Published October 1, 2026
Formation services advertise the filing fee in giant type and mention the annual fee in a footnote. That is backwards. Over five years, the filing fee is usually the smallest check you write to the state. The annual report fees, franchise taxes, and business privilege taxes are where the real money goes, and they range from zero to $800 a year depending on where you filed.
The expensive states
California: $800 a year. Every LLC pays an $800 minimum annual franchise tax, plus a $20 Statement of Information every two years. The first-year exemption that once gave new LLCs a break expired on January 1, 2024, so LLCs formed now pay from year one. Five years of California ownership: $4,070 in state fees on a $70 formation.
Massachusetts: $500 a year. The $500 annual report fee matches its $500 filing fee, making Massachusetts the priciest state to form in and among the priciest to maintain.
Nevada: $350 a year. A $150 annual list fee plus a $200 state business license, every year, on top of a $425 all-in formation cost. Nevada's privacy reputation is real, but you pay for it annually.
Delaware: $300 a year. A flat franchise tax due every June 1, regardless of revenue or activity. Your dormant side-project LLC owes the same $300 as an operating company.
Florida: $138.75 a year. Modest, but with teeth: file after the May 1 deadline and a $400 late penalty applies, bringing the total to $538.75. Mark the calendar.
The zero-fee states
Several states charge no annual LLC fee at all. Arizona and Missouri require no annual report, period. New Mexico has no annual report and no annual fee. Ohio, Idaho, Minnesota, and Mississippi require a periodic report or renewal but charge $0 for it. Texas charges no annual LLC fee for most small businesses; its franchise tax only kicks in above $2.65 million in annualized revenue for 2026, and below that you file a no-fee information report.
The quiet middle is where most states live: Colorado ($25), Michigan ($25), Kentucky ($15), Hawaii ($15), Utah ($18), Georgia ($60), Wyoming ($60), Illinois ($75), and Connecticut ($80). None of these will surprise you, which is exactly the point.
Watch the cadence, not just the amount
Not every "annual" fee is annual. Alaska charges $100 every two years. Indiana charges $32 every two years. Iowa charges $30 in odd years. The District of Columbia charges $300 every two years. A biennial $100 fee is effectively $50 a year, which changes comparisons. When you see a fee schedule, check whether the number is per year or per filing period.
Also watch what the fee is called. Some states have no "annual report fee" but still collect every year through a franchise tax (Arkansas: $150), a business privilege tax (Alabama: $50 minimum), or a personal property return (Maryland: $300 combined). "No annual report" does not always mean "no annual payment."
What happens if you skip it
Missing an annual report starts with late fees and penalties, and ends with administrative dissolution: the state cancels your LLC. A dissolved LLC loses its liability shield, which defeats the entire purpose of forming it. Reinstatement is possible in most states but costs more than the original fee would have. Set a calendar reminder for your anniversary month; this is the single highest-value administrative habit in small business ownership.
My honest take
Founders obsess over formation state and ignore maintenance cost, when maintenance is the bigger number within two years almost everywhere except California, where it is the bigger number within two months. If you are choosing between two states, multiply the annual fee by five, add the filing fee, and compare that. The "cheap" state usually stops looking cheap. And if you already own an LLC in an expensive state, do not dissolve it on fee shock alone; talk to a CPA first, because the tax and contract consequences of moving entities can exceed the savings.
Frequently asked questions
Which state has the lowest LLC annual fees?
Several states charge $0 per year: Arizona, Missouri, and New Mexico have no annual report at all, while Ohio, Idaho, Minnesota, and Mississippi require reports with no fee. Texas charges $0 for most small businesses under its franchise tax threshold.
Do I owe annual fees if my LLC earned nothing?
In most states, yes. Annual report fees and franchise taxes apply regardless of revenue or activity. California's $800 and Delaware's $300 are owed even by dormant LLCs.
What is the difference between an annual report fee and a franchise tax?
An annual report updates the state on your LLC's basic information (address, agent, members) and carries a filing fee. A franchise tax is a tax for the privilege of operating as an entity in the state. Some states charge one, some both, and a few call their franchise tax a report.
See every state's fees in one table.
LLC Cost by State compares filing fees, annual report fees, and franchise taxes across all 50 states plus DC, with a 5-year total cost calculator.
Not legal advice: Fee schedules change and this summary reflects figures verified in 2026. Always confirm current fees with your Secretary of State before filing.