Perry County explains stacked occupational tax for Hazard workers
Workers inside Hazard city limits can lose 2.25% of gross pay to stacked local occupational taxes, and the deduction can be easy to miss until net pay shrinks.
If you work inside Hazard city limits, the local deduction on your paycheck is not just one tax. Perry County’s 1% occupational tax stacks with Hazard’s 1.25% payroll tax, so a $1,000 gross check can carry a $22.50 local deduction before federal, state and other withholdings come out.
Who pays the stacked tax
Perry County is a dual, or “stacked,” county. The county’s occupational license rules apply to every person or business entity engaged in a for-profit business, or required to file with the IRS or Kentucky Revenue Cabinet, for work done in the county. If that work is inside Hazard city limits, the city tax comes on top of the county tax.
The tax follows the work location, not just the mailbox. A worker who performs taxable work in Hazard can see both deductions even if they do not think of themselves as a business owner, while someone outside the city may only see the county layer. The split is 1% for Perry County, plus Hazard’s 1.25% for work inside the city.
How the deduction changes take-home pay
For employees, the county form calculates payroll withholding at 1.0%, as line 3 times 0.0100. Hazard’s payroll withholding rate is 1.25% of gross salaries, wages, commissions and other compensation. Put together, that means a Hazard paycheck loses 2.25% to local occupational tax before other deductions are taken out.
A sample check shows how fast it adds up:
- On a $600 gross paycheck, Perry County withholds $6 and Hazard withholds $7.50, for a total local deduction of $13.50.
The deduction is not a flat fee, and it is not based on how much cash you bring home after other withholdings. It is tied directly to taxable pay earned in Perry County, and in Hazard it stacks.
What business owners and contractors have to file
The local rules do not stop with employees. Perry County’s occupational license materials also cover net-profit returns, monthly returns, quarterly returns, business license applications, reconciliation of license fee withheld and a federal employee registration form.
Most people and business entities engaged in profit-seeking activity in the city must apply for and obtain a business or occupational license before starting work or changing business status. The city also requires a one-time $100 registration fee with the application, and each separate business needs its own application and fee. For business entities, the minimum tax is paid in advance when the license is applied for, then credited against later taxes due.
Payroll withholding returns are due by the 15th day of the month after the close of the calendar quarter, and an annual withholding reconciliation is also required. In some cases, the city may grant an extension of up to six months for a business return if the request is filed on time. The city’s code also includes apportionment rules, so businesses with work across multiple locations have to separate what belongs inside Hazard from what belongs elsewhere.
Where to file, and who is in the office
The Perry County Occupational License Office is listed at 481 Main Street, 2nd Floor in Hazard, and county forms also give the mailing address as 481 Main Street, Suite 202, Hazard, KY 41701. The office phone number is (606) 436-0803.
The county publishes forms for business license applications, monthly returns, quarterly returns, net-profit returns, reconciliation of license fee withheld and a federal employee registration form.
Why the deduction matters in Perry County
Perry County’s stack makes Hazard stand out. As of January 2025, Kentucky League of Cities data showed 87 Kentucky counties levied an occupational license fee, all 87 on payroll and 70 on net profits, with county rates ranging from 0.50% to 2.5% and a median rate of 1%. County occupational license fees brought in $387 million in fiscal 2023, excluding Fayette and Jefferson, which was 44.5% of all county tax revenue.
Kentucky League of Cities data also put occupational license fees at about 61% of total municipal revenue statewide in fiscal 2023, and those fees help pay for police, fire protection, EMS, streets, sidewalks, road maintenance and water and sewer infrastructure.
Perry County’s current ordinance framework dates to Sept. 29, 2017, and the city’s code keeps the occupational tax rules in a detailed chapter covering definitions, employer withholding, returns, refunds, confidentiality and penalties.
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