The best state to form an LLC depends on what you're optimizing for — but the costs are not close. Year 1 state fees run from $50 in Arizona, Mississippi, Missouri and New Mexico to $1,000 in Massachusetts, and over five years the gap between the cheapest state and California is more than $4,000. Below we rank every jurisdiction on the numbers from our 2026 fee dataset, then explain the part most "best state" lists get wrong: for the majority of founders, the best state is the one you already live in.
On this page:
- The 2026 cost ranking (top 10 cheapest)
- Why your home state is best for most people
- Best budget states: the no-annual-fee club
- Best for privacy and no income tax: Wyoming
- Delaware: a startup exception, not a default
- States to think twice about
- How we ranked
- Frequently asked questions
Which states are cheapest to form an LLC in 2026?
Ranked by total Year 1 state cost (filing fee + first-year recurring fee), using official 2026 fee schedules:
| State | Filing | Per year | Year 1 | 5-year |
| Arizona | $50 | $0 | $50 | $50 |
| Mississippi | $50 | $0 | $50 | $50 |
| Missouri | $50 | $0 | $50 | $50 |
| New Mexico | $50 | $0 | $50 | $50 |
| Kentucky | $40 | $15 | $55 | $115 |
| Montana | $35 | $20 | $55 | $135 |
| Hawaii | $50 | $15 | $65 | $125 |
| Utah | $54 | $18 | $72 | $144 |
| Colorado | $50 | $25 | $75 | $175 |
| Michigan | $50 | $25 | $75 | $175 |
The national average Year 1 cost is $220 and the median is $160, so even a mid-priced state is reasonable. The full ranking for all 51 jurisdictions is on the LLC cost by state index, and our cheapest states guide goes deeper on the bottom of the table.
Why is your home state the best choice for most people?
Because an LLC only shields you where it's registered — and the state where you physically do business gets its fees either way. If you live in, say, Florida and form a Wyoming LLC, Florida still requires you to register as a foreign LLC and pay Florida's fees ($125 filing + $138.75/yr), in addition to Wyoming's $100 + $60/yr, plus a registered agent in both states and two annual filings to track. Your "cheap" Wyoming LLC now costs more than a plain Florida one, forever.
This is the foreign-qualification trap, and it's why the honest answer for a local business — a shop, a consultancy with local clients, anything with an office or employees — is almost always: form at home. Our foreign LLC registration guide shows the math in full. Forming out of state is a real strategy only when your business has no physical footprint in your home state, or a specific legal/tax reason applies.
What are the best budget states?
If low cost is the priority and you're forming where you operate, the standouts are the no-annual-fee states. Arizona, New Mexico, Mississippi and Missouri each cost $50 once and $0 every year after — $50 total over five years. Ohio ($99 filing, no annual fee) and Idaho ($100, annual report with no fee) and South Carolina ($110, no annual fee) round out the club: pay once, owe nothing recurring.
Texas deserves its own mention: the $300 filing fee looks steep, but most small LLCs pay $0 in ongoing state fees because the franchise tax only applies above $1.23 million in revenue — so Texas's 5-year total is just $300, cheaper over time than many "cheap" states. Pennsylvania is the opposite curiosity: a $70 report once every ten years works out to about $7/yr, the lowest recurring burden in the country. Run any of these through the LLC cost calculator to see the 5-year curve, not just Year 1.
Is Wyoming the best state for privacy and taxes?
For a genuinely location-independent business, Wyoming is the strongest all-round pick, and it's not just marketing: $100 to file, a $60/yr minimum annual license tax, no state income tax, and a privacy-friendly regime that doesn't publish member details the way many states do — a 5-year total of $400. That's why it's the most popular "file somewhere else" state in our data.
The caveats matter, though. The $60 is a minimum — the license tax is the greater of $60 or 0.0002× your Wyoming assets. You still need a registered agent with a Wyoming address. And the moment your business has real operations in another state, you're foreign-registering there too (see above). Wyoming is best when your business truly lives online and nowhere else. Full numbers: LLC cost in Wyoming.
Compare any two states head-to-head
Year 1, annual and 5-year totals for all 50 states + DC — free, no signup.
Open the free calculator →Should you form your LLC in Delaware?
Delaware's reputation comes from corporations, not LLCs. Venture-backed startups form Delaware C-corporations because investors demand its corporate law and Court of Chancery. For an LLC, Delaware offers most small businesses little — and charges a flat $400/yr franchise tax for the privilege: $490 in Year 1 and $2,090 over five years, before any foreign-registration costs in your home state. Unless a lawyer gives you a specific structural reason, Delaware is an expensive default. Compare it directly: LLC cost in Delaware.
Which states should you think twice about?
- California ($880 Year 1, $4,120 over 5 years): the $70 filing fee is a decoy — the $800 annual franchise tax applies to almost every LLC doing business there, plus a $20 biennial statement. If you operate in California you can't avoid it by forming elsewhere; California will still come for its tax.
- Massachusetts ($1,000 Year 1, $3,000 over 5 years): the most expensive state in the country — $500 to file and $500 every year.
- Nevada ($775 Year 1, $2,175 over 5 years): marketed hard on privacy and no state income tax, but the paperwork is pricey: $425 to start (articles + initial list + state business license) and $350/yr after. Run the 5-year math before choosing Nevada "for savings".
- New York ($204 Year 1 on paper): the filing is $200 and the biennial statement only $9 — but New York's newspaper publication requirement costs roughly $200–$400 upstate and $1,500–$2,000+ in New York City. The state fee table understates New York more than any other state.
How did we rank the states?
Every figure comes from our 2026 dataset of official state fee schedules: the one-time filing fee plus each state's recurring report fee or franchise tax, annualized where a state charges biennially or decennially. Year 1 = filing + first-year recurring; 5-year = filing + five years of recurring fees. Optional extras (registered agent services, publication, expedited filing) are excluded from the ranking because they vary by founder — the calculator adds them when they're relevant to you. Fees change, so each state page links the official Secretary of State site to confirm before you file.
Frequently asked questions
What is objectively the best state to form an LLC?
There isn't one — it depends on where you operate. By cost alone, Arizona, Mississippi, Missouri and New Mexico tie at $50 total over five years. For privacy and no state income tax, Wyoming ($400 over five years) leads. For most founders with a physical business, their home state is best because it avoids double foreign-registration fees.
Is Wyoming worth it if I live in another state?
Only if your business has no physical presence in your home state. If it does, you'll pay your home state's foreign-registration and annual fees on top of Wyoming's $100 + $60/yr, which usually costs more than forming at home. Our foreign LLC guide walks through the math.
Why don't more small businesses use Delaware?
Delaware's advantages mainly serve corporations raising venture capital. Its LLC carries a $400/yr franchise tax ($2,090 over five years) with no offsetting benefit for a typical small business — and you'd still owe your operating state's fees.
How much money does choosing the cheapest state actually save?
On paper, up to $4,070 over five years (California's $4,120 vs. $50 in the no-fee states) — but you can only legally capture that saving if your business genuinely operates in the cheap state. Choose with the free calculator, comparing 5-year totals for your real options.
Fees verified against official state sources — last checked October 26, 2026.