Key Takeaways:

  • LLCs are generally taxed based on the owner’s federal tax election, making state taxes complex as LLCs can be taxed as disregarded entities, partnerships, S corporations, or C corporations.
  • State-specific tax obligations can include personal income, corporate, franchise, and gross receipts taxes; however, these rates and the type of tax vary widely by state.
  • Several states (e.g., Texas, Tennessee) impose franchise or gross receipts taxes on LLCs, particularly those with high revenues, rather than traditional corporate or personal income taxes.
  • No personal or corporate income taxes exist in states like Nevada, Wyoming, and South Dakota, though other state-specific fees and franchise requirements may apply.
  • LLC owners must pay self-employment taxes, covering Medicare and Social Security contributions.
  • LLCs operating in multiple states need to be aware of state-specific fees, reporting requirements, and local taxes that may apply beyond standard income tax.
  • UpCounsel connects LLC owners with experienced tax attorneys to guide them through state-specific obligations and optimize their tax strategy.

The LLC tax rates by state are the annual percentages of income that each state levies against limited liability companies in their jurisdiction, usually in the form of corporate tax. This tax can vary quite a bit from state to state, and this is because although most states take their lead from federal laws in taxation, each state adds its own special deductions and exclusions, which can yield much variance.

Further complicating the matter is the fact that LLCs are taxed depending on what IRS election they take, which means a single-member LLC will pay taxes differently than an LLC with S corp election. It should also be noted that some states refer to their income tax as a franchise tax and others as a gross receipts tax.

Alabama

  • Corporate tax: 6.5%
  • Personal tax: 2–5%

Alaska

  • Corporate tax: 2–9.4%
  • Personal tax: NA

Arizona

  • Corporate tax: 6.96%
  • Personal tax: 2.59–4.54%

Arkansas

  • Corporate tax: 1–6.5%
  • Personal tax: 1–7%.

California

  • Corporate tax: 8.84%
  • Personal tax: 1.25–10.55%

Colorado

  • Corporate tax: 4.63%
  • Personal tax: 4.6%

Connecticut

  • Corporate tax: 7.5%
  • Personal tax: 3–5%

Delaware

  • Corporate tax: 8.7%
  • Personal tax: 2.2–6.95%

District of Columbia

  • Corporate tax: 9.975%
  • Personal tax: 4–8.5%

Florida

  • Corporate tax: 5.5%
  • Personal tax: NA

Georgia

  • Corporate tax: 6%
  • Personal tax: 1–6%

Hawaii

  • Corporate tax 4.4–6.4%
  • Personal tax: 1.4–11%

Idaho

  • Corporate tax: 7.6%
  • Personal tax: 1.6–7.8%

Illinois

  • Corporate tax: 7.3%
  • Personal tax: 3%

Indiana

  • Corporate tax: 8.5%
  • Personal tax: 3.4%

Iowa

  • Corporate tax: 6–12%
  • Personal tax: 0.36–8.98%

Kansas

  • Corporate tax: 4–7.05%
  • Personal tax: 3.5–6.45%

Kentucky

  • Corporate tax: 4–6%
  • Personal tax: 2–6%

Louisiana

  • Corporate tax: 4–8%
  • Personal tax: 2–6%

Maine

  • Corporate tax: 3.5–8.93%
  • Personal tax: 2–8.5%

Maryland

  • Corporate tax: 8.25%
  • Personal tax: 2–6.25%

Massachusetts

  • Corporate tax: 9.5%
  • Personal tax: 5.3%

Michigan

  • Corporate tax 4.95%
  • Personal tax: 4.35%

Minnesota

  • Corporate tax: 9.8%
  • Personal tax: 5.35–7.85%

Mississippi

  • Corporate tax: 3–5%
  • Personal tax: 3–5%

Missouri

  • Corporate tax: 6.25%
  • Personal tax: 1.5–6%

Montana

  • Corporate tax: 6.75%
  • Personal tax: 1–6.9%

Nebraska

  • Corporate tax: 5.58–7.81%
  • Personal tax: 2.56–6.84%

Nevada

  • Corporate tax: NA
  • Personal tax: NA

New Hampshire

  • Corporate tax: 8.5%
  • Personal tax: 5%

New Jersey

  • Corporate tax: 6.5–9%
  • Personal tax: 1.4–10.75%

New Mexico

  • Corporate tax: 4.8–7.6%
  • Personal tax: 1.7–4.9%

New York

  • Corporate tax: 7.1%
  • Personal tax: 4–8.97%

North Carolina

  • Corporate tax: 6.9%
  • Personal tax: 6–7.75%

North Dakota

  • Corporate tax: 4.1–6.5%
  • Personal tax: 1.84–4.86%

Ohio

  • Gross receipts tax: .26%
  • Personal tax: .495–5.925%

Oklahoma

  • Corporate tax: 6%
  • Personal tax: 5–5.5%

Oregon

  • Corporate tax: 6.6–7.9%
  • Personal tax: 5–11%

Pennsylvania

  • Corporate tax: 9.99%
  • Personal tax: 3.07%

Rhode Island

  • Corporate tax: 9%
  • Personal tax: 3.75–9.9%

South Carolina

  • Corporate tax: 5%
  • Personal tax: 0–7%

South Dakota

  • Corporate tax: NA
  • Personal tax: NA

Tennessee

In addition to excise tax, LLCs operating in Tennessee are also subject to a franchise tax calculated on the greater of net worth or real and tangible property values, at a minimum of $100 annually. Franchise tax specifics, alongside excise tax obligations, make Tennessee a unique state for LLC taxation, particularly as exemptions may apply based on industry type and LLC structure. Owners are encouraged to explore all deductions to optimize their tax liabilities.

  • Franchise tax: .25% of net corporation or tangible property value. Minimum payment of $100.
  • Excise tax: 6.5% of net taxable income in Tennessee.
  • Personal tax: 6%.

Texas

LLCs in Texas may benefit from the state’s lack of traditional corporate and personal income taxes but are subject to the Texas Margin Tax if gross receipts exceed a certain threshold (currently $1,230,000). Texas calculates its tax rate on the lower of total revenue or 70% of revenue, providing deductions for industries with higher overhead costs. This tax structure makes Texas an appealing location for LLCs focused on growing revenue without corporate income taxes.

  • Gross receipts tax: 1% on gross income exceeding $1,000,000
  • Personal tax: NA

Utah

  • Corporate tax: 5%
  • Personal tax: 5%

Vermont

  • Corporate tax: 6–8.5%
  • Personal tax: 3.55–9.4%

Virginia

  • Corporate tax: 6%
  • Personal tax: 2–5.75%

Washington

  • Gross receipts tax: 1.5% on any revenue after $35,000 of gross receipts.
  • Personal tax: NA

West Virginia

  • Corporate tax: 8.5%
  • Personal tax: 3–6.5%

Wisconsin

  • Corporate tax: 7.9%
  • Personal tax: 4.6–7.75%

Wyoming

  • Corporate tax: NA
  • Personal tax: NA

States Without Personal or Corporate Income Tax

In addition to Wyoming, states like Nevada and South Dakota impose minimal or no personal or corporate income tax on LLCs. This can significantly reduce an LLC’s state tax obligations and make these states appealing for LLC formation. However, some of these states impose franchise fees or other forms of business registration fees, which LLC owners should account for in planning. In Wyoming, for instance, LLCs face a minimal annual license tax based on their assets within the state.

Income Taxes

When it comes to income taxes, because LLC members are treated as self-employed business owners rather than employees, tax withholding does not apply to them. Rather, each member must pay taxes on their profits directly to the IRS.

LLC Tax Election Options

LLC owners have flexibility in choosing a tax election, impacting state tax treatment. By default, a single-member LLC is taxed as a disregarded entity, meaning profits are passed through to the owner’s personal tax return. Multi-member LLCs are generally treated as partnerships, but LLCs can opt to be taxed as S or C corporations, each offering different tax advantages. S corporation status, for instance, can help LLC owners minimize self-employment tax on portions of income, though it requires meeting certain qualifications. Each state may vary slightly in applying these tax treatments, so owners should consult state-specific guidelines.

Self-Employment Taxes

Similarly, because they are considered self-employed, LLC members must pay a self-employment tax directly to the IRS. This tax covers the Medicare and Social Security contributions that are not withheld from their paycheck due to their status as self-employed. Currently, members who are active in the LLC must pay this on their share of the profits, while non-active members may be exempt from it. This self-employment tax is reported on the Schedule SE form as part of the 1040 tax return.

Additional Fees and Local Tax Obligations for LLCs

Beyond corporate or personal income tax, many states impose additional fees on LLCs, such as annual registration fees, franchise taxes, and local taxes. For example, LLCs operating in California must pay an annual LLC fee, with tiered rates based on annual revenue. New York LLCs also incur annual filing fees, which vary by income level. Local property or sales taxes may further affect LLCs with physical presences, making it essential for LLCs operating in multiple states to research specific state requirements and fees.

If you need help understanding the LLC tax rates by state and what they mean for you, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.