Best States for LLC Formation (2026 Ranking)
How all 50 states + DC rank for forming an LLC in 2026 — weighted composite of filing fees, annual costs, state income tax, owner privacy, asset protection, and processing speed. Every ranking links to that state's full LLC guide.
Top 5 states for LLC formation
Wyoming, Delaware, New Mexico, Nevada, and South Dakota — the low-cost, high-privacy, no-income-tax jurisdictions.
The gold standard for LLC formation. No state income tax, strong asset protection (charging order sole remedy), high owner privacy, low fees.
The corporate lawyer's favorite — Chancery Court expertise, well-developed law, and privacy. $110 filing, $300 annual tax.
New Mexico offers the most private LLC in the US — no member names ever required on any state filing, no annual report, low fees.
No state income tax, strong asset protection, but pricier: $75 filing + $150 initial list + $200 business license = $425 year 1.
No state income tax, low fees ($150 file + $50 annual), and asset-protection-friendly. Under-appreciated alternative to WY/NV.
Wyoming, Delaware, New Mexico, Nevada, and South Dakota are the top 5 US states for forming an LLC in 2026. Common features: no state income tax (or none on LLC pass-through income), strong charging-order-sole-remedy asset protection, high owner privacy, and moderate-to-low fees. Wyoming is the frequent #1 for pure LLC formation because it combines all four factors at low cost ($100 filing, $60 annual, no income tax, anonymous). Delaware is the #1 choice for VC-backed startups because of the Court of Chancery's specialized business-law expertise. On the opposite end, California imposes an $800 minimum annual franchise tax plus tiered gross-receipts fees plus among the highest state income taxes — the most expensive US state to operate an LLC in.
Important: Where you form matters most for holding entities, IP holding companies, and investment vehicles. If your LLC will "do business" in your home state (have an office, employees, or significant sales), that state will require foreign registration and taxation regardless of where you formed — often eliminating the advantage of forming elsewhere. Consult a business attorney or CPA for your specific situation.
How we ranked
Composite score weights six factors:
- State income tax on LLC pass-through income (25%): 0% scores highest; 10%+ scores lowest.
- Annual/franchise tax (20%): Recurring cost to keep the LLC in good standing.
- Owner privacy (15%): Whether member/manager names appear on public filings.
- Asset protection (15%): Charging-order-sole-remedy status and strength of veil piercing precedent.
- Filing fees (15%): One-time formation cost.
- Processing speed (10%): Days to receive stamped articles.
Rankings reflect suitability for a holding-entity or out-of-state formation use case. If you'll "do business" in your home state (physical presence, employees, significant sales), your home state generally must be your primary or foreign-registered state regardless of formation state.
Top 10 states in detail
Why each of the top 10 earned its ranking, with headline metrics linked to the full state guide.
Wyoming pioneered the modern US LLC in 1977. It offers no state income tax, no annual franchise tax, strong charging-order-sole-remedy asset protection, and does not require member/manager names on public filings. $100 filing, $60 annual report.
Delaware's Court of Chancery has 200+ years of business-law jurisprudence. Delaware is the go-to for VC-backed startups and holding structures. Higher annual cost ($300 franchise tax) than Wyoming but unmatched legal predictability.
New Mexico requires no member or manager names on formation documents or subsequent filings. No annual report, no franchise tax. $50 one-time filing. The best for pure privacy at rock-bottom cost.
Nevada offers no state income tax and strong charging-order-sole-remedy asset protection, but is more expensive than Wyoming: $75 filing + $150 initial list of managers + $200 business license = $425 at formation, plus $350/year in renewals.
South Dakota offers no state income tax and low ongoing costs ($150 filing, $50 annual report). Perpetual trust law is uniquely favorable. Under-appreciated compared to Wyoming and Nevada.
Alaska has no state income tax and permits self-settled asset protection trusts. LLC filing $250, biennial report $100. Geographic distance is the only real friction for out-of-state members.
Ready to form your LLC? Get expert help.
The right formation state depends on where you'll operate, your business type, and long-term goals. Connect with a business attorney or specialized LLC formation service.
Full comparison table
Click any column header to sort. Search by state name. Click a state to open its full guide.
| # | State | Filing Fee | Annual/Franchise Tax | State Income Tax | Owner Privacy | Processing Speed | LLC Score |
|---|---|---|---|---|---|---|---|
| 1 | Wyoming | $100 | $60/yr | None | Anonymous | Same day (online) | 96 |
| 2 | Delaware | $110 | $300/yr | None (LLCs) | Anonymous | 1-2 days | 94 |
| 3 | New Mexico | $50 | $0 | 4.9%–5.9% | Anonymous (best) | 1-3 days | 92 |
| 4 | Nevada | $75 | $350/yr | None | Manager listed | 1-2 days | 88 |
| 5 | South Dakota | $150 | $50/yr | None | Manager listed | 3-5 days | 86 |
| 6 | Alaska | $250 | $100/2yr | None | Manager listed | 1-2 weeks | 80 |
| 7 | Tennessee | $300 min (50/mem) | $300 min/yr | None (personal) | Manager listed | 3-5 days | 78 |
| 8 | Texas | $300 | $0 (franchise tax if >$2.47M rev) | None (personal) | Manager listed | 3-5 days | 76 |
| 9 | Florida | $125 | $138.75/yr | None (personal) | Manager listed | 5-10 days | 75 |
| 10 | Washington | $200 | $60/yr + B&O tax | None (personal); B&O | Manager listed | 1-2 days | 72 |
| 11 | Arizona | $50 | $0 | 2.5% (flat) | Manager listed | 2-3 weeks (or $35 exp.) | 68 |
| 12 | Missouri | $50 | $0 | 0%–4.95% | Manager listed | Same day online | 68 |
| 13 | Ohio | $99 | $0 | 0%–3.5% + CAT | Manager listed | 3-7 days | 68 |
| 14 | Michigan | $50 | $25/yr | 4.25% (flat) | Manager listed | 5-10 days | 66 |
| 15 | Colorado | $50 | $10/yr | 4.25% (flat) | Manager listed | 1-2 days | 65 |
| 16 | Indiana | $95 | $32/2yr | 3.05% (flat) | Manager listed | 1-3 days | 64 |
| 17 | Kentucky | $40 | $15/yr | 4% (flat) | Manager listed | 1-3 days | 64 |
| 18 | Georgia | $100 | $50/yr | 5.39% (flat 2024) | Manager listed | 5-7 days | 63 |
| 19 | Iowa | $50 | $60/2yr | 4.4%–5.7% | Manager listed | 1-3 days | 63 |
| 20 | Oklahoma | $100 | $25/yr | 0.25%–4.75% | Manager listed | 5-7 days | 63 |
| 21 | Arkansas | $45 | $150/yr | 0%–4.4% | Manager listed | 1-3 days | 62 |
| 22 | Idaho | $100 | $0 | 5.8% (flat 2023) | Manager listed | 7-10 days | 62 |
| 23 | Utah | $70 | $18/yr | 4.55% (flat) | Manager listed | 1-3 days | 62 |
| 24 | North Carolina | $125 | $200/yr | 4.5% (flat 2024) | Manager listed | 3-5 days | 60 |
| 25 | Pennsylvania | $125 | $70/10yr (decennial) | 3.07% (flat) | Manager listed | 10-15 days | 60 |
| 26 | Alabama | $200 | $100 BPT min | 2%–5% | Manager listed | 5-7 days | 58 |
| 27 | Mississippi | $50 | $25/yr | 4.7% (flat 2024) | Manager listed | 3-5 days | 58 |
| 28 | Virginia | $100 | $50/yr | 2%–5.75% | Manager listed | 5-10 days | 58 |
| 29 | New Hampshire | $100 | $100/yr | None personal; BPT/BET | Manager listed | 1-3 days | 57 |
| 30 | South Carolina | $110 | $0 | 0%–6.4% | Manager listed | 1-3 days | 57 |
| 31 | West Virginia | $100 | $25/yr | 2.36%–5.12% | Manager listed | 5-7 days | 56 |
| 32 | Kansas | $160 | $50/yr | 3.1%–5.7% | Manager listed | 1-3 days | 55 |
| 33 | Louisiana | $100 | $35/yr | 1.85%–4.25% | Manager listed | 5-7 days | 55 |
| 34 | Montana | $35 | $20/yr | 1%–5.9% | Manager listed | 3-7 days | 55 |
| 35 | Maine | $175 | $85/yr | 5.8%–7.15% | Manager listed | 1-3 weeks | 54 |
| 36 | Minnesota | $155 | $0 | 5.35%–9.85% | Manager listed | 1-3 days | 54 |
| 37 | Vermont | $125 | $35/yr | 3.35%–8.75% | Manager listed | 1-3 days | 54 |
| 38 | Nebraska | $100 | $10/2yr | 2.46%–5.84% | Manager listed | 1-3 days | 53 |
| 39 | North Dakota | $135 | $50/yr | 1.1%–2.5% | Manager listed | 5-7 days | 53 |
| 40 | Wisconsin | $130 | $25/yr | 3.5%–7.65% | Manager listed | 5-7 days | 53 |
| 41 | Oregon | $100 | $100/yr | 4.75%–9.9% | Manager listed | 1-2 days | 52 |
| 42 | Rhode Island | $150 | $50/yr | 3.75%–5.99% | Manager listed | 3-5 days | 51 |
| 43 | Maryland | $100 | $300/yr | 2%–5.75% | Manager listed | 5-7 days | 50 |
| 44 | Connecticut | $120 | $80/yr | 3%–6.99% + capital base tax | Manager listed | 3-5 days | 48 |
| 45 | Hawaii | $50 | $15/yr | 1.4%–11% | Manager listed | 3-5 days | 48 |
| 46 | New York | $200 | $9/2yr + publication req. | 4%–10.9% | Manager listed | 7-10 days | 45 |
| 47 | New Jersey | $125 | $75/yr | 1.4%–10.75% | Manager listed | 1-3 days | 42 |
| 48 | Illinois | $150 | $75/yr min | 4.95% (flat) | Manager listed | 1-3 weeks | 38 |
| 49 | District of Columbia | $99 | $300/2yr | 6% flat corp franchise | Manager listed | 5-10 days | 35 |
| 50 | Massachusetts | $500 | $500/yr | 5% (flat) | Manager listed | 5-7 days | 32 |
| 51 | California | $70 | $800/yr min + GRT | 1.4%–13.3% | Manager listed | Same day online | 30 |
Key trends & takeaways
The "form where you do business" default is winning
Ten years ago the online-LLC-service industry pushed Nevada and Delaware for everyone. Today, the mainstream advice — from state bar associations, CPAs, and business attorneys — is: form in the state where you actually do business. Otherwise, you pay for the formation state's filing/annual fees AND foreign-registration fees in your home state, plus foreign-entity income tax exposure.
The exceptions worth knowing:
- Holding entities for real estate or IP that generate passive income unrelated to your home state.
- VC-backed startups where Delaware is essentially required by investor preference.
- Multi-state operations where a Delaware or Wyoming parent + operating subsidiaries in each state simplifies structure.
The Corporate Transparency Act changed the privacy calculation
Since 2024, most US LLCs must report beneficial ownership information to FinCEN under the federal Corporate Transparency Act — the information is not public but is available to law enforcement. This has slightly reduced the practical value of state-level anonymity offered by Wyoming, New Mexico, and Delaware. Anonymity from casual searchers remains, but genuine beneficial ownership is now on file federally.
California's cost gap keeps growing
California's $800 minimum annual franchise tax is now more than 13× Wyoming's total annual cost. For sole proprietors and single-member LLCs that don't strictly need to be in California, the cost gap is a real business decision — though the "do business in California" rule limits when this is possible.
What to watch in 2026
- Federal Corporate Transparency Act: Ongoing federal court litigation may affect enforcement.
- State franchise tax reform: A few states (Illinois, Massachusetts) periodically consider franchise-tax reform.
- Delaware LLC Act amendments: Delaware routinely updates its LLC Act; 2025–2026 amendments continue.
Ready to form your LLC? Get expert help.
The right formation state depends on where you'll operate, your business type, and long-term goals. Connect with a business attorney or specialized LLC formation service.
FAQs about this ranking
Primary sources
- National Federation of Independent Business — State LLC Formation. Business-owner-oriented state-by-state resource. https://www.nfib.com/
- Nolo — State LLC Filing Fees. Reference chart with current filing and annual fees. https://www.nolo.com/legal-encyclopedia/state-guide-llc-report-tax-filing-requirements.html
- Individual state Secretary of State websites. Primary source for filing forms, fees, and processing times. https://www.usa.gov/state-government
- Individual state LLC statutes. Cited on each state's dedicated LLC formation page. https://statelawhandbook.com/topic/llc-formation/
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