An LLC by itself usually pays no federal tax. The IRS treats most LLCs as pass-through entities, so profits land on the owners’ personal returns and are taxed there. For 2026, that means federal income tax on your share of the profit at rates from 10% to 37%, a 15.3% self-employment tax on net earnings, and whatever your state adds. So the honest answer to how much LLC taxes cost is: it depends on your profit, how many owners you have, which state you’re in, and whether you’ve elected to be taxed as a corporation. The rest of this article walks through each layer with the 2026 numbers.
Federal Income Tax on Your Share of the Profit
A single-member LLC reports its profit or loss on Schedule C of Form 1040. A multi-member LLC files Form 1065 and issues each owner a Schedule K-1 showing their share.1Internal Revenue Service. Instructions for Schedule C (Form 1040) Either way, the LLC income joins the owner’s other income — wages from a spouse, investment earnings, side work — and is taxed at ordinary graduated rates.
For 2026, the federal brackets for a single filer are:2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- 10% on taxable income up to $12,400
- 12% on income from $12,401 to $50,400
- 22% on income from $50,401 to $105,700
- 24% on income from $105,701 to $201,775
- 32% on income from $201,776 to $256,225
- 35% on income from $256,226 to $640,600
- 37% on income above $640,600
Married couples filing jointly reach each threshold at roughly double those amounts. Because the brackets are progressive, only the dollars inside a given range are taxed at that range’s rate. An owner with $80,000 of taxable income pays 10% on the first $12,400, 12% on the next slice, and only the portion above $50,400 is taxed at 22%.
Before any of this applies, you subtract the standard deduction: $16,100 for single filers and $32,200 for married couples filing jointly in 2026.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
The Qualified Business Income Deduction
Pass-through LLC owners can also claim a deduction on qualified business income under Section 199A. The One, Big, Beautiful Bill made this deduction permanent starting in 2026 and raised it from 20% to 23% of qualifying income.3Internal Revenue Service. One, Big, Beautiful Bill Provisions If your LLC earns $100,000 of qualified business income, you can deduct $23,000 before figuring income tax. The deduction lowers income tax only; it does not reduce self-employment tax.
Not everything qualifies. Guaranteed partnership payments and the reasonable salary an S-corp owner pays themselves are excluded.4Internal Revenue Service. Qualified Business Income Deduction Owners of specified service businesses — law, accounting, medicine, and similar fields — start to lose the deduction once taxable income exceeds $201,750 (single) or $403,500 (joint), and it disappears entirely above $276,750 or $553,500. Non-service businesses can still claim it at higher incomes, though the calculation gets more involved.
Self-Employment Tax: The 15.3% Most Owners Don’t See Coming
On top of income tax, LLC owners owe 15.3% self-employment tax on their net business earnings to fund Social Security and Medicare. The rate splits into 12.4% for Social Security and 2.9% for Medicare.5Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax Employees split those costs with their employer. As an LLC owner, you cover both halves.
The Social Security portion only applies up to an annual cap. For 2026, the cap is $184,500.6Social Security Administration. Contribution and Benefit Base Earnings above that are exempt from the 12.4% Social Security piece. The 2.9% Medicare portion has no ceiling. If your self-employment income tops $200,000 (single) or $250,000 (joint), an extra 0.9% Medicare surcharge applies to the excess.7Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Two adjustments soften the hit. First, self-employment tax applies to 92.35% of net earnings, not 100%. Second, you can deduct half of your self-employment tax when calculating adjusted gross income, which lowers your income tax.8Internal Revenue Service. Topic No. 554, Self-Employment Tax Both calculations happen on Schedule SE.
A Quick Example
Say your LLC nets $120,000 after expenses. Multiply by 92.35% and you get $110,820 in taxable self-employment earnings. The 15.3% tax on that is about $16,955. You then deduct half of that ($8,478) from your gross income before figuring federal income tax. The effective self-employment tax rate on the original $120,000 works out closer to 14.1%.
State Income Tax and Annual LLC Fees
Federal tax is only part of the total. Most states impose their own income tax on pass-through business earnings, at rates ranging from zero in states without an income tax to over 13% at the high end. Your LLC profit flows to your state return the same way it flows to your federal one, so in most jurisdictions the same dollars get taxed twice.
Many states also charge an annual fee just for keeping an LLC on the books. These range from nothing in some states to over $800 in others, whether or not the LLC made a dollar that year. A few states scale the fee to revenue or in-state assets, which can add up to thousands for a high-revenue business. Skipping the payment can trigger administrative dissolution, and with it the loss of the liability protection you formed the LLC to get.
A handful of states tax gross receipts rather than net income. That distinction matters. Gross receipts tax applies to every dollar of revenue before expenses. A business with $500,000 in revenue and $450,000 in expenses owes gross receipts tax on the full $500,000 even though real profit was only $50,000.
Payroll Taxes If Your LLC Has Employees
Hiring adds another layer. As an employer, you pay 7.65% of each worker’s gross wages for your share of Social Security and Medicare, matching the 7.65% withheld from the employee’s paycheck.9Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates The Social Security portion stops at the same $184,500 wage cap.
You also owe federal unemployment tax (FUTA) at 6% on the first $7,000 of each employee’s annual wages.10Office of the Law Revision Counsel. 26 USC 3301 – Rate of Tax Contributions to a state unemployment program generate a credit that drops the effective federal rate to 0.6% for most employers.11Internal Revenue Service. Topic No. 759, Form 940 – Employers Annual Federal Unemployment Tax State unemployment insurance stacks on top, with wage bases from the federal floor of $7,000 up to more than $60,000 depending on the state.
Can You Lower the Bill by Electing S-Corp or C-Corp Status?
An LLC doesn’t have to accept the default pass-through treatment. Filing the right form lets you elect to be taxed as a C corporation or an S corporation, and each option changes the math.
C Corporation Election
Filing Form 8832 elects C-corp treatment.12Internal Revenue Service. About Form 8832, Entity Classification Election The LLC then pays a flat 21% corporate income tax on profits. Owners pay no personal tax until the business distributes dividends, which are then taxed again on the owner’s return. That double taxation is the main drawback. Some owners still choose it when they plan to reinvest heavily and keep personal taxable income low, or when 21% beats their personal marginal rate.
S Corporation Election
Filing Form 2553 elects S-corp treatment, which keeps pass-through taxation but changes how self-employment tax applies.13Internal Revenue Service. About Form 2553, Election by a Small Business Corporation As an S-corp owner working in the business, you must pay yourself a reasonable salary. That salary is subject to 7.65% employer and 7.65% employee FICA. Any remaining profit taken as a shareholder distribution is not subject to self-employment tax.
This is where the real savings sit for profitable LLCs. If your business nets $200,000 and a reasonable salary for your role is $90,000, only the $90,000 draws payroll tax. The other $110,000 passes through as ordinary income, subject to income tax but not the 15.3% self-employment tax. That’s roughly $15,000 saved in a single year.
The IRS watches this closely. Setting your salary artificially low invites reclassification of distributions as wages plus back taxes and penalties.14Internal Revenue Service. Paying Yourself The election works best when the business consistently earns well above what you’d need to draw as salary. For LLCs earning under about $60,000 to $70,000, payroll costs and added accounting often erase the savings.
Quarterly Estimated Payments and Late Penalties
LLC owners don’t have withholding, so they pay the IRS quarterly. Estimated payments cover income tax and self-employment tax together. The 2026 due dates are:15Internal Revenue Service. Estimated Tax
- April 15, 2026 for income earned January through March
- June 15, 2026 for April and May
- September 15, 2026 for June through August
- January 15, 2027 for September through December
You generally avoid underpayment penalties if your total tax owed after withholding and credits is under $1,000, or if you pay at least 90% of the current year’s liability or 100% of last year’s, whichever is less.16Internal Revenue Service. Estimated Taxes If your adjusted gross income exceeded $150,000 last year ($75,000 if married filing separately), the prior-year safe harbor rises to 110%.17Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
Filing deadlines depend on classification. A single-member LLC follows the individual April 15 deadline. Multi-member LLCs taxed as partnerships file Form 1065 by March 15, and S-corp LLCs also file by March 15. An extension gives you six more months to file, but not to pay.
Late-filing penalties on partnership returns add up fast. For returns due in 2026, the IRS charges $255 per partner per month a return is late, for up to 12 months.18Internal Revenue Service. Failure to File Penalty A five-member LLC that files three months late owes $3,825 even if no tax is due at the entity level. S-corp returns carry a similar per-shareholder structure. Because these returns are informational, owners often assume there’s no urgency; the notice arrives anyway.