Executive Summary: The Multistate LLC Landscape
Operating an Limited Liability Company (LLC) across state lines introduces a complex web of tax obligations beyond federal filings. While most states conform to federal tax classifications, deviations in franchise taxes, sales tax nexus, and pass-through entity (PTE) elections create significant compliance risks and planning opportunities. Use the interactive modules below to explore these four critical pillars of State and Local Tax (SALT).
Federal vs. State Treatment
Most states follow the federal "Check-the-Box" regulations. If an LLC is taxed as a partnership federally, it is generally taxed as a partnership for state income tax purposes.
However, non-conformity exists. Some jurisdictions impose entity-level taxes regardless of federal status, or have unique filing requirements for single-member LLCs (SMLLCs).
Key Insight
Texas, for example, does not recognize the flow-through nature for its Franchise Tax, taxing the entity directly via the "Margin Tax."
State Conformity Explorer
Select a state to view its specific treatment of LLCs and deviations from federal norms.
Standard Conformity
ConformsIncome Tax
Follows Federal (Flow-through)
Entity Level Tax
None (typically)
Key Nuance
Most states automatically classify the LLC based on its federal election (Partnership, C-Corp, or S-Corp).