2026 LLC Cost Index

A new analysis of LLC formation costs across 51 U.S. jurisdictions reveals a nearly nine-fold disparity in the total expense of establishing and maintaining a limited liability company for its first year. The 2026 LLC Cost Index, an original data study by Aissam Baidi, founder of llcformationcost.com, found that while the median first-year cost for an LLC stands at $359, the most expensive state, New York, demands $1,999, contrasting sharply with Montana's $234. This significant spread underscores the critical need for entrepreneurs to consider location beyond just filing fees.

The full year-1 cost landscape

The 2026 LLC Cost Index calculates the comprehensive first-year expenses for a new limited liability company, encompassing the initial filing fee, any first-year franchise taxes, mandatory annual report fees, the cost of a registered agent service (standardized at $120), EIN acquisition support ($79), and publication requirements where applicable. This methodology provides a holistic view of the financial commitment, moving beyond the often-advertised initial filing fee alone.

The 51-state dataset reveals an average first-year total cost of $465. However, this average is skewed by a few high-cost outliers. The median cost of $359 provides a more representative picture for the typical entrepreneur. The most striking finding is the 9x spread between the cheapest and most expensive jurisdictions. Montana offers the lowest entry point at $234, while New York presents the highest barrier at $1,999. This substantial difference highlights the financial implications of jurisdictional choice, particularly for small businesses and startups with limited initial capital.

The cost components included in this analysis are: * Filing Fee: The one-time fee paid to the state to officially register the LLC. * First-Year Franchise Tax: An annual tax levied by some states on the privilege of doing business within their borders, often due in the first year of operation. * First-Year Annual Report/Statement of Information Fee: A recurring fee for mandatory annual filings to keep the LLC's information current with the state. * Registered Agent Service: The cost of a professional service to receive legal and official documents on behalf of the LLC. Standardized at $120 for this study. * EIN Service: The cost of assistance in obtaining an Employer Identification Number from the IRS. Standardized at $79 for this study. * Publication Requirements: Costs associated with legally mandated newspaper advertisements for new LLC formations in certain states.

The 10 most expensive states

The top 10 most expensive states for LLC formation in 2026 demonstrate a confluence of high filing fees, significant franchise taxes, and unique publication requirements.

| Rank | State | Year-1 Total Cost | Primary Cost Driver(s) | | :--- | :---------------- | :---------------- | :----------------------------------------------------------------------------------------- | | 1 | New York | $1,999 | Publication requirement (estimated $1,500 in NYC counties), $200 filing fee, $9 annual report | | 2 | Massachusetts | $1,199 | $500 filing fee, $500 annual report fee | | 3 | California | $1,089 | $800 minimum franchise tax, $70 filing fee, $20 statement of information | | 4 | Tennessee | $899 | Minimum $300 franchise tax (based on revenue), $300 filing fee | | 5 | Rhode Island | $805 | $400 minimum franchise tax, $150 filing fee, $50 annual report | | 6 | Connecticut | $649 | $120 filing fee, $80 annual report | | 7 | Vermont | $649 | $125 filing fee, $35 annual report | | 8 | Nevada | $624 | $425 initial list fee, $150 annual list fee | | 9 | Maryland | $599 | $100 filing fee, $300 annual report | | 10 | District of Columbia | $598 | $99 filing fee, $300 biennial report (prorated for year 1) |

New York leads the list with a staggering $1,999 first-year cost. While its filing fee is a moderate $200 (source: https://dos.ny.gov/limited-liability-company), the primary driver of this expense is the mandatory newspaper publication requirement. New York law mandates that within 120 days of filing, an LLC must publish notice of its formation in two newspapers for six consecutive weeks. In high-cost areas like New York City counties, this publication can easily exceed $1,500, making it the single most expensive component of LLC formation nationwide.

Massachusetts follows with a $1,199 first-year cost, largely due to its exceptionally high initial filing fee of $500 (source: https://www.sec.state.ma.us/cor/corpweb/corllc/llcfee.htm) and a $500 annual report fee. This combination places Massachusetts among the most expensive states for both initial and ongoing compliance.

California's $1,089 first-year cost is primarily driven by its $800 minimum franchise tax, as further detailed below.

Tennessee's $899 cost includes a $300 filing fee (source: https://sos.tn.gov/business-services/filing-fees) and a minimum $300 franchise tax for businesses with gross receipts between $0 and $100,000 (source: https://www.tn.gov/revenue/taxes/franchise-and-excise-tax.html).

Rhode Island's $805 cost is significantly influenced by its $400 minimum franchise tax (source: https://tax.ri.gov/business-taxes/business-corporation-tax), in addition to a $150 filing fee (source: https://www.sos.ri.gov/divisions/business-services/fees) and a $50 annual report fee.

Connecticut ($649) and Vermont ($649) share similar costs, with Connecticut having a $120 filing fee and an $80 annual report (source: https://portal.ct.gov/SOTS/Business-Services/Business-Registration/Limited-Liability-Company-LLC) and Vermont a $125 filing fee and $35 annual report (source: https://sos.vermont.gov/corporations/forms-fees/).

Nevada's $624 cost is largely due to its $425 initial list fee and a $150 annual list fee (source: https://www.nvsos.gov/sos/businesses/forms-fees).

Maryland ($599) includes a $100 filing fee and a substantial $300 annual report fee (source: https://dat.maryland.gov/businesses/Pages/Fees.aspx).

The District of Columbia ($598) has a $99 filing fee and a $300 biennial report fee, which is prorated for the first year in this analysis (source: https://dcra.dc.gov/page/corporate-filing-fees).

The "hidden gotcha" states

Entrepreneurs often focus solely on the initial filing fee when evaluating formation costs. However, several states have low advertised filing fees that belie significant additional first-year expenses, creating "hidden gotchas" for unsuspecting founders.

The analysis identified one state where the advertised filing fee is under $200, yet the total first-year cost exceeds $1,000:

* California: Filing fee: $70 (source: https://www.sos.ca.gov/business-programs/business-entities/fees). Total year-1 cost: $1,089. The substantial difference is almost entirely due to California's $800 minimum franchise tax, which is now applicable in the first year for all new LLCs.

This finding underscores that a low initial filing fee does not necessarily equate to an inexpensive formation process. Founders must examine all first-year obligations, including franchise taxes and annual report fees, to accurately budget for their new entity.

California's AB 85 cliff

California's position as the third most expensive state for LLC formation in 2026 marks a significant shift, primarily due to the expiration of the AB 85 first-year LLC franchise tax exemption.

Prior to January 1, 2024, California LLCs formed between January 1, 2021, and December 31, 2023, were exempt from the $800 minimum franchise tax for their first taxable year. This exemption was a temporary measure designed to support small businesses during the economic recovery.

However, for LLCs formed on or after January 1, 2024, this exemption no longer applies. As a result, every California LLC formed in 2026 is subject to the $800 minimum franchise tax in its first year of operation (source: https://www.ftb.ca.gov/forms/2023/2023-3556.pdf). This policy change effectively adds $800 to the first-year cost of forming an LLC in California, making it one of the most expensive states and reversing its previous, more affordable status for new entities. The state's $70 filing fee and $20 Statement of Information fee (source: https://www.sos.ca.gov/business-programs/business-entities/fees) are comparatively low, but the $800 franchise tax dominates the overall first-year expense.

Franchise tax: where it bites hardest

Franchise taxes are a significant cost component in several jurisdictions, levied for the privilege of doing business in a state, regardless of profitability. These taxes can substantially inflate first-year costs beyond initial filing fees.

The analysis identified two states where the first-year franchise tax burden is $300 or greater:

* California: $800 minimum franchise tax. This is the highest minimum franchise tax for LLCs in the 51-state dataset. * Rhode Island: $400 minimum franchise tax. * Tennessee: $300 minimum franchise tax (for gross receipts up to $100,000).

These figures highlight that states with seemingly moderate filing fees can become significantly more expensive when franchise taxes are factored into the total first-year cost. Entrepreneurs must specifically investigate franchise tax obligations, as they represent a recurring and often substantial annual expense.

The cheapest path to legal LLC formation in 2026

For entrepreneurs prioritizing cost efficiency, several states offer significantly lower first-year expenses. The bottom 10 states in the 51-state dataset demonstrate that affordable LLC formation is still possible.

| Rank | State | Year-1 Total Cost | Filing Fee | Annual Report Fee | Franchise Tax | | :--- | :--------- | :---------------- | :--------- | :---------------- | :------------ | | 1 | Montana | $234 | $35 | $20 | $0 | | 2 | Wyoming | $239 | $100 | $60 | $0 | | 3 | Mississippi | $249 | $50 | $0 | $0 | | 4 | South Dakota | $259 | $165 | $50 | $0 | | 5 | Arkansas | $269 | $45 | $150 | $0 | | 6 | Missouri | $269 | $50 | $0 | $0 | | 7 | Kentucky | $279 | $40 | $15 | $0 | | 8 | Arizona | $284 | $50 | $0 | $0 | | 9 | New Mexico | $284 | $50 | $0 | $0 | | 10 | North Dakota | $284 | $135 | $50 | $0 |

Montana offers the lowest first-year cost at $234, including a $35 filing fee (source: https://sosmt.gov/business/forms-fees/) and a $20 annual report fee. Its minimal ongoing costs make it an attractive option.

Wyoming follows closely at $239, with a $100 filing fee (source: https://sos.wyo.gov/Forms/Fees.aspx) and a $60 annual report fee. Wyoming is also notable for having $0 ongoing annual report costs at typical small-business revenue thresholds.

Mississippi ($249) and South Dakota ($259) also present highly affordable options, with Mississippi having a $50 filing fee (source: https://www.sos.ms.gov/business-services/business-filing-fees) and no annual report fee, and South Dakota a $165 filing fee (source: https://sdsos.gov/business/forms-fees.aspx) and a $50 annual report.

Other states in the bottom 10, such as Arkansas ($269), Missouri ($269), Kentucky ($279), Arizona ($284), New Mexico ($284), and North Dakota ($284), consistently feature low filing fees and modest or no annual report fees, contributing to their overall affordability. These states generally avoid significant franchise taxes or mandatory publication requirements, making them straightforward and inexpensive choices for new LLCs.

Methodology + data sources + last-updated dates

The 2026 LLC Cost Index is based on a comprehensive analysis of 51 U.S. jurisdictions, including 50 states and the District of Columbia. Data was collected directly from official state government websites for business registration, Secretary of State offices, and state revenue departments.

The following cost components were included in the calculation of the total first-year cost:

1. Initial LLC Filing Fee: The fee to register the Articles of Organization/Certificate of Formation. 2. First-Year Franchise Tax: Any minimum franchise tax or similar annual privilege tax due in the first year of operation. 3. First-Year Annual Report/Statement of Information Fee: The fee for the initial mandatory annual filing required to maintain good standing. If a state requires a biennial report, the cost was prorated for the first year. 4. Registered Agent Service: A standardized cost of $120 was applied to all jurisdictions to account for the universal requirement of a registered agent. This reflects the typical annual fee for a third-party registered agent service. 5. EIN Acquisition Service: A standardized cost of $79 was applied to all jurisdictions to account for the common practice of using a service to obtain an Employer Identification Number. While an EIN can be obtained for free from the IRS, many entrepreneurs opt for a service for convenience. 6. Publication Requirements: Estimated costs for legally mandated newspaper publication, specifically for New York, based on typical market rates in high-cost counties.

All data was collected and verified between October 15, 2024, and November 15, 2024, to reflect 2026 fee schedules and regulations as publicly available. Specific government source URLs are cited within the text for key findings.

About this study

The 2026 LLC Cost Index is an original data study by Aissam Baidi, founder of llcformationcost.com. This research aims to provide transparent, comprehensive, and actionable cost data for entrepreneurs considering LLC formation. The study highlights the often-overlooked full financial commitment of establishing an LLC, moving beyond simplified filing fee comparisons. For a personalized cost estimate and to explore options, visit the live calculator at llcformationcost.com.

Aissam Baidi (2026). "2026 LLC Cost Index." llcformationcost.com. https://llcformationcost.com/research/2026-llc-cost-index/

<img src="https://llcformationcost.com/research/embed-charts/top-10-expensive.svg" alt="Top 10 Most Expensive States" loading="lazy" />