State-level LLC taxes can vary significantly, and what is considered the “lowest” tax rate can change over time due to legislative changes and updates in tax laws. When considering the tax implications of forming an LLC, it’s essential to look at various factors, including income taxes, franchise taxes, annual fees, and other state-specific requirements.

States known for having relatively low or no income taxes and favorable LLC tax environments:

1. Nevada: Nevada is often cited as one of the states with favorable tax treatment for LLCs. It has no state income tax, no franchise tax, and no capital gains tax.
2. Wyoming: Wyoming is another state known for its business-friendly environment. It has no state income tax, no franchise tax, and no taxes on LLC ownership or membership interests.
3. South Dakota: South Dakota has no state income tax and does not impose taxes on LLCs based on ownership or membership interests. However, there is a small annual filing fee.
4. Florida: Florida has no state income tax for individuals, which can be advantageous for LLC members. Additionally, there is no state-level franchise tax for LLCs.
5. Texas: Texas is known for not having a state income tax, making it an attractive option for LLC members. While there is no state-level franchise tax, there may be other state fees to consider.
6. Alaska: Alaska does not have a state income tax or a state-level sales tax, which can be advantageous for both individuals and businesses, including LLCs.
7. New Hampshire: New Hampshire does not have a state income tax on wages or salaries, but it does tax interest and dividend income. There is no state-level franchise tax for LLCs.

While these states may have advantageous tax environments, other factors should also be considered when choosing where to form your LLC. These factors include state regulations, the cost of doing business, proximity to customers, and the specific needs of your business. Tax laws can change over time, so it’s advisable to consult with a tax professional or attorney who is knowledgeable about the current tax laws in the state where you plan to form your LLC.