Sources say the deal also includes that officers involved in any shooting will have to under drug and alcohol testing. The Kentucky attorney-general's office and the FBI are investigating the shooting.
Taylor's boyfriend, Kenneth Walker - a legal gun owner who fired a "warning shot" seconds before the police broke down the door - has also filed a civil lawsuit against the city and police department.
Taylor was 26 when she was shot at least five times on 13 March during a mistaken drugs raid.
The suit accused three Louisville police officers of blindly firing into Ms Taylor's apartment the night of the March raid, striking the medical worker several times. Sgt. Jon Mattingly was injured in the shooting, though he later recovered, after Taylor's boyfriend fired his weapon, believing that the officers who were entering his home were home invaders.
Following her death, the city's police chief was sacked over the department's mishandling of a fatal shooting at a protest, and Louisville's city council passed "Breonna's law" banning no-knock warrants.
Louisville Mayor Greg Fischer was asked if he would be speaking to press about the settlement.
Taylor's death sparked an outcry across the nation, as she became yet another symbol for demonstrators protesting against police brutality and misconduct. That man, Jamarcus Glover, was arrested at a different location about 10 miles (16 kilometres) away from Taylor's apartment on the same evening.
"Today what we did here was to do what we could do to bring a little bit of police reform and it's just a start", continued Ms Baker. Louisville city council previously passed "Breonna's Law" in June, which banned the use of "no knock" warrants. As for the wrongful death settlement he says.
People are naturally skeptical of any significant reform because none of the three officers involved with the murder have been charged with a crime.
One of the officers involved in the raid, Brett Hankison, was sacked in June.
Taylor's case has served as a flashpoint for a series of protests that have roiled Louisville and fed the flames of anti-police protests nationwide. High-profile celebrities like Oprah Winfrey and LeBron James have called for the officers to be charged in Taylor's death. It remains unclear why Taylor's residence was listed on the warrant, and no drugs or money were found in her apartment as a result of the raid. Other reforms seek to build stronger community connections by establishing a housing credit program to encourage officers to live in certain low-income areas in the city. He and Detectives Myles Cosgrove and Brett Hankison were placed on administrative reassignment.