Arizona: what each business structure costs a year

At $100,000 profit, an LLC taxed as an S corp costs $4,797 a year less than a sole proprietorship in Arizona. All figures are 2026 tax and fees.

$4,797 a year

less as an LLC taxed as an S corp than as a sole proprietorship in Arizona, at these numbers. That includes the state's pass-through entity tax election.

Arizona, 2026: $100,000 profit, single filer

Structure

Yearly cost

vs yours

To set up

Sole proprietorship yours

$24,295

Itemized: $24,295

Self-employment taxirs.gov, 2026 rates	$14,130
Federal income taxirs.gov, 2026 rates	$8,235
State income taxazdor.gov, checked Oct 23, 2026	$1,930
Yearly cost	$24,295

Single-member LLC

$24,295

+$0

$50

Itemized: $24,295

Self-employment taxirs.gov, 2026 rates	$14,130
Federal income taxirs.gov, 2026 rates	$8,235
State income taxazdor.gov, checked Oct 23, 2026	$1,930
Yearly cost	$24,295

LLC taxed as an S corp lowest

$19,498

−$4,797

$50

Itemized: $19,498

Payroll tax on your salaryirs.gov, 2026 rates	$6,322
Payroll service and tax return (estimate)	$1,800
Arizona pass-through entity tax, paid by the company (elected)azleg.gov, checked Oct 23, 2026	$1,373
Federal income taxirs.gov, 2026 rates	$9,397
State income tax, after the PTET creditazdor.gov, checked Oct 23, 2026	$606
Yearly cost	$19,498

S corporation

$19,535

−$4,760

$60

Itemized: $19,535

Annual Report (for-profit corporation)azcc.gov, checked Oct 23, 2026	$45
Payroll tax on your salaryirs.gov, 2026 rates	$6,322
Payroll service and tax return (estimate)	$1,800
Arizona pass-through entity tax, paid by the company (elected)azleg.gov, checked Oct 23, 2026	$1,372
Federal income taxirs.gov, 2026 rates	$9,390
State income tax, after the PTET creditazdor.gov, checked Oct 23, 2026	$606
Yearly cost	$19,535

C corporation

$28,555

+$4,260

$60

Itemized: $28,555

Annual Report (for-profit corporation)azcc.gov, checked Oct 23, 2026	$45
Payroll tax on your salaryirs.gov, 2026 rates	$6,322
Payroll service and tax return (estimate)	$2,000
State corporate income taxazdor.gov, checked Oct 23, 2026	$2,680
Federal corporate income tax (21%)irs.gov, 2026 rates	$10,923
Federal income taxirs.gov, 2026 rates	$4,951
State income taxazdor.gov, checked Oct 23, 2026	$1,634
Yearly cost	$28,555

What these figures count

State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
The 20% qualified business income deduction with its income limits and the professional-service rule.
Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

When an S corp election pays in Arizona

Electing S corp tax treatment for an LLC starts to pay in Arizona at about $50,000 of profit, with the default salary and $1,800 a year for payroll and the extra tax return.

An S corp in Arizona can elect to pay the state's income tax itself, a pass-through entity tax of 2.5%, and the owner gets a credit for it. The company deducts it on the federal return, so it is not held to the SALT cap. The calculator uses it when it lowers the totalazleg.gov.

Profit	Sole prop	LLC	LLC as S corp	C corp
$30,000	$5,484	$5,484	$6,893	$7,428
$50,000	$10,500	$10,500	$10,231	$12,748
$75,000	$16,844	$16,844	$13,196	$19,435
$100,000	$24,295	$24,295	$19,498	$28,555
$150,000	$40,698	$40,698	$33,121	$48,337
$200,000	$57,683	$57,683	$47,523	$67,304
$300,000	$98,845	$98,845	$79,029	$106,645

Single filer, no other income, revenue taken as 1.5 times profit, default salary. The lowest cost in each row is marked.

State fees and taxes in Arizona

	LLC	Corporation
Filing to form	$50Articles of Organization (Form L010)	$60Articles of Incorporation (Form C010)	azcc.gov
Yearly report	No yearly report fee	Annual Report (for-profit corporation), $45 a year	azcc.gov
Report due	none	Anniversary of the incorporation date

Arizona taxes personal income at a flat 2.5% (2025). azdor.gov
C corporations pay 4.9% of net income, with a minimum of $50. azdor.gov
Arizona follows the federal S corp election.
New employers pay state unemployment tax of 2% on the first $8,000 of each employee's wages. That applies to an owner's salary from an S or C corp. des.az.gov
Publication of the filing notice is still required (A.R.S. 29-3201). If the statutory agent address is in Maricopa or Pima County the Commission publishes it free on its website; elsewhere the LLC must pay a local newspaper, cost varies. Expedited filing is $85.
Expedited articles are $95 and expedited annual reports $80. Corporations also publish a notice of filing; free via the Commission website in Maricopa and Pima Counties, a paid newspaper notice elsewhere.

Not in the calculator: Arizona transaction privilege tax (a sales tax on the seller) applies at state, county and city level to many business activities. Cities also have their own business licenses; there are no local income taxes.

Switching calculators for Arizona

By profession in Arizona

Questions

Is an S corp worth it in Arizona?

On these figures, from about $50,000 of profit. At $100,000 an LLC taxed as an S corp costs $19,498 a year against $24,295 for a plain LLC, $4,797 less. The saving comes from paying Social Security and Medicare tax on a salary instead of on all profit.

How much does an LLC cost per year in Arizona?

The state charges no yearly report fee. Forming one costs $50.

Does Arizona recognise the S corp election?

Yes. The federal election carries over with no separate state form. Arizona follows the federal S election. S corps file Form 120S and may elect to pay a 2.5% pass-through entity tax, not modelled.

What income tax does Arizona charge?

Arizona taxes personal income at a flat 2.5% (2025). C corporations pay 4.9% of net income, with a minimum of $50.

How this page models Arizona (1)

The DES FY2026 rate chart PDF (des.az.gov) refuses automated reads, so the $8,000 wage base is confirmed from A.R.S. 23-622 and the 2.0% new-employer rate from the DES 'Calculating Unemployment Taxes' page.

Sources checked 2026-10-23. Each figure links to the state or IRS page it comes from.

Other states