Nevada LLC Tax Structure 2025 – How LLCs are Taxed

In general, a Limited Liability Company (LLC) in Nevada does not pay any taxes like corporations and other business structures. It has a pass-through taxation instead of business or corporate tax. Besides, the LLC tax structure includes state and federal mandatory taxes. LLCs are required to choose the tax structure at the time of filing the company.

IRS (Internal Revenue Service) allows an LLC in Nevada to choose its preferred classification of tax at the beginning of the LLC filing. For example, a single-member LLC is taxed as a sole proprietor, and a multi-member LLC is taxed as a partnership. As there is no fixed tax structure for LLCs, everyone certainly wants to opt for the most beneficial one. On this page, LLCBuddy editors shared all about the tax structure in Nevada LLC.

How Does Taxation Work in a Nevada LLC

For an LLC in Nevada, the tax structure is very simple and flexible. First of all, every LLC has the advantage of a pass-through taxation. On the other hand, an LLC can choose the desired tax structure at the time of formation. There are two ways an LLC can be taxed,

As a Sole Proprietorship

A single-member LLC is usually considered a sole proprietorship company. Hence, by default, it is taxed as a sole proprietorship. A single-member LLC is also called a disregarded entity. Under the U.S. tax law, it is assumed that a single-member LLC is owned by an individual (& not by another LLC), so the U.S. tax law levies rules on it as a Sole Proprietor. A single-member LLC’s owner (Sole Proprietor) has to report all the income of the LLC via their own income tax return.

As mentioned earlier, the single owner of the LLC is treated as the Sole proprietor of the LLC & has to file the Self-Employment Tax on all of the LLC’s earnings. Nevada does not levy State Income Tax, so a single-member LLC must file only the Federal Income Tax.

As a Partnership

Any LLC with more than one owner is referred to as a Multi-Member LLC & it is taxed as a partnership by default. Similar to the Single Owner or Single Member LLC, this LLC is also a pass-through entity. This means that the income of the LLC passes through the income of the members & they have to file taxes through their own earnings.

Partnership or Multi-Member LLC has to pay taxes similar to those of the Single-Member LLC. If the Partnership LLC is directly owned by individuals, it is exempt from the Franchise Tax. All the members of the Multi-Member LLC are liable to pay Self-Employment Tax & Federal Income Tax.

Pass-through Taxation for Nevada LLC

A Limited Liability Company (LLC) is a form of business structure that consists of members and/or managers (owners). The biggest advantage of an LLC in Nevada is the pass-through taxation. The limited liability company does not pay any federal income taxes based on the revenue of the company. Instead, the tax liability passes through to each member of the LLC. Furthermore, the members will have to pay individual income tax based on their income.

Both for a single-member LLC and a multi-member LLC in Nevada, the tax burden passes through to the member(s). In other cases, if an LLC chooses to be taxed as a Corporation, the LLC will have to pay federal income tax based on its revenue and profit. There is no pass-through taxation for C-Corp and S-Corp.

Options to Change Default Tax Classification

The LLCs are categorized either as sole proprietorships or as partnerships, depending on the number of members the LLC has. This is the default tax classification applicable to LLCs. However, the LLCs have an option of changing the default classification & opting to register under the following categories for taxation purposes:

C-Corporation

An LLC can prefer to be treated as a C-corporation by filing Form 8832 (the Entity Classification Election Form) with the IRS. The C-corporation is a regular corporation that is subject to corporate taxes & it is not a pass-through entity.

An LLC taxed as a C-Corporation is not a pass-through entity. In a C-corporation, the members/shareholders/ owners are taxed separately. The shareholders of the C-corporation are taxed twice on the dividends that they earn. The dividends of the shareholders are taxed at the corporate level, with a Corporate Tax filed with Form 1120 & at a Shareholder level, an Income Tax filed with Form 1040. Shareholders are subject to Federal Income Tax.

S-Corporation

The S-Corporation is the most common type of corporate structure used by small businesses. It was created to provide corporations with limited liability protection while maintaining the benefits of being a separate legal entity. An LLC can prefer to be treated as an S-Corporation by filing Form 2553. S corporations are small business corporations that choose to pass through the corporate income, losses, deductions, & credits to the shareholders for the purposes of Federal Taxes.

An S-Corporation is similar to an LLC except that it is treated by the IRS as a corporation for tax purposes. S-Corps do pay corporate income taxes; however, they are still considered disregarded entities for federal tax purposes.

Like an LLC, an S-Corp reports its annual earnings on a separate Schedule E on the member’s personal account. An S-Corp is treated by the IRS much like a partnership for tax purposes. Unlike a Partnership, in an S Corporation, the shareholders are required to pay Federal self-employment tax on their share of the company’s profits.

LLC Taxes to be Paid in Nevada

An LLC in the state of Nevada has to pay two types of taxes to the Nevada Department of Taxation:

• State Tax
• Commerce tax

State Income Tax

Nevada is one of those states that does not have a state income tax. This means the LLC members will owe no state tax on income they earn from a Nevada LLC.

State Sales Tax

The State Sales tax rate in Nevada is 4.6%. Tax-exempted goods are food, medications, clothing, and gas. Other local taxing jurisdictions, such as cities and counties, may impose an additional sales tax. The sales tax needs to be paid monthly or quarterly.

Commerce Tax

If your LLC generates more than $4,000,000 in gross revenue in a tax year, then you’ll be required to file a Nevada Commerce Tax return. According to different business categories, its own gross receipts tax rate has been assigned. The rates range from 0.051% to 0.331%.

Federal Self-Employment Tax

The Federal Self-Employment tax is administered by the Federal Insurance Contributions Act (FICA). The Federal Self-Employment Tax applies to all the earnings of an LLC member or manager. The Federal Self-Employment Tax rate in Nevada is 15.3%. To deduct your LLC’s expenses from the income you earned, you must calculate the Self-Employment Tax your LLC owes.

Federal Income Tax

For any earnings you take out from your LLC, you need to pay a regular income tax. The income tax payable depends on various factors such as your earnings, current income tax bracket, deductions, etc. One pays federal income tax only on profits that you take out of the business and allowances.

Employee & Employer Taxes

If your LLC pays employees, then there are some slightly different tax implications. The employee & employer tax implications are different from all the other types mentioned above. Both the employer and the employee withhold 7.65% of their taxable wages, which results in the current federal tax rate of 15.3%.

Irrespective of whether you withhold the Federal Tax and Nevada state tax or not, each employee has to file an individual Tax return. The employer might also need to pay insurance for certain employees, such as unemployment tax, etc.

Classification of Nevada LLC Taxes

An LLC is considered a Pass-through Entity because it allows the income to pass through & become self-employment income. The members of the LLC have to pay Self-employment tax or Self-Employment Taxes on any income they earn through the LLC. The LLC has to pay Franchise Tax on its income. In addition to the Self-employment tax, there are some other requirements that an LLC has to consider, such as:

1. Franchise Tax – Franchise tax applies to or levies upon LLCs, C-corporations, & S-corporations. Sole Proprietorship & Partnerships (directly owned by individuals) are exempted from the Franchise Tax. This tax is to be paid to the office of the Comptroller of Public Accounts.
2. Federal Tax Identification Number – An LLC with employees must obtain a Federal Tax Identification Number. Nevada does not have a separate State Tax Identification number.
3. State Employer Taxes – If an LLC has employees on the payroll, it must pay state employer taxes in Nevada. These taxes are handled through the Nevada Workforce Commission.
4. Franchise Tax Report – In Nevada, the LLCs do not file a Franchise Tax Report. Instead, they file an Annual Report. This report has all the information regarding the LLC and its business for a year.

Federal Tax Classifications

When LLCs were recognized as one of the types of Business Corporations, the IRS did not create a new tax classification just for the LLC. LLCs were allowed to choose from the current tax classifications.

Choosing a Classification for Your LLC

In terms of owners’ protection against liability, perpetual existence, & savings in Taxation, both LLCs (Limited Liability Companies) & Corporations are very much alike. However, with regard to formalities, Taxation, & capital, LLCs & Corporations differ in Nevada.

Liabilities

Both LLCs and Corporations provide liability protection to their owners. The LLC provides protection against inside liability (towards the employee) & outside liability (towards the creditor). The Corporation usually provides only the inside liability.

Tax Classification Flexibility

For taxation purposes, an LLC has a choice of being treated as a sole proprietorship, Partnership, C-corporation, or S-corporation. A corporation can choose to be treated only as a C or S Corporation.

Taxation

As mentioned earlier, the LLC can choose to be treated as a corporation; the Corporation does not have the option of being treated as an LLC. A Nevada LLC is subject to Franchise tax, Federal Income Tax, Sales & Use Taxes & State Employment Taxes (for LLCs that have employees)

A regular corporation or a C-Corporation is subject to corporate tax, which can be filed through Form 1120 every year. The shareholders have to pay the income tax only when they receive dividends from the Corporation. These dividends are taxed twice at the corporate level (on a corporate form)& at the shareholder level (on shareholder form).

An S-Corporation in an LLC is not subject to corporate taxes. But the shareholders are subjected to Taxation – even if they do not receive any dividends. A member of a Nevada S-corporation has to pay Federal Self-Employment Tax only on his salary; any other profits that he makes through the LLC are not subject to the 15.3% Self-Employment Tax.

Classification of LLC Taxes – At a Glance

Points of Difference	LLC	S- Corporation	C-Corporation	Sole Proprietorship
Taxation	As an LLC, by default, there is no tax levied at the entity level. The members’ income or even the loss is passed through to the members or owners.	Similar to LLC, no tax is levied on an S-Corporation at the entity level. The members’ income or even the loss is passed through to the members or owners.	The C-Corporation is often taxed at the entity level. The Dividends are taxed at the shareholders’ level.	The sole proprietorship as an entity is not taxable. The Sole Proprietor pays taxes as an Individual.
Double Taxation	The LLC does not have Double Taxation	There is no Double Taxation in S-Corporation	There is Double Taxation in C-Corporations, only when the Shareholders earn in the form of dividends.	No Double Taxation in a sole proprietorship.
Self-Employment Tax	The net income of the members or owners is subject to self-employment tax.	The salaries of the shareholder are subject to self-employment tax, but any other profits that the shareholder makes are not subject to the employment tax.	The C-Corporation is subject to self-employment tax.	The sole proprietorship is subject to self-employment tax
Pass-Through Income/Loss	An LLC is often referred to as a Pass-through entity because its income passes through/ passes to its members.	Yes, An S Corporation is a Pass-through Entity.	No, A C-Corporation is not a Pass-through Entity.	Yes, a sole proprietorship is a Pass-through Entity.

FAQ

How Do LLCs Pay Taxes in Nevada

In Nevada, LLCs are considered “pass-through” entities, meaning that the profits and losses of the company are passed through to the individual members for tax purposes. This is different from a corporation, where the entity itself is taxed on its profits, and then the shareholders are taxed on any dividends received from the corporation.

For tax purposes, each member of an LLC in Nevada is required to report their share of the company’s profits and losses on their individual tax returns. This means that the LLC itself does not pay income tax to the state of Nevada. Instead, the members are responsible for paying taxes on their share of the company’s income.

One of the benefits of this pass-through tax treatment is that it can help to avoid double taxation. In a C corporation, for example, the company is taxed on its profits and then any dividends paid to shareholders are taxed again on their individual tax returns. With an LLC, profits are only taxed once at the individual level.

Another advantage of the tax treatment for LLCs in Nevada is the flexibility it provides. LLC members have the option to choose how they want to be taxed for federal income tax purposes. They can elect to be taxed as a partnership, a corporation, or even as a sole proprietorship if there is only one member.

It’s important to note that while LLCs do not pay income tax to the state of Nevada, they are still required to file an annual report and pay an annual fee to the Nevada Secretary of State. Failure to do so can result in penalties and even the dissolution of the LLC.

In conclusion, understanding how LLCs pay taxes in Nevada is essential for anyone considering forming this type of entity in the state. The pass-through tax treatment, flexibility in tax classification, and avoidance of double taxation make LLCs an attractive option for many business owners. By having a clear understanding of the tax implications of forming an LLC in Nevada, business owners can make informed decisions about their business structure and tax obligations.

In Conclusion

Every Tax classification has its own set of benefits & restrictions. Every state will have different taxation rules for each of the categories of business corporations. Depending on the objective of formation of the business entity (Eg, to avoid dual Taxation- one can choose S Corporation, for more flexibility, one can choose the LLC format). It is essential to understand the taxing structure of each country & each Classification to decide how you wish to treat your LLC.