Danville local tax guide
Who pays Danville's local tax
Danville taxes work done within its limits, so the address that matters is your job site. A Harrodsburg or Lancaster resident employed at the hospital, Centre College, or a plant inside Danville pays the 2% city rate. A Danville resident who drives to Lexington pays Lexington's tax on those wages, not Danville's. If you work from a home office inside Danville for a company located elsewhere, the city considers that work done in Danville.
Danville's city tax and the Boyle County layer
Danville's occupational license tax is a flat 2% of gross compensation for work performed in the city, as listed in the Kentucky Secretary of State's local tax records. Employers withhold it each payday and remit it to the city. With no exemption, a $40,000 salary produces $800 of city tax and $100,000 produces $2,000.
Boyle County also levies an occupational tax on wages earned anywhere in the county, at a rate above the statewide median for counties. A worker at a site in rural Boyle County deals only with the county tax, while a worker inside Danville also pays the city; whether city tax is credited against the county's depends on the county ordinance. Our numbers show the city tax alone.
Worked example: a $75,000 Danville paycheck
Here is the full year for a single filer paid $75,000 in Danville. The federal government takes $7,670 in income tax, Social Security $4,650, and Medicare $1,088. Kentucky subtracts its $3,360 standard deduction and taxes the remaining $71,640 at 3.5%, for $2,507.
Danville's 2% then costs $1,500, so annual take-home pay is $57,585, about $4,799 a month. A Kentucky paycheck with no local tax would leave $59,085, which means the city tax is the difference of $1,500, or roughly $125 a month. Any Boyle County tax is separate from that figure.
The Kentucky $75,000 salary page shows the state-level numbers by pay period.
Commuting in central Kentucky
Danville draws workers from Mercer, Garrard, and Lincoln counties, and sends some of its own residents north to Lexington. Each county's tax is tied to where the job is, so a Lincoln County resident working in Danville pays Danville and Boyle County, not Lincoln County, on that pay.
A Danville resident commuting to Lexington pays Lexington's 2.25% urban county fee as a nonresident and skips the Fayette County school tax, which only Fayette residents pay. Compare the two with the Lexington calculator.
State withholding is set on Form K-4 and is the same whether you work in Danville or anywhere else in Kentucky.
How Danville's rate compares
Danville's 2% matches Bowling Green, Paducah, Georgetown, and Richmond. At $75,000, Danville workers pay $563 less locally than Lexington residents and $375 less than workers in Ashland, where the rate is 2.5%. Henderson's 1.65% costs $262 less than Danville's tax, and Owensboro's 1.78% $165 less.
Tips for Danville paychecks
Count both Danville and Boyle County
Boyle County taxes work done in the county as well. When comparing a Danville offer with one in a county that has no payroll tax, ask what the county withholds.
Lexington commuters: check your stub
Danville residents with Fayette County jobs should see Lexington's 2.25% on their stubs, not Danville's 2%. Ask payroll to correct any Danville withholding on those wages.
Remote workers in town
Working from a Danville home for an out-of-town employer can still create a Danville tax bill. If nothing is withheld, contact the city about paying it directly.