Business Operating Costs by State
Compare the real costs of running a business across all 50 states. LLC filing fees, tax rates, minimum wage, and annual compliance costs, all in one place. Click any column header to sort.
| State | LLC Filing Fee | Annual Report | Corp Tax Rate | Sales Tax | Min Wage | Notes |
|---|
Click column headers to sort. Data current as of January 2026. Sources: Tax Foundation, US DOL, state Secretary of State websites.
How to Read This Table
The LLC filing fee is what you pay to your state's Secretary of State when you submit your Articles of Organization. This is a one time cost. Some states like California charge as little as $70, while Massachusetts charges $500. But the filing fee alone does not tell the full story.
The annual report fee is what many states charge every year to keep your LLC in good standing. Miss this payment and your state can dissolve your business. California stands out with its $800 minimum franchise tax, which hits every LLC regardless of revenue. Other states like Ohio and Pennsylvania charge nothing for annual reports.
Corporate tax rates shown here are the top marginal rate for C corporations. Most small businesses operate as pass-through entities like LLCs or S-corps, where business income flows through to the owner's personal tax return instead. If you run a pass-through business, the state individual income tax rate matters more than the corporate rate. We show corporate rates because they affect the overall business climate and anyone considering C-corp election.
Sales tax is the state-level base rate. Many cities and counties add their own local sales tax on top of this, sometimes adding 2 to 5 percentage points. Five states have no sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon.
Cheapest States to Start a Business
If you are looking purely at startup costs, a handful of states stand out. Wyoming charges $100 to form an LLC, has no state income tax and no corporate income tax, and the annual report fee is just $60. South Dakota is similar with a $150 LLC fee, no income tax, and a $50 annual report. Both states also have strong asset protection laws for LLCs.
On the other end, California's $800 annual franchise tax makes it one of the most expensive states for small LLCs, even if you earn nothing. Massachusetts charges $500 just to file, and Illinois has a $150 filing fee plus a $75 annual report. New York requires you to publish a notice in two newspapers after forming, which can cost $200 to $1,500 depending on the county.
Keep in mind that the cheapest state on paper is not always the cheapest in practice. If you live in Texas but form your LLC in Wyoming to save on fees, you still need to register as a foreign LLC in Texas to do business there. That means paying fees in both states plus maintaining a registered agent in Wyoming. For most one-person businesses, forming in your home state is the simplest and often cheapest path.
States With No Income Tax
Nine states have no individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire eliminated its interest and dividends tax in 2025, making it fully income-tax-free for 2026.
For pass-through business owners, operating in a no-income-tax state means your business profits are not taxed at the state level. This can save thousands of dollars per year compared to states like California (top rate 13.3%) or New York (top rate 10.9%). However, these states often make up revenue through higher sales taxes, property taxes, or gross receipts taxes. Texas and Washington both impose gross receipts taxes that apply to business revenue regardless of whether the business is profitable.
Note: This tool provides general reference data for informational and comparison purposes only. Tax laws, filing fees, and regulatory requirements change frequently. Always verify current rates with your state's official Secretary of State website and Department of Revenue before making business decisions. This is not legal, tax, or financial advice. Consult a qualified CPA or attorney for guidance specific to your situation.