Cheapest States to Form an LLC (2026 Cost Ranking)
Pure cost ranking of forming and operating an LLC in each US state in 2026 — filing fee, annual/franchise tax, year-1 total, year-5 total. If minimizing entity cost is your priority, this is where to look.
5 cheapest states for LLC formation
Kentucky and Montana tie at $55 year-1 cost. Missouri, New Mexico, and Arizona follow at $50 with no annual fees.
$40 filing + $15/yr = $55 first year, $115 over 5 years. The cheapest LLC in the US.
$35 filing + $20/yr = $55 first year, $135 over 5 years. Very low cost for a no-sales-tax state.
$50 filing + $0/yr = $50 first year, $50 over 5 years. No annual report, no franchise tax.
$50 filing + $0/yr = $50 first year, $50 over 5 years. No annual report and anonymous LLCs.
$50 filing + $0/yr = $50 first year, $50 over 5 years. No annual report or franchise tax.
Kentucky and Montana tie for the cheapest first-year LLC at $55 total ($40 or $35 filing + $15 or $20 annual). Missouri, New Mexico, and Arizona tie for the lowest lifetime cost at $50 total with no annual report or franchise tax. If you want the cheapest 5-year total, look at these three — after formation, the ongoing cost is $0 in each. California ($4,070 over 5 years) and Massachusetts ($3,000 over 5 years) are by far the most expensive, driven by California's $800 annual franchise tax and Massachusetts's $500 filing plus $500 annual report.
Important caveat: This ranking is pure entity cost. It does not include income tax on the owners' pass-through share, foreign-registration fees if you operate outside the formation state, or registered agent fees (typically $50–$300/year if you use a service). For most operating businesses, the total cost of forming out-of-state exceeds the savings once foreign registration is required in your home state.
How we ranked
This is a cost-only ranking. The composite score reflects three factors:
- Year-1 total cost (50%): Filing fee + first year's annual report or franchise tax.
- Year-5 total cost (35%): Filing fee + 5 years of annual fees. Reveals states where a low filing fee hides a heavy annual burden.
- Annual/franchise tax rate (15%): Recurring cost as a percentage of the year-1 total.
State income tax on pass-through owners is not included in the score (varies by owner income) but is shown in the table for reference. Registered agent fees also excluded — they range $0 (if you or a member acts as registered agent in-state) to $300/year (commercial registered agent service).
Top 10 states in detail
Why each of the top 10 earned its ranking, with headline metrics linked to the full state guide.
Kentucky ties for cheapest first-year LLC cost at $55 ($40 filing + $15 first annual report), and the cheapest 5-year running cost at $115 total. No franchise tax on LLC pass-through income, though the 4% flat state income tax applies to owners.
Montana ties Kentucky for the cheapest first-year cost. No sales tax, no annual franchise tax. Only the 4.7% state income tax applies to pass-through owners.
Missouri has one of the simplest LLC frameworks in the US: $50 filing fee, no annual report, no franchise tax. Lifetime cost for the entity is $50 unless you make changes.
New Mexico charges $50 to file and has no annual report or franchise tax. Combined with anonymous filings, NM is uniquely well-suited for passive holding entities.
Arizona charges $50 to file, has no annual report requirement, and no franchise tax. 2.5% flat state income tax applies. Publication requirement in a few counties adds a small extra cost.
Form your LLC in the lowest-cost state that works for you.
Cost is only one factor — the right formation state depends on where you'll operate. Get help choosing and filing.
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 Fee | Year-1 Total | Year-5 Total | State Income Tax | Cost Score |
|---|---|---|---|---|---|---|---|
| 1 | Kentucky | $40 | $15/yr | $55 | $115 | 4% (flat) | 98 |
| 2 | Montana | $35 | $20/yr | $55 | $135 | 4.7% (flat) | 96 |
| 3 | Missouri | $50 | $0 | $50 | $50 | 0%–4.95% | 94 |
| 4 | New Mexico | $50 | $0 | $50 | $50 | 4.9%–5.9% | 93 |
| 5 | Arizona | $50 | $0 | $50 | $50 | 2.5% (flat) | 91 |
| 6 | Michigan | $50 | $25/yr | $75 | $175 | 4.25% (flat) | 87 |
| 7 | Mississippi | $50 | $25/yr | $75 | $175 | 4.7% (flat) | 86 |
| 8 | Colorado | $50 | $10/yr | $60 | $100 | 4.25% (flat) | 85 |
| 9 | Hawaii | $50 | $15/yr | $65 | $125 | 1.4%–11% | 84 |
| 10 | Iowa | $50 | $60/2yr | $50 | $170 | 4.4%–5.7% | 84 |
| 11 | Utah | $70 | $18/yr | $88 | $160 | 4.55% (flat) | 80 |
| 12 | Arkansas | $45 | $150/yr | $195 | $795 | 0%–4.4% | 78 |
| 13 | Ohio | $99 | $0 | $99 | $99 | 0%–3.5% + CAT | 76 |
| 14 | Oklahoma | $100 | $25/yr | $125 | $225 | 0.25%–4.75% | 76 |
| 15 | South Carolina | $110 | $0 | $110 | $110 | 0%–6.4% | 75 |
| 16 | Idaho | $100 | $0 | $100 | $100 | 5.8% (flat) | 74 |
| 17 | Indiana | $95 | $32/2yr | $95 | $159 | 3.05% (flat) | 74 |
| 18 | Pennsylvania | $125 | $70/10yr | $125 | $125 | 3.07% (flat) | 73 |
| 19 | Virginia | $100 | $50/yr | $150 | $350 | 2%–5.75% | 72 |
| 20 | Wyoming | $100 | $60/yr | $160 | $400 | None | 72 |
| 21 | Nebraska | $100 | $10/2yr | $100 | $120 | 2.46%–5.84% | 71 |
| 22 | West Virginia | $100 | $25/yr | $125 | $225 | 2.36%–5.12% | 71 |
| 23 | Louisiana | $100 | $35/yr | $135 | $275 | 1.85%–4.25% | 70 |
| 24 | New Hampshire | $100 | $100/yr | $200 | $600 | None personal | 70 |
| 25 | Georgia | $100 | $50/yr | $150 | $350 | 5.39% (flat) | 68 |
| 26 | Florida | $125 | $138.75/yr | $264 | $680 | None personal | 66 |
| 27 | Delaware | $110 | $300/yr | $410 | $1,310 | None (LLCs) | 65 |
| 28 | North Dakota | $135 | $50/yr | $185 | $335 | 1.1%–2.5% | 65 |
| 29 | North Carolina | $125 | $200/yr | $325 | $925 | 4.5% (flat) | 64 |
| 30 | Vermont | $125 | $35/yr | $160 | $300 | 3.35%–8.75% | 62 |
| 31 | Wisconsin | $130 | $25/yr | $155 | $230 | 3.5%–7.65% | 60 |
| 32 | Kansas | $160 | $50/yr | $210 | $360 | 3.1%–5.7% | 58 |
| 33 | Minnesota | $155 | $0 | $155 | $155 | 5.35%–9.85% | 58 |
| 34 | South Dakota | $150 | $50/yr | $200 | $350 | None | 57 |
| 35 | Oregon | $100 | $100/yr | $200 | $500 | 4.75%–9.9% | 56 |
| 36 | Alabama | $200 | $100/yr min | $300 | $600 | 2%–5% | 54 |
| 37 | Maine | $175 | $85/yr | $260 | $515 | 5.8%–7.15% | 54 |
| 38 | Rhode Island | $150 | $50/yr | $200 | $350 | 3.75%–5.99% | 54 |
| 39 | Connecticut | $120 | $80/yr | $200 | $440 | 3%–6.99% | 52 |
| 40 | Alaska | $250 | $100/2yr | $250 | $450 | None personal | 50 |
| 41 | New York | $200 | $9/2yr + publication ($200–$2000) | $400–$2,200 | $418–$2,218 | 4%–10.9% | 50 |
| 42 | Texas | $300 | $0 (if rev < $2.47M) | $300 | $300 | None personal | 50 |
| 43 | Tennessee | $300 min ($50/mem) | $300 min/yr | $600 | $1,800 | None personal | 48 |
| 44 | Washington | $200 | $60/yr | $260 | $500 | None personal | 46 |
| 45 | Maryland | $100 | $300/yr | $400 | $1,300 | 2%–5.75% | 44 |
| 46 | Illinois | $150 | $75/yr min | $225 | $525 | 4.95% (flat) | 40 |
| 47 | District of Columbia | $99 | $300/2yr | $99 | $699 | 6% corp franchise | 38 |
| 48 | Nevada | $75 | $350/yr (list + license) | $425 | $1,825 | None | 36 |
| 49 | New Jersey | $125 | $75/yr | $200 | $500 | 1.4%–10.75% | 32 |
| 50 | California | $70 | $800/yr min | $870 | $4,070 | 1.4%–13.3% | 15 |
| 51 | Massachusetts | $500 | $500/yr | $1,000 | $3,000 | 5% (flat) | 10 |
Key trends & takeaways
The $50–$55 sweet spot
Five states cluster around $50–$55 for full first-year LLC cost — Kentucky, Montana, Missouri, New Mexico, and Arizona. Among these, Missouri and New Mexico stand out for lifetime cost because they charge no annual report or franchise tax at all. If you have an LLC that will exist for many years and generate limited income, these are the pure-cost winners.
The California franchise tax is a persistent outlier
California's $800 minimum annual franchise tax — regardless of income — creates a $4,000+ five-year cost for every LLC. Even a single-member LLC that generates no revenue owes $800 per year. The first-year waiver that applied to LLCs formed 2021–2023 has sunset, so LLCs formed in 2024 and later owe the tax from year one.
Cheap doesn't always mean best
If your LLC will operate in your home state, forming in a low-cost state elsewhere usually costs more once you add foreign registration in your home state. Example: forming a Kentucky LLC ($55) and doing business in Illinois requires foreign registration in Illinois ($150 + $75/year) — total year-1 cost $280, not $55. See our "Best States for LLC Formation" ranking for a more nuanced framework.
What to watch in 2026
- Federal Corporate Transparency Act: No state-level cost impact, but BOI reports add federal compliance overhead regardless of formation state.
- State-level fee increases: Several states periodically raise fees; verify current fee with the state's Secretary of State before filing.
- Franchise tax reform: California's $800 minimum has been contested but not reformed.
Form your LLC in the lowest-cost state that works for you.
Cost is only one factor — the right formation state depends on where you'll operate. Get help choosing and filing.
FAQs about this ranking
Primary sources
- Nolo — LLC Filing Fees and Annual Report Fees by State. Reference chart with filing and annual fee data. https://www.nolo.com/legal-encyclopedia/state-guide-llc-report-tax-filing-requirements.html
- State Secretary of State websites. Primary source for current fees. https://www.usa.gov/state-government
- Tax Foundation — State Individual Income Tax Rates. Reference for pass-through income tax rates. https://taxfoundation.org/data/all/state/state-individual-income-tax-rates-and-brackets-2024/
- Individual state LLC statutes. Cited on each state's dedicated LLC formation page. https://statelawhandbook.com/topic/llc-formation/
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