You may have heard that Nevada LLC taxes are favorable to business owners. This is true if you plan to do business there, but keep in mind it’s rarely advantageous for out-of-state businesses to incorporate somewhere other than their home state; taxes accrue where you do business, not where you incorporate.
In this article, we’ll cover everything you need to know about Nevada LLC taxes, from pass-through treatment to self-employment, sales, and payroll taxes.
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LLCs Are “Pass-Through” Entities
LLCs aren’t taxed directly. Instead, income “passes through” to owners as individual income. You can take the same deductions as a W-2 employee, applicable small business tax deductions, and net operating losses from previous years.
As an LLC owner, you have more filing requirements than regular employees.
In addition to Form 1040, you’ll complete Schedule C detailing business financials and calculate self-employment taxes with Schedule SE. If you have employees, you also file a Form 941, which reports payroll tax withheld on their behalf.
This applies to all LLCs, not just those incorporated in Nevada.
However, you’re not limited to the default classification. You can also elect to be taxed as an S-corp or C-corp. Talk to a business tax services specialist before making this decision, but in short, S-corps can be advantageous because their structure can minimize self-employment taxes while C-corps can attract investment by allowing you to sell stock. Read our article on converting LLCs to S Corps or C Corps to learn more.
LLC Taxes in Nevada
Here are the primary reasons Nevada is an attractive place to start a business:
- While the average American pays 8.9% in state income tax, Nevada is one of a handful of states that doesn’t have personal income tax.
- If you’ve elected to be taxed as a C-Corp, you’ll also enjoy zero state corporate income tax.
- Lastly, the Silver State doesn’t charge a franchise tax, a fee many states charge for the privilege of doing business there.
That said, the state isn’t tax-free. In addition to federal tax requirements, there are a number of things for business owners to be mindful of.
Nevada Commerce Tax
Instead of a franchise or corporate income tax, Nevada charges a “commerce tax” on businesses with gross receipts of over $4,000,000. The state charges between 0.051 and 0.331 percent of gross revenue, depending on your industry. See here for a list of applicable tax rates.
The Nevada Commerce Tax Return can be filed here. It’s due 45 days after the end of the fiscal year. The 2024-2025 deadline is August 14, 2025. If necessary, you can file for a 30-day extension using this form.
Nevada Sales Tax
In addition to local rates, the state of Nevada charges a 6.85% sales tax for transactions in the state. To pay this tax, you must first apply for a Nevada business license; the cost is $200 annually for LLCs.
Next, find and file the appropriate form with the Nevada Department of Taxation’s website. Taxes are due according to the following frequencies:
- For over $10,000 monthly revenue, file every month.
- For less than $10,000 monthly revenue, file quarterly.
- If you had less than $1500 in revenue last year, file annually.
Nevada Modified Business Tax
If you have employees, you may be responsible for paying “modified business tax.” This is Nevada’s version of payroll tax.
The first $50,000 of employee wages is exempt. Afterward, gross wages are taxed at 1.17%. LLC owners are not considered employees; if you’re a solo LLC without employees, this doesn’t apply to you.
Modified business tax forms and payments are due quarterly.
Nevada Unemployment Insurance
If you have employees, you’re subject to Nevada unemployment taxes. The rate varies considerably but begins at 2.95% of wages paid to each employee, up to a limit.
The 2024 limit is $40,600, and the 2025 limit is $41,800.
Once you’ve been paying into the system for at least 14 quarters, your rate changes depending on your ratio of contributions to benefits claimed by former employees. You may pay as low as 0.25% or as high as 5.40%.
They’re due quarterly and can be paid using Nevada’s online tax center portal.
Nevada Self-Employment Tax
The state doesn’t charge self-employment tax, but you’re still responsible for Federal Social Security and Medicare taxes. Employers split these with employees. However, as a self-employed business owner, you’re responsible for the full 15.3%.
If you believe you’ll owe over $1,000 in total federal taxes, file quarterly. Otherwise, you can file self-employment taxes alongside your regular income tax at the end of the tax year.
Frequently Asked Questions
Does Nevada have a state income tax?
No. Nevada residents do not pay state tax on income from wages, salaries, or other similar compensation. This is one reason why the Silver State seems so attractive for businesses. However, the state does levy a considerable number of other taxes, such as property, sales, or excise.
What is the sales tax in Nevada?
The base sales tax rate in Nevada is 6.85% but local governments may also levy additional sales tax. Humboldt County is the lowest, at 6.85%. Clark County, home of Las Vegas, is the highest at 8.375%.
What is the Nevada modified business tax?
The MBT is a payroll tax imposed on businesses operating within the state. Businesses that pay over $50,000 in wages are liable. While the first $50,000 is exempted, wages above this amount for most businesses are taxed at 1.17%. Financial institutions are charged 1.554%.
How much is a business license in Nevada?
The business license fee is $200 for most business types and $500 for corporations. It must be renewed annually for the same fee; forms are due on the last day of the anniversary month of which the license was first filed. In addition to the state business license, certain local governments may require additional licenses or permits.
Do you pay federal taxes as an LLC in Nevada?
Yes. Regardless of where you live, all Americans are responsible for federal taxes. By default, LLCs are considered “disregarded entities” fo tax purposes, meaning income is passed through to individual income. As an LLC owner, you must pay both self-employment and federal income tax.
Conclusion
Nevada offers significant tax advantages for LLCs doing business in the state, such as no income or franchise taxes. However, business owners must continue to comply with federal obligations and other state requirements.
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