What is the tax rate for an LLC?

LLCs do not have a single flat tax rate. As a pass-through entity, LLC income is taxed at the owner's individual rates. For 2026, LLC owners typically pay: 15.3% self-employment tax (Social Security 12.4% + Medicare 2.9%) on net earnings, plus federal income tax at marginal rates of 10% to 37% depending on total taxable income, plus state income tax (0% to 13.3% depending on the state). The effective combined tax rate for most LLC owners falls between 25% and 45%.

How much does an LLC pay in taxes on $100,000 profit?

On $100,000 of LLC profit (single filer, no state income tax), you would owe approximately $14,130 in self-employment tax (15.3% on 92.35% of net income), plus roughly $11,600 in federal income tax after the standard deduction and half-SE deduction, minus about $4,000 from the QBI deduction benefit. Total federal tax: approximately $25,730, for an effective rate of about 25.7%. State income tax would add 0% to 13.3% depending on your state.

Do LLCs pay more taxes than corporations?

It depends on income level and how profits are used. LLC owners pay self-employment tax (15.3%) that C-Corporations avoid, but C-Corps face double taxation — 21% corporate tax plus shareholder-level tax on dividends (0-20%). For income under roughly $400,000, LLCs typically pay less total tax. Above that level, the math shifts in favor of C-Corp taxation, especially if profits are reinvested rather than distributed. An S-Corp election can reduce LLC self-employment tax while avoiding double taxation.

What is the self-employment tax rate for LLC owners in 2026?

The self-employment tax rate is 15.3% on the first $176,100 of net self-employment earnings (2025 Social Security wage base — the 2026 figure will be announced in October 2025). This breaks down as 12.4% for Social Security and 2.9% for Medicare. Above the Social Security wage base, only the 2.9% Medicare tax applies. High earners (above $200,000 single / $250,000 married) pay an additional 0.9% Medicare surtax, bringing the rate to 3.8% on income above those thresholds.

Which states have no income tax for LLCs?

Nine states have no personal income tax, which means LLC pass-through income is not taxed at the state level: Alaska, Florida, Nevada, New Hampshire (no tax on earned income), South Dakota, Tennessee (no tax on earned income), Texas, Washington, and Wyoming. However, some of these states impose other business taxes — Texas has a franchise/margin tax, Washington has a B&O tax, and Nevada has a commerce tax for large businesses.

Can an LLC reduce its tax rate?

Yes. The most effective strategies include: (1) Electing S-Corp status when net income exceeds $50,000 to reduce self-employment tax, (2) Maximizing business deductions (home office, vehicle, health insurance, retirement contributions up to $69,000), (3) Claiming the 20% QBI deduction under Section 199A, (4) Timing income and expenses across tax years, (5) Contributing to tax-advantaged retirement plans like a Solo 401(k) or SEP-IRA, and (6) Hiring family members to shift income to lower brackets.

LLC Tax Rates 2026: Federal + State Rates for All 50 States (Complete Guide)

What Tax Rate Does an LLC Pay?

Unlike C-Corporations that pay a flat 21% corporate tax, LLCs are pass-through entities. This means LLC profits flow through to your personal tax return and are taxed at your individual rates. There is no separate "LLC tax rate" — instead, you face three layers of taxation:

Self-employment tax: 15.3% on net earnings (12.4% Social Security + 2.9% Medicare)
Federal income tax: 10% to 37% based on your marginal tax bracket
State income tax: 0% to 13.3% depending on your state

Key point: The 15.3% self-employment tax is the biggest surprise for new LLC owners. Unlike W-2 employees who split FICA with their employer, LLC owners pay both halves. However, you can deduct half of your SE tax as an above-the-line deduction on your federal return.

2026 Federal Income Tax Brackets (Single Filer)

After accounting for the standard deduction ($15,700 for 2026) and the half-SE deduction, your LLC income is taxed at these marginal rates:

Taxable Income	Tax Rate	Tax on Bracket
$0 - $11,925	10%	$0 - $1,193
$11,926 - $48,475	12%	$1,193 - $5,579
$48,476 - $103,350	22%	$5,579 - $17,652
$103,351 - $197,300	24%	$17,652 - $40,100
$197,301 - $250,525	32%	$40,100 - $57,132
$250,526 - $626,350	35%	$57,132 - $188,690
Over $626,350	37%	$188,690+

Effective LLC Tax Rates by Income Level

Here's what LLC owners actually pay at common income levels (single filer, no state income tax, after standard deduction, half-SE deduction, and QBI deduction):

LLC Net Profit	SE Tax	Federal Income Tax	Total Federal Tax	Effective Rate
$25,000	$3,532	$810	$4,342	17.4%
$50,000	$7,065	$3,259	$10,324	20.6%
$75,000	$10,597	$6,745	$17,342	23.1%
$100,000	$14,130	$11,602	$25,732	25.7%
$150,000	$21,194	$21,816	$43,010	28.7%
$200,000	$26,532	$33,816	$60,348	30.2%
$300,000	$30,090	$59,576	$89,666	29.9%
$500,000	$35,890	$120,176	$156,066	31.2%

Use our free calculator for an exact figure based on your specific income, filing status, and state. The table above uses simplified assumptions for illustration. Calculate your LLC tax now →

Self-Employment Tax: The 15.3% That Catches LLC Owners Off Guard

Self-employment tax is the LLC equivalent of FICA payroll tax. As a W-2 employee, your employer pays half of Social Security and Medicare taxes — but as an LLC owner, you pay both halves.

How SE Tax Is Calculated

Start with your LLC net profit (Schedule C line 31)
Multiply by 92.35% (this reduces the base to approximate the employer-equivalent portion)
Apply 15.3% (12.4% Social Security + 2.9% Medicare) up to the Social Security wage base ($176,100 for 2025)
Above the wage base, only 2.9% Medicare applies
Above $200,000 (single) or $250,000 (married), an additional 0.9% Medicare surtax applies

Silver lining: You can deduct 50% of your self-employment tax as an above-the-line deduction on Form 1040. This reduces your adjusted gross income and therefore your income tax. It does not reduce your SE tax itself.

State LLC Tax Rates: All 50 States

State taxes add another layer on top of federal. Here are the key categories:

No Income Tax States (0%)

These nine states do not tax LLC pass-through income:

Alaska — No income tax, no statewide sales tax
Florida — No income tax, $138.75 annual report fee
Nevada — No income tax, $150 annual fee, commerce tax above $4M
New Hampshire — No tax on earned income (interest/dividends only)
South Dakota — No income tax, $50 annual report
Tennessee — No tax on earned income
Texas — No income tax, franchise tax above $1.23M revenue
Washington — No income tax, B&O tax applies
Wyoming — No income tax, $60 annual report

Flat Tax Rate States

State	Flat Rate	Annual Fee
Colorado	4.40%	$10
Georgia	5.49%	$50
Illinois	4.95%	$75
Indiana	3.15%	$31 (biennial)
Kentucky	4.00%	$15
Massachusetts	5.00%	$500
Michigan	4.25%	$25
North Carolina	4.50%	$200
Pennsylvania	3.07%	$7 (decennial)
Utah	4.65%	$18

Highest Tax Rate States

State	Top Rate	Applies Above
California	13.30%	$1,000,000+
New Jersey	10.75%	$1,000,000+
New York	10.90%	$25,000,000+
Oregon	9.90%	$125,000+
Minnesota	9.85%	$193,240+
Hawaii	11.00%	$200,000+
Vermont	8.75%	$229,500+
Iowa	5.70%	$78,435+

The QBI Deduction: How to Reduce Your LLC Tax Rate by Up to 20%

The Qualified Business Income (QBI) deduction under IRC Section 199A allows LLC owners to deduct up to 20% of their qualified business income from their taxable income. This effectively reduces your income tax rate on LLC profits.

QBI Income Limits for 2026

Filing Status	Full Deduction Below	Phase-Out Range	No Deduction Above
Single	$201,300	$201,300 - $251,300	$251,300
Married Filing Jointly	$402,600	$402,600 - $502,600	$502,600

Impact on effective rate: For an LLC owner earning $100,000 (single filer), the QBI deduction reduces taxable income by roughly $17,000, saving approximately $3,700 in federal income tax. This drops the effective rate from about 29% to about 26%.

Service business warning: If your LLC operates in a Specified Service Trade or Business (SSTB) — such as law, medicine, accounting, consulting, or financial services — the QBI deduction begins phasing out at the income thresholds above and is completely eliminated once income exceeds the upper limit.

How to Lower Your LLC Tax Rate

There are several legitimate strategies to reduce your effective LLC tax rate:

1. Elect S-Corp Status ($50K+ Income)

The most impactful strategy for profitable LLCs. By electing S-Corp status, you split income between a reasonable W-2 salary (subject to 15.3% FICA) and distributions (not subject to SE tax). At $100K profit with a $50K salary, you save approximately $7,650 in SE tax per year.

Compare LLC vs S-Corp tax savings →

2. Maximize Deductions

Every dollar of legitimate business deduction reduces your taxable income and SE tax base:

Home office deduction: $5/sq ft simplified method (up to $1,500) or actual expenses
Vehicle: 67 cents per mile (2024 rate) or actual expenses
Health insurance: 100% deductible for self-employed (above-the-line)
Retirement: Solo 401(k) up to $69,000 or SEP-IRA up to 25% of net SE income
Section 179: Deduct up to $1,220,000 in equipment purchases

See all 37 LLC tax deductions →

3. Hire Family Members

If your spouse or children work in the business, paying them a reasonable salary shifts income to lower tax brackets. Children under 18 working for a parent's sole proprietorship are exempt from FICA taxes.

4. Time Income and Expenses

Cash-basis LLCs can defer income by delaying invoicing in December and accelerate deductions by prepaying expenses. This is especially useful if you expect to be in a lower bracket next year.

5. Contribute to Retirement Plans

A Solo 401(k) allows contributions up to $69,000 (2024) — $23,000 as employee elective deferral plus up to 25% of net SE income as employer contributions. If you're 50+, add a $7,500 catch-up contribution.

LLC Tax Rates 2026