The taxing truth: From property to premiums, why local elections matter more than you think

Cities and counties across Kentucky are quietly adding new local taxes on everything from your home to your insurance premiums — proof that who you elect locally hits your wallet hardest.

By Jesse Brewer, Boone County Commissioner

Why local tax decisions matter

Our local governments in Kentucky hold more taxing power than most people realize, and maybe it’s time we all start paying closer attention to who we’re electing at the city council and county commission levels. These are the leaders making decisions that reach directly into our pockets, yet too often they escape real accountability.

We shouldn’t be taxed on every single thing. Look — most cities are even taxing us on health insurance in Kentucky! The state can’t tax it, but counties and cities sure can. Health insurance is already unaffordable for many, so why on earth is it acceptable to add another tax on top of it?

Before squeezing hardworking citizens with property taxes, insurance premium taxes, and hidden local fees, governments should first be looking at how to cut expenses and spend more efficiently.

Escrow and hidden taxes

If you’re one of the estimated 1.7 million households that own their home in Kentucky, then there is an even better chance you are part of the 1.3 million estimated households that have a mortgage and escrow their taxes and insurance. And why wouldn’t you do that? It’s not only convenient for you but oftentimes your lender will require it.

But if you do escrow, then there is a good chance you may not even see your insurance bill with all of its itemizations on it — potentially making you unaware of a hidden insurance premium tax in Kentucky.

The law behind it: KRS 91A.080

In 1994 the Kentucky legislature passed a law, now KRS 91A.080, which allows the state, as well as cities and counties, to levy a tax on various insurance products. These include, but are not limited to, life, casualty, fire, vehicle and marine insurance. Translation: if you own a house, car, boat, motorcycle, or a business with errors and omissions insurance, liability insurance, or nearly any other type of policy, it’s subject to this tax.

The state does have a few exemptions that cannot be taxed, and those include health insurance, title insurance when you purchase a home, and workers’ compensation insurance. Other than those few, nearly every policy in Kentucky is taxable.

How much is the insurance premium tax?

The state of Kentucky started the insurance premium tax at 1.5%, but in 2020 the state raised it to 1.8%. The tax was originally created to fund pension liabilities for police and fire.

But here’s the kicker: Kentucky is one of just 10 states that also allows counties and cities to levy an additional local insurance tax. These local tax rates vary by jurisdiction, ranging anywhere from 5%–15%, on top of the 1.8% state tax.

This means your homeowners insurance, auto insurance, and business policies in Kentucky may all be carrying hidden local taxes.

Extra fees on top of taxes

As if the taxes weren’t enough, the state also allows insurance companies to tack on a “facilitation fee” for collecting them. This fee is either:

• 5% of the tax collected, or

• 2% of your total premium—whichever is less.

Here’s a simple example:

• If your annual insurance premium is $1,000 and your local tax rate is 5%, you’ll pay $50 in tax.

• On top of that, the insurance company can charge up to $7.50 as a fee for processing the tax.

If both your city and county charge this tax, you’ll pay the fee twice—once for each jurisdiction.

Just how widespread is this tax?

So just how many taxing authorities have an insurance premium tax in Kentucky? According to research from as recently as 2023, 362 cities and 50 counties in Kentucky levy an insurance premium tax.

In Boone County, where I serve as an elected commissioner, we do not have an insurance premium tax of any kind at the county level. If you are interested in seeing a full list of who has a premium tax and what their corresponding rates are, you can visit the Kentucky Department of Insurance website or click here: 2025-2026 Tax Schedule.pdf.

The bottom line: Hold local officials accountable

At the end of the day, taxes don’t just come from Frankfort or Washington, D.C. — they’re being decided right here at the city and county level in Kentucky. From property to insurance premiums, local governments keep finding ways to dig deeper into the pockets of hardworking Kentuckians.

If we want that to change, then we need to start paying attention to who we’re putting in office and holding them accountable. Local elections in Kentucky matter more than most people realize, and the only way to stop hidden taxes from piling up is to demand smarter spending, greater efficiency, and leaders who put citizens first.