Franklin County, KY Local Taxes & Fees: Business Tax Classification (2026)

Franklin County Code § 110.03 sets the tax for every person or business entity engaged in business for profit in the county, and for anyone required to make a filing with the Internal Revenue Service or the Kentucky Revenue Cabinet. The code sorts taxpayers by what is measured. Employees are measured by wages and compensation paid or payable for work done in the county, whether the worker is a resident or a nonresident. Businesses are measured by net profit from activity within the unincorporated area of the county, with a floor of $40. Under § 110.01, a person classified as an independent contractor under the Internal Revenue Code is not an employee, so that person is reached through the net profit side rather than the wage side.

Partnerships, S corporations and every other entity whose income is passed through to owners are subject to the chapter, and the tax is assessed before the income passes through. A business that operates in more than one tax district apportions net profit under § 110.04 using a payroll factor and a sales factor, and files an apportionment form from the Occupational Tax Office. Before starting, every person or business must complete the Occupational Tax Office questionnaire under § 110.02, which carries a $40 fee, with a separate questionnaire for each separate business.

Two gatekeeping rules sit in § 110.03. Every contractor or subcontractor named on a building permit application needs a business license, and no building permit issues until all of them hold one. A business physically located in the county gets no license until the Department of Planning, Zoning and Building Codes Enforcement approves the application for compliance with Chapter 155.

Section 110.03(G) lists the exclusions: banks and trust companies, Kentucky National Guard training pay, precinct workers, public service corporations taxed under KRS 136.120, holders of KRS Chapter 243 alcohol licenses as to alcohol profits, certain insurers, ministers' qualifying compensation, domestic servants, constitutional officers, and the legally blind as to their net annual compensation. Individuals and fiduciaries with more than $50,000 in annual net profits from county rental real estate are rebuttably presumed to be in the rental business. All proceeds go to the county's general revenue fund under § 110.12.