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Kentucky Department of Insurance Bulletin 2026-02 updates the schedules, forms, and compliance procedures for the Kentucky Local Government Premium Tax, commonly called KY LGPT. The updated requirements apply to general liability and other taxable insurance premiums collected from July 1, 2026, through June 30, 2027. Authorized insurers and surplus lines brokers must update their systems to apply the new rates, tax codes, payees, and addresses by July 1, 2026. Read Bulletin 2026-02.
Determining KY LGPT on General Liability Insurance
General liability insurance is generally treated as a casualty or liability line when determining Kentucky Local Government Premium Tax. The applicable tax depends on the local government’s rate schedule, tax code, and ordinance. Some jurisdictions may exempt casualty or liability coverage or apply different rules, so insurers should verify the specific city and county entries before calculating KY LGPT.
Tax liability is based on the physical location of the insured risk within a local government’s corporate boundaries. The policyholder’s mailing address or ZIP code must not be used by itself to determine the taxing jurisdiction. For general liability coverage, insurers should identify the actual premises, operations, or other insured risk location and establish the correct city and county.
Insurers and surplus lines brokers that issued or renewed more than 2,000 Kentucky policies during the preceding calendar year must use a Verified Risk Location system or program. Proper use of a verified system and documented due diligence may provide protection from certain penalties caused by risk-location errors, although the underlying KY LGPT and applicable interest may still be owed.
Rates, Package Policies, and Minimum Taxes
The applicable Kentucky Local Government Premium Tax rate is generally the rate in effect on the first day of the policy term. If additional premium results from a midterm endorsement or other policy change, the rate in effect on the change’s effective date applies. KY LGPT rates and minimum taxes are applied per policy.
When general liability coverage is included in a commercial package with an indivisible premium, the premium must be allocated among the relevant insurance categories before the tax is calculated. The bulletin specifies that an indivisible premium containing fire and property-and-casualty coverage must be allocated:
- Two-thirds to the fire provision; and
- One-third to the property-and-casualty provisions.
Where a jurisdiction imposes both a percentage rate and a minimum tax, the policyholder may owe whichever amount is greater. Minimum taxes generally apply to new and renewal business on taxable lines unless the local ordinance provides otherwise.
City and County Liability Taxes
A general liability risk may be subject to city KY LGPT, county KY LGPT, or both. Under Tax Code A, city tax may be credited against county tax when all statutory conditions are met. The insurer pays the city and remits any remaining county balance. Form LGT-142 must accompany the corresponding quarterly returns.
In grandfathered Tax Code B counties, a risk located inside city limits may owe both city and county Kentucky Local Government Premium Tax without a credit. Local exclusions are especially important for casualty and liability insurance; the 2026–2027 schedule identifies jurisdictions where particular lines are excluded or treated differently.
Disclosures and Collection Fees
When KY LGPT is charged to the general liability policyholder, the insurer or surplus lines broker must disclose the tax amount and the name of each taxing jurisdiction. Multiple jurisdictions must be listed separately. If the charge includes a collection fee, the disclosure must say so.
A collection fee may not exceed the lesser of 15% of the KY LGPT collected and remitted or 2% of the taxable premium. Flat fees imposed by local governments must be paid quarterly by the insurance company and cannot be charged to the policyholder.
Filing Deadlines and Penalties
Quarterly KY LGPT returns and payments are due to each applicable local government 30 days after the end of each calendar quarter, using Form LGT-141 or a substantially similar form. Returns 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, while a paper copy must also be sent to each applicable local government. The Department filing carries a $5 fee, and a no-tax-due filing is required when no taxable premiums were collected.
For 2026, unpaid or underpaid Kentucky Local Government Premium Tax accrues interest at 9%. A local government may also assess a 10% penalty when payment remains unpaid 30 days after its due date.
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, Kentucky law, or the applicable local ordinances.