Please be advised that the City of Falmouth adopted a new occupational tax ordinance on May 7, 2026. These changes will affect businesses operating within the city limits and will become effective in accordance with the ordinance provisions.

The new ordinance includes the following changes: 

A one percent (1%) tax will be imposed on the taxable net profits of every business entity attributable to activity conducted within the City of Falmouth. Businesses will file an annual return and remit the tax on or before the due date of their federal income tax return (including any extensions). Only the portion of net profits fairly apportioned to the City under Kentucky law will be subject to this tax.

A one and one-half percent (1.5%) payroll tax will also be imposed on compensation earned for work performed within the city limits. Employers are required to withhold this tax from employee wages, salaries, commissions, and other reportable compensation and remit it to the City on a quarterly basis. Returns and payments will be due by the last day of the month following the end of each calendar quarter. Employers are responsible for the tax even if it is not withheld from employees.

All revenues generated from these fees and taxes will be deposited into the City’s General Fund for general municipal purposes. The City Clerk and/or City Treasurer will directly administer the program.

We encourage you to review your business records, gross receipts, net profit figures, and payroll information in preparation for these changes. Businesses should also begin updating their payroll systems to start withholding the 1.5% compensation tax effective July 1, 2026

Information regarding occupational license fees can be found under the Business tab.