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Kentucky Department of Insurance Bulletin 2026-02 updates the forms, tax schedules, procedures, and compliance requirements for the Kentucky Local Government Premium Tax, commonly called KY LGPT. The guidance applies to authorized insurance companies and surplus lines brokers collecting premiums on Kentucky risks from July 1, 2026, through June 30, 2027. Companies and brokers must update their procedures to follow the new schedule by July 1, 2026. Local governments with changed rates, payees, or addresses are marked with an asterisk in the updated schedule. Read Bulletin 2026-02.
Determining KY LGPT Liability
The Kentucky Local Government Premium Tax is imposed on insurance risks physically located within the taxing city or county. The insured’s mailing address—and particularly the ZIP code—must not be used by itself to determine the correct jurisdiction. Insurers and brokers should identify the actual risk location, including its physical address, city, and county.
Organizations that issued or renewed more than 2,000 Kentucky policies during the preceding calendar year must use a Verified Risk Location system or program. The applicable KY LGPT rate is generally the rate in effect on the first day of the policy term. For premium collected because of a midterm policy change, the rate in effect on the change’s effective date applies. Taxes and applicable minimum taxes are calculated per policy.
Disclosure, Fees, and Exemptions
When KY LGPT is passed on to a policyholder, the insurer or surplus lines broker must disclose the tax amount and the taxing jurisdiction. Each jurisdiction must be listed separately when tax is owed to more than one local government. If a collection fee is charged, the disclosure must state that the amount includes both LGPT and a collection fee.
A reasonable collection fee may be retained, but it cannot exceed the lesser of:
- 15% of the Kentucky Local Government Premium Tax collected and remitted; or
- 2% of the taxable premium.
Key statutory exemptions include workers’ compensation, annuities, federal flood insurance, individual health policies, certain state employee group health coverage, qualifying high-deductible health plans, certain government and public-school risks, and policies issued by specified entities such as HMOs, captive insurers, and fraternal benefit societies. Local ordinances may provide additional exemptions, so the applicable tax code description must also be reviewed.
City and County Tax Treatment
Where Tax Code A applies, a city’s KY LGPT may be credited against a county tax when statutory conditions are satisfied. The insurer pays the city tax and any remaining balance to the county. Form LGT-142 must accompany the relevant quarterly filings.
In “grandfathered” Tax Code B counties—where the county tax predates July 13, 1990—both city and county taxes may apply to a risk inside city limits, with no city credit against the county tax.
Filing Deadlines and Penalties
Quarterly Kentucky Local Government Premium Tax payments and Form LGT-141 returns are due directly to the applicable local government 30 days after each calendar quarter ends. These forms are not filed with the Department of Insurance but must be retained for at least five years.
Annual reconciliation is due March 31:
- Form LGT-140 must be filed electronically with the Department through the eService Portal.
- A paper Form LGT-140 must also be sent to each applicable local government.
- The Department filing carries a $5 fee.
- A no-tax-due electronic reconciliation is still required when no taxable premiums were collected.
For 2026, unpaid or underpaid KY LGPT accrues interest at 9%. A local government may also assess a 10% penalty when payment remains unpaid 30 days after its due date. Amended returns and refund, credit, or assessment requests generally must be made within two years of the March 31 annual-reconciliation deadline for the affected tax period.
The updated materials include the 2026–2027 tax schedule, tax-code descriptions, payee and address listing, Form LGT-140, Form LGT-141, and Form LGT-142. Questions may be directed to the Kentucky Department of Insurance Local Government Premium Tax Unit at DOI.MunicipalTaxes@ky.gov or 502-564-1649.
This summary is informational and does not replace Bulletin 2026-02, applicable Kentucky statutes and regulations, or local ordinances.