Tax Planning for Physicians in Covington, KY (2026)
Physicians in Covington pay federal tax at up to 37% plus Kentucky income tax (a top rate of 3.5%), and local rules add another layer. Here is how the 2026 rules apply to doctors, dentists and practice owners in Covington, KY.
2026 at a glance for Covington, KY physicians
| Kentucky income tax | Top rate of 3.5% (2026) |
|---|---|
| State tax on $400,000 of state taxable income | $14,000 single / $14,000 married filing jointly |
| State tax on $1,000,000 (married filing jointly) | $35,000 |
| Occupational license tax on net profits | 2.5% (minimum $100) |
| Pass-through entity tax | Available (elective) |
| Top federal rate | 37% (from $640,600 single / $768,700 joint) |
State tax figures apply Kentucky's 2026 brackets to state taxable income and ignore credits, deductions and local taxes.
Local taxes in Covington
Covington assesses its occupational license tax at 2.5% of net profits from business conducted in the city (or $100, whichever is greater), and any business that operates there, including professional practices located outside the city, must hold a city occupational license. Many Covington-area physicians also work across the river in Cincinnati, which levies a 1.8% city income tax.
State rules that apply in Covington
Yes. The state has an elective pass-through entity tax (PTET) that partnerships and S corporations can use to deduct state income tax at the entity level.
- Kentucky's flat rate dropped to 3.5% for 2026, but local occupational taxes in Louisville and Lexington can add more than 2%.
- Occupational license taxes also apply to net profits of practices, so practice owners need local returns in addition to state returns.
Where the savings usually come from
For most Covington physicians, federal planning drives the largest results: W-2 strategies such as 401(k)/403(b), 457(b) and the backdoor Roth; 1099 and locum planning; entity and cash balance plan design for practice owners; and real estate strategies for physicians with time to participate.
More physician tax guides
- Other Kentucky cities: Louisville, Lexington, Bowling Green.
- State rules: Kentucky physician tax guide and all 50 state guides.
- By specialty: Anesthesiologists, Dentists, Ophthalmologists, Hospitalists and every specialty.
- Core strategy: tax planning for physicians, tax planning for medical practice owners, advanced strategies for high-income physicians and S corporation tax planning for physicians, plus the physician tax glossary.
Frequently asked questions
Does Covington have a city income tax?
Covington assesses its occupational license tax at 2.5% of net profits from business conducted in the city (or $100, whichever is greater), and any business that operates there, including professional practices located outside the city, must hold a city occupational license. Many Covington-area physicians also work across the river in Cincinnati, which levies a 1.8% city income tax.
What state income tax do physicians in Covington pay?
Kentucky has a top rate of 3.5% for 2026. On $400,000 of state taxable income, the 2026 brackets produce about $14,000 for a married couple filing jointly, before credits.
Can GenWealth 360 work with physicians in Covington?
Yes. GenWealth 360 works with physicians, dentists and practice owners nationwide, including Covington, through virtual meetings. Our office is in Long Beach, California.
Get a tax plan built for your situation
GenWealth 360 builds proactive, tax-first plans for physicians, dentists and medical practice owners in all 50 states. Start with a conversation about your income, entity and goals.
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Sources
This article is for general educational purposes and is not tax, legal or investment advice. Tax law changes often and its application depends on your facts. Figures reflect 2026 rules as published by the sources listed above. Consult a qualified professional before acting. See our editorial policy.