LLC State Taxes: Complete 50-State Comparison for 2026
State taxes can significantly impact your LLC's total tax burden. While federal taxes are the same regardless of location, state taxes vary enormously -- from 0% in states like Wyoming and Florida to over 13% in California. This guide provides a comprehensive state-by-state comparison to help you understand your obligations.
Important: You owe state taxes where your business operates, not just where it is formed. Forming an LLC in Delaware or Wyoming while operating in New York means you pay taxes in New York (and potentially filing fees in both states). The best state for your LLC is almost always the state where you live and work.
All 50 States: LLC Tax Comparison
| State | Top Income Tax Rate | Annual Fee / Franchise Tax | Notes |
|---|---|---|---|
| Alabama | 5% | $100 minimum privilege tax | Flat business privilege tax based on net worth |
| Alaska | 0% | $100 biennial report | No state income tax; some local taxes |
| Arizona | 2.5% | $0 annual report | Flat rate; no franchise tax |
| Arkansas | 3.9% | $150 annual franchise tax | Graduated rates recently reduced |
| California | 13.3% | $800 franchise + LLC fee ($0-$11,790) | Highest state income tax; LLC fee based on gross revenue |
| Colorado | 4.4% | $10 annual report | Flat rate; low compliance costs |
| Connecticut | 6.99% | $80 annual report | Mandatory PTET for most PTEs |
| Delaware | 6.6% | $300 annual LLC tax | Popular for formation but still taxed where you operate |
| D.C. | 10.75% | $300 biennial report | High rates; limited SALT workaround |
| Florida | 0% | $138.75 annual report | No state income tax; popular for LLC formation |
| Georgia | 5.39% | $50 annual registration | Moving to flat rate |
| Hawaii | 11% | $15 annual report | High income tax; 4% general excise tax on gross receipts |
| Idaho | 5.695% | $0 annual report | Flat rate |
| Illinois | 4.95% | $75 annual report | Flat rate; optional PTET at 4.95% |
| Indiana | 3.05% | $31 biennial report | Low flat rate |
| Iowa | 5.7% | $30 biennial report | Reduced from higher graduated rates |
| Kansas | 5.7% | $55 annual report | Two brackets |
| Kentucky | 4% | $15 annual report | Flat rate; very low compliance cost |
| Louisiana | 4.25% | $35 annual report | Recently simplified from multiple brackets |
| Maine | 7.15% | $85 annual report | Three brackets |
| Maryland | 5.75% | $300 annual report | Plus local income taxes up to 3.2% |
| Massachusetts | 9% | $500 annual report | Flat rate; includes 4% surtax on income over $1M |
| Michigan | 4.25% | $25 annual report | Flat rate; low cost |
| Minnesota | 9.85% | $0 annual renewal | One of the highest state income taxes |
| Mississippi | 5% | $0 annual report | Flat rate after recent reform |
| Missouri | 4.8% | $0 annual report | Low rate; no annual fees |
| Montana | 5.9% | $20 annual report | No sales tax |
| Nebraska | 5.84% | $10 biennial report | Recently reduced from higher rates |
| Nevada | 0% | $150 annual list + $200 business license | No income tax; commerce tax if revenue exceeds $4M |
| New Hampshire | 0%* | $100 annual report | *No tax on earned income; taxes interest and dividends |
| New Jersey | 10.75% | $75 annual report | Very high top rate; PTET available |
| New Mexico | 5.9% | $0 annual report | Graduated rates; gross receipts tax applies |
| New York | 10.9% | $25 biennial filing | Plus NYC surcharge up to 3.876%; PTET available |
| North Carolina | 4.5% | $200 annual report | Flat rate, declining over time |
| North Dakota | 2.5% | $50 annual report | Very low rates |
| Ohio | 0%* | $0 annual report | *No income tax on pass-through; Commercial Activity Tax (0.26% on gross receipts over $1M) |
| Oklahoma | 4.75% | $25 annual report | Flat rate |
| Oregon | 9.9% | $100 annual report | High rate; no sales tax |
| Pennsylvania | 3.07% | $70 annual report | Flat rate; one of the lowest |
| Rhode Island | 5.99% | $50 annual report | Three brackets |
| South Carolina | 6.4% | $0 annual report | Recently reduced from 7% |
| South Dakota | 0% | $50 annual report | No state income tax; no corporate tax |
| Tennessee | 0% | $300 minimum annual report | No individual income tax; franchise/excise tax on businesses |
| Texas | 0% | $0 (franchise tax if revenue > $2.47M) | No income tax; franchise/margin tax 0.375-0.75% above threshold |
| Utah | 4.65% | $18 annual renewal | Flat rate |
| Vermont | 8.75% | $35 annual report | High rate; small state |
| Virginia | 5.75% | $50 annual registration | Top rate applies above $17,000 |
| Washington | 0% | $60 annual report | No income tax; B&O tax on gross receipts (0.47-3.3%) |
| West Virginia | 5.12% | $25 annual report | Graduated rates being reduced |
| Wisconsin | 7.65% | $25 annual report | Four brackets |
| Wyoming | 0% | $60 annual report | No income tax; no franchise tax; very LLC-friendly |
Best States for LLC Formation (Tax Perspective)
From a pure tax perspective, the best states for LLCs have no income tax and low annual fees:
- Wyoming: No income tax, no franchise tax, $60/year annual report, strong asset protection, privacy-friendly
- South Dakota: No income tax, no corporate tax, $50/year, strong trust and asset protection laws
- Nevada: No income tax (but $350/year in fees), commerce tax only above $4M revenue
- Florida: No income tax, $138.75/year, large economy and business-friendly
- Texas: No income tax, no annual fee for most LLCs, franchise tax only above $2.47M revenue
Reality Check: While these states are tax-friendly, forming there only benefits you if you actually live and operate there. A California resident forming a Wyoming LLC still owes California taxes on all California-source income plus an $800 franchise tax for registering as a foreign LLC in California.
Worst States for LLC Taxes
- California: 13.3% top rate + $800 franchise tax + LLC fee up to $11,790 = potentially the most expensive state
- New York: 10.9% state + up to 3.876% NYC surcharge = effective rate up to 14.776%
- New Jersey: 10.75% top rate on income over $1M
- Hawaii: 11% top income tax + 4% general excise tax on gross receipts
- Minnesota: 9.85% top rate with relatively low threshold
Nexus: When You Owe Taxes in Multiple States
You may owe state taxes in states where your LLC has nexus (a sufficient connection). Nexus can be created by:
- Physical presence: Office, warehouse, employees, or inventory in the state
- Economic nexus: Exceeding revenue or transaction thresholds (common for sales tax, some states apply to income tax)
- Remote employees: Having employees working in another state
- Attending trade shows: Regular presence at events in a state
- Owning property: Rental property or equipment in another state
State Annual Report and Filing Fees
Beyond income tax, most states charge annual or biennial fees to maintain your LLC in good standing. The lowest fees:
- $0: Arizona, Mississippi, Missouri, New Mexico, Ohio, South Carolina, Texas (below threshold)
- $10-$25: Colorado ($10), Nebraska ($10), Michigan ($25), New York ($25), Oklahoma ($25), West Virginia ($25), Wisconsin ($25)
- $300+: Delaware ($300), Maryland ($300), Tennessee ($300 minimum), Massachusetts ($500), California ($800)
Key Considerations for Multi-State LLCs
- Foreign LLC registration: Operating in a state where you are not formed requires registering as a "foreign LLC" ($100-$300+ fee, plus annual requirements)
- Apportionment: Multi-state income must be apportioned using each state's formula (typically based on sales, payroll, and property)
- Tax credits: Most states allow a credit for taxes paid to other states to prevent double taxation
- Composite returns: Some states require LLCs to file composite returns and withhold tax on behalf of out-of-state members