336.137)
- App-based marketplace contractors are not employees under state or local law if they agree in writing that they are independent contractors and bear their own expenses. The platform also can't set required hours, bar other platforms or other work, or supply tools. Freight and parcel delivery are excluded.
Questions
Is there a local income tax in Louisville?
Yes. Louisville Metro Occupational License Tax (with Transit/TARC and School Boards taxes) is 0.022% for residents and 0.015% for nonresidents (effective Rates in the Revenue Commission regulations effective January 1, 2024, still in effect for 2026). Independent contractors pay the tax on net profits apportioned to Louisville Metro: residents owe 2.2% (1.25% Metro + 0.20% transit + 0.75% school boards) regardless of how much they earn there, while nonresidents owe 1.45% if they work in Louisville any part of four or more days in the year or earn $3,000+ in gross receipts there. Sole proprietors file an annual net-profits return with the Louisville Metro Revenue Commission.
What local business taxes apply to self-employed self-employed people in Louisville?
Louisville Metro net profits license tax (business side of the occupational license tax): Every business, including a sole proprietorship, pays 1.25% Metro + 0.20% transit tax on net profit from business activity in Louisville Metro, and resident individuals and business entities also pay the 0.75% school boards tax (2.2% total). Sole proprietors are not required to make the quarterly estimated payments that apply to other business entities owing more than $5,000.
Do I need a business license to freelance from home in Louisville?
Businesses that must file a net-profits return must apply to the Louisville Metro Revenue Commission for an occupational license tax account number before starting business; a sole proprietor can use one account number for all their business activities.
What Louisville rules protect gig workers and freelancers?
Louisville Metro occupational license tax rule for tipped workers (Regulation 1.17): Waiters, waitresses, bellhops and others with tips are treated as employees for tips their employer withholds tax on, but as independent contractors for tips not withheld; those workers must register with the Revenue Commission, file an annual return and pay the occupational license tax on that tip income.
Do self-employed people in Kentucky pay state income tax?
Kentucky has a flat 3.5% state income tax for 2026. The rate fell from 4.0% to 3.5% for tax years beginning on or after Jan. 1, 2026 under HB 1 (2025 Regular Session): https://apps.legislature.ky.gov/record/25rs/hb1.html. The 2026 standard deduction is $3,360.
When are Kentucky estimated tax payments due for 2026?
Generally required if you expect to owe at least $500 for 2026 after withholding and refundable credits, and those will cover less than the smaller of 90% of 2026 tax or 100% of 2025 tax. Use 110% instead of 100% if 2025 AGI was over $150,000. Same dates as federal (April 15, June 15, and September 15, 2026, and January 15, 2027). The state form is 740-ES.
Are there other Kentucky taxes for self-employed self-employed people?
Kentucky limited liability entity tax (LLET): Applies to every corporation and limited liability pass-through entity doing business in Kentucky, including single-member LLCs owned by an individual, which file Form 725 even if disregarded federally. A sole proprietor without an LLC is not a limited liability entity. The tax is the lesser of 0.095% of Kentucky gross receipts or 0.75% of Kentucky gross profits (phased in between $3 million and $6 million), with a $175 minimum. Entities with $3 million or less in gross receipts or gross profits pay only the $175. (Source is the 2023 Form 725 instructions, the latest at this URL; rates are set by KRS 141.0401.)
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- revenue.ky.gov/Forms/2026%20Withholding%20Formula.pdf
- revenue.ky.gov/Forms/740-ES%20Instructions%20(2025).pdf
- elc.ky.gov/workplace-standards/Documents/KY%20Wage%20and%20Hour%20Poster%20English.pdf
- revenue.ky.gov/Forms/Form%20725%20Instructions.pdf
- apps.legislature.ky.gov/law/statutes/statute.aspx?id=47492
- louisvilleky.gov/sites/default/files/2023-12/regulations-adopted-11.23.pdf
Facts researched from official sources and independently re-checked; last verified October 2026, next scheduled review 2027-01-02. Educational information for 2026, not tax, legal or investment advice. Rules change; check the official sources listed and a tax professional for your situation. Gigaverse AI, Inc. is a financial technology company, not a bank, and not itself a registered investment adviser or broker-dealer.