Cheapest States to Form an LLC in 2026

Cheapest States to Form an LLC in 2026: Complete Cost Comparison

The cheapest state to form an LLC in 2026 is Montana at just $35, but forming in your home state is almost always the right choice. Next Step Filings is a compliance-first business services company based in Glen Allen, Virginia, that has processed over 20,000 state filings across 12 U.S. states with a 99.8% success rate. We've seen firsthand what happens when business owners chase the lowest filing fee without understanding the full picture: they end up paying double in registration fees, annual reports, and registered agent costs. This guide ranks every state by total first-year cost, breaks down the hidden expenses of forming out of state, and explains why the "cheapest" option on paper rarely saves money in practice.

Next Step Filings is a private business services company and does not provide legal advice.

Top 10 Cheapest States to Form an LLC (by Filing Fee)

If you're looking strictly at the initial state filing fee to form an LLC, these are the ten least expensive states in 2026. Next Step Filings tracks filing fees across all 50 states and updates this data regularly to ensure accuracy.

RankStateFormation Filing FeeAnnual/Biennial Report FeeEstimated Total First-Year Cost1Montana$35$20 (annual)$552Kentucky$40$15 (annual)$553Arkansas$45$150 (annual franchise tax)$1954Mississippi$50$0 (no annual report)$505Colorado$50$10 (annual)$606Iowa$50$30 (biennial)$507Michigan$50$25 (annual)$758New Mexico$50$0 (no annual report)$509Missouri$50$0 (no annual report)$5010Arizona$50$0 (no annual report)$50

Notice something important: the cheapest formation fee doesn't always mean the cheapest total cost. Arkansas has a $45 filing fee but a $150 annual franchise tax. Mississippi, New Mexico, Missouri, and Arizona have $50 filing fees but require no annual report at all, making them extremely affordable over time. Colorado stands out with a $50 filing fee and only a $10 annual report.

Complete State-by-State Filing Fee Comparison

Below is a broader comparison of LLC formation fees across all 50 states, grouped by cost tier. Next Step Filings provides formation and compliance services across 12 states, and our team stays current on fee schedules that change from year to year.

Budget Tier: Under $100

StateFormation FeeAnnual Report FeeMontana$35$20Kentucky$40$15Arkansas$45$150 (franchise tax)Mississippi$50$0Colorado$50$10Iowa$50$30 (biennial)Michigan$50$25New Mexico$50$0Missouri$50$0Arizona$50$0Wyoming$100$60 (minimum)Indiana$97$32 (biennial)Ohio$99$0Wisconsin$130$25 (annual)Utah$72$20 (annual)

Mid-Range Tier: $100 to $200

StateFormation FeeAnnual Report FeeConnecticut$120$80Florida$125$138.75New Jersey$125$75Virginia$100$50Georgia$100$50North Carolina$125$200Oregon$100$100 (annual)Washington$200$71New York$200$9 (biennial)Delaware$110$300 (annual tax)Pennsylvania$125$7 (decennial)Minnesota$155$0

Premium Tier: Over $200

StateFormation FeeAnnual Report FeeTexas$300Franchise tax report (no-tax-due threshold: $2.47M)Nevada$425$350 (annual list + business license)Illinois$150$75 (annual)Alabama$208Minimum $100 (business privilege tax)Massachusetts$500$500 (annual)California$70$800 (annual franchise tax)Tennessee$300 (minimum)$300 (minimum annual)

These tables reveal an important pattern: formation fees tell only part of the story. California has one of the lowest formation fees at $70, but its $800 annual franchise tax makes it one of the most expensive states for ongoing LLC maintenance. Nevada looks attractive for its lack of state income tax, but the combined $425 formation cost and $350 annual renewal make it far from cheap.

Annual Maintenance Costs: The Expense Most People Overlook

The initial filing fee is a one-time expense. Annual maintenance costs are what you'll pay every year for as long as your LLC exists. Next Step Filings consistently advises clients to evaluate the total ongoing cost, not just the formation fee.

Annual maintenance typically includes:

Lisa Matthews, General Manager and Business Compliance Advisor at Next Step Filings, puts it this way: "Most small business owners find out they're out of compliance at the worst possible moment." The owners who get surprised are usually the ones who only looked at the formation fee and missed the annual obligations.

The Hidden Cost of Forming in Another State

This is where most "cheapest state" advice falls apart. If you live and operate your business in one state but form your LLC in a different state to save money, you will almost certainly need to foreign qualify your LLC in your home state. Foreign qualification means registering your out-of-state LLC to do business where you actually operate. It comes with its own set of fees and obligations.

Here's what foreign qualification typically costs:

Let's run the numbers with a real example. Say you live in Virginia and you're considering forming in Wyoming instead because of its $100 filing fee and strong privacy protections:

Cost CategoryWyoming Formation + VA Foreign QualificationVirginia Formation OnlyFormation filing fee$100 (Wyoming)$100 (Virginia)Foreign qualification fee$100 (Virginia foreign LLC registration)$0Annual report (formation state)$60 (Wyoming)$50 (Virginia)Annual report (operating state)$50 (Virginia)$0 (already filed above)Registered agent (2 states)$300 ($150 x 2)$150Total first-year cost$610$300Annual ongoing cost$460$200

Forming in Wyoming to "save money" actually costs this Virginia business owner more than double. And that doesn't account for the added complexity of managing compliance in two states instead of one. Next Step Filings sees this mistake regularly and helps clients understand the true cost before they file.

Why Your Home State Is Usually the Best Choice

For the vast majority of small business owners, forming your LLC in the state where you live and operate is the most cost-effective and practical choice. Here's why:

Lisa Matthews notes: "Service-based business owners are the backbone of local economies. Cleaners, contractors, landscapers, consultants. They don't have compliance departments. They have us." For these business owners, simplicity is a competitive advantage. Forming in your home state keeps things straightforward.

When It Actually Makes Sense to Form in Another State

There are legitimate situations where forming in a state other than your home state makes sense. These are the exceptions, not the rule:

Even in these cases, you'll likely need to foreign qualify somewhere eventually. Next Step Filings helps clients evaluate the total cost across all jurisdictions before making a formation decision.

Most Expensive States to Form an LLC

On the opposite end of the spectrum, these states carry the highest first-year costs for LLC formation and maintenance:

RankStateFormation FeeFirst-Year Annual CostTotal First-Year Cost1Massachusetts$500$500 (annual report)$1,0002California$70$800 (franchise tax)$8703Nevada$425$350 (annual list + license)$7754Tennessee$300$300 (minimum franchise tax)$6005Texas$300$0 (below no-tax-due threshold)$300

California is a notable case. Its $70 formation fee looks cheap until the $800 annual franchise tax arrives. Every California LLC owes this tax regardless of revenue, starting in its second tax year. For businesses earning little or no revenue in their early months, this fixed cost can be a significant burden.

Nevada is another state that appears attractive because of its lack of state income tax. But the combined formation and annual renewal costs ($425 + $350 = $775 in year one) make it one of the most expensive states for small LLC owners. Unless you genuinely live and operate in Nevada, the costs outweigh the benefits for most small businesses.

State Tax Considerations Beyond Filing Fees

Filing fees and annual reports are just the surface-level costs. For a detailed breakdown of every expense involved, see our guide on LLC formation cost by state. State taxes can have a much larger impact on your LLC's bottom line. Here are the key tax factors to consider when choosing a state:

The bottom line: tax planning should involve a CPA or tax professional who understands your specific business situation. Next Step Filings handles the filing and compliance side, but we always encourage clients to consult a tax advisor for entity structuring decisions. Our focus is making sure your filings are accurate, timely, and compliant, processing them within 24 to 48 hours with a 99.8% success rate.

How NSF's Transparent Pricing Model Works

One of the most common frustrations business owners have with filing services is hidden fees. You see an advertised price, start the process, and then discover add-on charges for expediting, registered agent service, document delivery, or "compliance packages" that weren't mentioned upfront.

Next Step Filings uses a transparent, separated pricing model. Here is how it works:

Lisa Matthews explains: "Compliance doesn't slow down a startup. Unmanaged regulatory debt does." Part of managing that regulatory debt is understanding exactly what you're paying and why. Next Step Filings has built its pricing model around that principle across all 12 states and 20,000+ filings we've processed.

You can explore our services and see current pricing at nextstepfilings.com/llc-formation for new LLC formation, or nextstepfilings.com/annual-renewal for annual renewal services.

Choosing the Right State: A Decision Framework

Instead of just asking "what's the cheapest state," ask these questions to find the right state for your LLC:

Next Step Filings helps business owners work through this analysis every day. Our team has the state-specific knowledge across 12 U.S. states to help you make an informed decision based on your actual situation, not on generic advice from the internet.

Frequently Asked Questions About LLC Formation Costs

What is the cheapest state to form an LLC in 2026?

By filing fee alone, Montana is the cheapest state to form an LLC at $35. However, when you factor in annual maintenance costs, states with no annual report requirement (Mississippi, New Mexico, Missouri, Arizona, and Ohio) may offer the lowest total cost over time. Next Step Filings recommends evaluating the total first-year cost and ongoing annual costs rather than the formation fee in isolation. For most business owners, forming in their home state is the most cost-effective choice overall.

Is it cheaper to form an LLC in Wyoming or Delaware instead of my home state?

In most cases, no. If you live and operate in a different state, forming in Wyoming or Delaware means you'll also need to foreign qualify in your home state. This adds a registration fee ($50 to $750), a second annual report fee, and a second registered agent fee. For a typical small business owner, this doubles the ongoing compliance cost. Wyoming ($100 formation, $60 annual) and Delaware ($110 formation, $300 annual tax) are popular for holding companies and privacy-focused structures, but they rarely save money for businesses operating in a single state. Next Step Filings processes over 20,000 filings and helps clients avoid this common and costly mistake.

What hidden costs should I watch for when forming an LLC?

Beyond the state filing fee, watch for these costs that many comparison guides leave out: annual report or renewal fees (ranging from $0 to $500 per year), franchise taxes (California's $800 annual tax is the most significant), registered agent fees ($100 to $300 per year if you use a professional service), publication requirements (New York requires newspaper publication that can cost $300 to $1,500 depending on the county), and foreign qualification fees if you form in a different state than where you operate. Next Step Filings separates state fees from service fees so you always see the complete cost breakdown before you file.

Why is California so expensive for LLCs?

California imposes an annual franchise tax of $800 on all LLCs, regardless of whether the LLC earns any revenue. This tax is due every year starting in the LLC's second tax year. Combined with the $70 formation fee and $20 biennial Statement of Information filing, a California LLC costs at least $870 in its first full year and $800 or more every year after that. For LLCs earning over $250,000 in gross revenue, an additional annual fee applies. Despite these costs, if you live and work in California, forming your LLC there is still the right choice because you'd owe California taxes anyway, and forming elsewhere would add foreign qualification costs on top of it.

Does forming in a no-income-tax state save me money on taxes?

Not usually. If you live in a state that has income tax, you owe that state's tax on your personal income regardless of where your LLC is formed. Forming your LLC in Wyoming, Nevada, or Florida does not eliminate your home state's income tax obligation. Your state taxes you as a resident on your worldwide income, including income earned through an out-of-state LLC. The only way to benefit from a no-income-tax state is to actually live and operate there. Next Step Filings helps clients understand these distinctions so they can make informed filing decisions.

How much does Next Step Filings charge for LLC formation?

Next Step Filings uses a transparent pricing model that separates state filing fees from service fees. State fees vary by state (see the tables above). Our service fee is a flat rate with no hidden charges, no subscriptions, and no bundled upsells. We process filings within 24 to 48 hours across all 12 states we serve, with a 99.8% success rate. Visit nextstepfilings.com/llc-formation to see current pricing for your state, or call us at 1-888-851-6604 for a personalized cost breakdown.

What states have no annual report requirement for LLCs?

As of 2026, the states with no annual report requirement for LLCs include Mississippi, New Mexico, Missouri, Arizona, and Ohio. Pennsylvania requires a decennial (every 10 years) report rather than an annual one. These states have the lowest ongoing maintenance costs because you don't pay an annual renewal fee. However, remember that even in these states, you may still owe state taxes, need a business license, or have other compliance obligations. Next Step Filings tracks filing requirements across all 12 states where we provide services and helps clients stay current on their specific obligations.

Written by Lisa Matthews, General Manager and Business Compliance Advisor at Next Step Filings. Lisa has over a decade of experience in corporate administration and regulatory navigation, helping thousands of entrepreneurs maintain good standing and protect personal assets.