LLC SALT 2025

LLC State Tax Strategy 2025

Navigating the "Fiscal Labyrinth" of state taxation: From Gross Receipts traps to the erosion of Public Law 86-272.

Executive Summary

The 2025 state tax landscape is defined by a shift from "Physical Presence" to "Economic Nexus." States are aggressively taxing out-of-state LLCs based on sales revenue alone, ignoring whether you have an office or employees there.

Furthermore, "Privilege Taxes" based on Gross Receipts (like Washington's B&O or California's LLC Fee) catch many profitable and unprofitable businesses alike. On the bright side, the PTE Tax Election remains a vital workaround for the federal SALT cap, though its future post-2025 is uncertain.

The Reach

Economic Nexus: $100k - $500k in sales often triggers tax duties. "Transaction counts" (e.g., 200 sales) are being repealed in many states.

The Trap

Revenue Taxation: States like WA, TX, and OH tax your Top Line. Expenses don't matter. You pay even if you lose money.

The Savior

PTE Election: 36 states allow LLCs to pay state tax at the entity level, bypassing the federal $10k (now $40k under OBBBA) SALT cap.

Nexus & P.L. 86-272

The "Cookie" Audit

States like CA, NY, and MA have adopted the MTC position that placing non-essential cookies (analytics, chat) on a user's browser constitutes "business activity," voiding P.L. 86-272 income tax protection.

Nexus Thresholds (2025)

California
>$711,000
Sales
New York
>$1 Million
Receipts
Texas
>$500,000
Gross Receipts
Washington
>$100,000
B&O Threshold

"Privilege" Taxes (Revenue Based)

These taxes apply even if your LLC has zero net income. They are the "cost of doing business."

California LLC Fee

Gross Receipts

In addition to the $800 minimum tax, LLCs pay a fee based on total CA income.

$250k - $499k: $900 Fee
$500k - $999k: $2,500 Fee
$1M - $4.9M: $6,000 Fee
$5M+: $11,790 Fee

Washington B&O

No deductions. Rate hikes in Oct 2025.

  • • < $1M: 1.5%
  • • > $5M: 2.1% (Service)
  • • Nexus: >$100k Sales

Ohio CAT

Major relief for small biz in 2025.

  • • Exclusion: Raised to $6 Million (Jan 1, 2025).
  • • Rate: 0.26% on excess.
  • • Filing: Cancel account if under $6M.

PTE Tax Strategy

The SALT cap workaround. LLCs pay the state tax, get a federal deduction, and pass a credit to owners.

2025 Updates

  • OBBBA Impact: Federal SALT Cap raised to $40k. PTE is still vital for high earners (>$500k income) or high-tax states (CA/NY).
  • Sunset Risk: Many PTE laws expire if the federal SALT cap expires (Dec 31, 2025). Action: Make 2025 payments in 2025.
  • Connecticut: Now elective (was mandatory). 6.99% rate.

Compliance & Transparency

Non-Resident Withholding

LLCs must withhold tax for out-of-state members. CA: 7% quarterly. NY: Estimated payments required.

State "Mini-CTAs"

NY LLC Transparency Act: Effective Jan 1, 2026. Requires beneficial ownership disclosure to the state (private DB).

Interactive: Privilege Tax Estimator

Estimate your "Gross Receipts" tax liability in key states. Remember: these apply even if you have $0 profit.

Revenue Data

Estimated Liability

Base Tax / Minimum $0
Revenue-Based Fee/Tax $0
Total Entity Cost $0
Select a state to see details.