Cheapest States to Form an LLC in 2026

Why State Costs Matter

The state where you form your LLC determines both your upfront costs and your ongoing annual costs. The difference between the cheapest and most expensive states can be thousands of dollars over the life of your business. A Wyoming LLC costs as little as $160 in the first year (filing fee + annual report), while a California LLC costs $870+ (filing fee + $800 franchise tax) — and that gap repeats every year.

But cost should not be the only factor. Where you actually do business, your state's tax environment, privacy laws, and legal protections all matter. This guide helps you find the right balance.

Top 10 Cheapest States for LLC Formation

**1. Kentucky — $40 filing fee**: The lowest initial filing fee in the country. No annual report fee. Annual cost after formation: $15 (annual report). First-year total: $55.

**2. New Mexico — $50 filing fee**: No annual report requirement, no franchise tax, strong privacy protections. Annual cost after formation: $0. First-year total: $50. This is the cheapest state for total LLC costs over time.

**3. Mississippi — $50 filing fee**: Annual report is free (filed with tax return). Annual cost after formation: $0. First-year total: $50.

**4. Arizona — $50 filing fee**: No annual report fee. Annual cost after formation: $0. First-year total: $50. Arizona is an excellent choice for businesses operating in the Southwest.

**5. Colorado — $50 filing fee**: Annual report fee is $10 (one of the lowest). Annual cost after formation: $10. First-year total: $60.

**6. Iowa — $50 filing fee**: Biennial report fee is $30 (every two years). Annual cost after formation: $15/year averaged. First-year total: $50.

**7. Michigan — $50 filing fee**: Annual report fee is $25. Annual cost after formation: $25. First-year total: $75.

**8. Missouri — $50 filing fee**: No annual report requirement. Annual cost after formation: $0. First-year total: $50.

**9. Utah — $54 filing fee**: Annual renewal fee is $20. Annual cost after formation: $20. First-year total: $74.

**10. Wyoming — $100 filing fee**: Annual report fee is $60. No state income tax, strong privacy protections, strong asset protection laws. Annual cost after formation: $60. First-year total: $160.

Top 5 Most Expensive States for LLC Formation

**1. Massachusetts — $500 filing fee**: Annual report fee is $500. First-year total: $1,000. This is the most expensive state for both formation and maintenance.

**2. California — $70 filing fee**: But the $800 annual franchise tax (starting year two) makes California one of the most expensive states to maintain an LLC. First-year total: $70 (year one is exempt from franchise tax). Year two total: $820+.

**3. Tennessee — $300 per member filing fee**: Minimum $300 (one member), but multi-member LLCs pay $300 per member. A three-member LLC costs $900 to form. Annual report fee: $300 minimum. First-year total: $600+.

**4. Texas — $300 filing fee**: Plus franchise tax for LLCs with more than $2.47 million in total revenue (1.0% of revenue for retail/wholesale, 0.375% for other businesses). First-year total: $300+.

**5. Nevada — $75 filing fee**: But add the $200 annual business license fee, $150 annual list fee, and the state's relatively high cost of doing business. First-year total: $425.

The "True Cost" You Need to Calculate

State filing fees and annual reports are just part of the picture. To calculate the true cost of forming and maintaining your LLC in a specific state, add up the initial filing fee, annual report or renewal fees, franchise taxes or annual LLC taxes, registered agent fees (if you cannot serve as your own agent), state income tax on LLC profits, and any state-specific requirements (like New York's publication requirement, which can cost $300-$2,000).

New York deserves special mention: the $200 filing fee is moderate, but the state requires new LLCs to publish a notice of formation in two newspapers (one daily, one weekly) for six consecutive weeks. In New York City, this publication requirement can cost $1,000-$2,000. In rural counties, it might be as low as $300.

Should You Form in a Cheap State If You Live Elsewhere?

This is a common question, and the answer is nuanced. If you form your LLC in a state where you do not live or operate, you will likely need to register as a foreign LLC in your home state. This means you pay the filing fees and annual costs in both states. You comply with the regulations and tax requirements of both states. You need a registered agent in both states.

For most small businesses, forming in your home state is the most cost-effective choice. The exceptions include purely online businesses with no physical presence in any state (Wyoming or New Mexico are excellent choices), real estate investors who want strong asset protection laws (Wyoming), businesses seeking maximum privacy ([anonymous LLC](/blog/anonymous-llc-guide) in Wyoming or New Mexico), and holding companies that do not directly conduct business in any state.

5-Year Cost Comparison: Top States

| State | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | 5-Year Total | |-------|--------|--------|--------|--------|--------|--------------| | New Mexico | $50 | $0 | $0 | $0 | $0 | $50 | | Missouri | $50 | $0 | $0 | $0 | $0 | $50 | | Kentucky | $55 | $15 | $15 | $15 | $15 | $115 | | Wyoming | $160 | $60 | $60 | $60 | $60 | $400 | | California | $70 | $820 | $820 | $820 | $820 | $3,350 | | Massachusetts | $1,000 | $500 | $500 | $500 | $500 | $3,000 |

What to Do Next

Choose your state based on the total picture — not just the filing fee. Consider where you operate, your state's tax environment, your need for privacy, and the ongoing annual costs. Then [form your LLC](/pricing) with FormifyAI. We file in all 50 states and include registered agent service, so your only additional cost is the state filing fee itself.