Campbell County, Kentucky announced that effective January 1, 2024, its Occupational License Tax (OLT) withholding rate, currently 1.05% of taxable wages, will be split into three separate components for (1) senior citizens, (2) mental health and (3) general.

While the total Campbell County OLT withholding rate will remain at 1.05%, the maximum annual withholding per employee will increase substantially, from $406 in 2023 to $1,711 in 2024.

Other Campbell County OLT withholding changes

Campbell County currently administers the OLT on behalf of cities within the County, namely, Alexandria City, Cold Spring City, Fort Thomas City, Highland Heights City and Southgate City. Starting January 1, 2024, Campbell County will also be the OLT administrator for Wilder.

Below are the OLT tax rates and wage caps that apply to these cities for 2024.

Ernst & Young LLP insights

Campbell County and taxing authorities within the County are among the small proportion of Kentucky OLT taxing jurisdictions that apply an annual wage cap to the withholding amount. Further, the OLT wage cap may be increased each year. For example, Campbell County and some cities within that county use the Social Security wage cap, which is adjusted each year to the average wage.

Each year employers should determine where a Kentucky local OLT wage cap applies, and if that cap is adjusted for the upcoming tax year.

For other challenges in complying with Kentucky OLT withholding requirements, see the September 2023 issue of EY Payroll Month in Review.

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Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor