LLC can be treated by the IRS as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity", dependi
ng on elections made by the LLC and the number of members.
Single Member LLC. LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation.
Multi Member LLC. LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation.
Federal income tax
The U.S. has two separate income tax systems: Federal and State. The Federal tax is administrated by the IRS (Internal Revenue Service) and imposed by the IRC (internal Revenue Code) on net taxable income (gross income minus tax deductions).
Tax Rate--Single Taxpayers--2019
Taxable income: Tax:
Over But not over Tax % On amount over
$ 0 $ 9,700 $ 0.00 10 $ 0 9,700 39,475 970.00 12 9,700 39,475 84,200 4,543.00 22 39,475 84,200 160,725 14,382.50 24 84,200 160,725 204,100 32,748.50 32 160,725 204,100 510,300 46,628.50 35 204,100 510,300 ....... 153,798.50 37 510,300
State tax
State income tax comes in addition to any Federal income tax imposed by the IRS and it is administrated by each state Tax or Revenue Department. There are Seven states that have no income tax:
Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming
Two states have a limited income tax on individuals. These states tax only dividend and interest income:
Tennessee
New Hampshire
Here's a listing of each state's highest income tax rate and how much income you'll have to make to pay that rate.
Alabama: 5% on income over $3,000
Alaska: No income tax
Arizona: 4.54% on income over $150,000
Arkansas: 7% on income over $32,600
California:10.55% on income over $1 million
Colorado: flat 4.63% of federal taxable income
Connecticut: 6.5% on income over $500,000
District of Columbia: 8.5% on income over $40,000
Delaware: 6.95% on income over $60,000
Florida: No income tax
Georgia: 6% on income over $7,000
Hawaii: 11% on income over $200,000
Idaho: 7.8% on income over $26,418
Illinois: flat 3% of federal AGI with modifications
Indiana: flat 3.4% of federal AGI with modifications
Iowa: 8.98% on income over $63,315
Kansas: 6.45% on income over $30,000
Kentucky: 6% on income over $75,000
Louisiana: 6% on income over $50,000
Maine: 8.5% on income over $20,150
Maryland: 6.25% on income over $1 million
Massachusetts: flat 5.3% on all income
Michigan: flat 4.35% of federal AGI with modifications
Minnesota: 7.85% on income over $74,780
Mississippi: 5% on income over $10,000
Missouri: 6% on income over $9,000
Montana: 6.9% on income over $15,400
Nebraska: 6.84% on income over $27,000
Nevada: no income tax
New Hampshire: 5% on interest and dividend income. Wages are not taxed.
New Jersey: 8.97% on income over $500,000
New Mexico: 4.9% on income over $16,000
New York: 8.97% on income over $500,000
North Carolina: 7.75% on income over $60,000
North Dakota: 4.86% on income over $373,650
Ohio: 5.925% on income over $200,000
Oklahoma: 5.5% on income over $8,700
Oregon: 11% on income over $250,000
Pennsylvania: flat 3.07% on all income
Rhode Island: 9.9% on income over $373,650
South Carolina: 7% on income over $13,700
South Dakota: no income tax
Tennessee: 6% on interest and dividend income. Wages are not taxed.
Texas: no income tax
Utah: flat 5% on all income
Vermont: 8.95% on income over $373,650
Virginia: 5.75% on income over $17,000
Washington: no income tax
West Virginia: 6.5% on income over $60,000
Wisconsin: 7.75% on income over $225,000
Wyoming: no income tax
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