Massachusetts: what each business structure costs a year

At $100,000 profit, an S corporation costs $3,932 a year less than a sole proprietorship in Massachusetts. All figures are 2026 tax and fees.

$3,932 a year

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

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

Structure

Yearly cost

vs yours

To set up

Sole proprietorship yours

$26,792

Itemized: $26,792

Self-employment taxirs.gov, 2026 rates	$14,130
Federal income taxirs.gov, 2026 rates	$8,235
State income taxmass.gov, checked Oct 23, 2026	$4,427
Yearly cost	$26,792

Single-member LLC

$27,116

+$324

$500

Itemized: $27,116

Annual Reportsec.state.ma.us, checked Oct 23, 2026	$500
Self-employment taxirs.gov, 2026 rates	$14,059
Federal income taxirs.gov, 2026 rates	$8,153
State income taxmass.gov, checked Oct 23, 2026	$4,404
Yearly cost	$27,116

LLC taxed as an S corp

$23,171

−$3,621

$500

Itemized: $23,171

Annual Reportsec.state.ma.us, checked Oct 23, 2026	$500
Payroll tax on your salaryirs.gov, 2026 rates	$6,533
State disability and paid leavemass.gov, checked Oct 23, 2026	$184
Payroll service and tax return (estimate)	$1,800
Massachusetts corporate excise minimum (S corporation)mass.gov, checked Oct 23, 2026	$456
Massachusetts pass-through entity tax, paid by the company (elected)bakertilly.com, checked Oct 23, 2026	$2,689
Federal income taxirs.gov, 2026 rates	$8,960
State income tax, after the PTET creditmass.gov, checked Oct 23, 2026	$2,049
Yearly cost	$23,171

S corporation lowest

$22,860

−$3,932

$275

Itemized: $22,860

Annual Reportsec.state.ma.us, checked Oct 23, 2026	$100
Payroll tax on your salaryirs.gov, 2026 rates	$6,533
State disability and paid leavemass.gov, checked Oct 23, 2026	$184
Payroll service and tax return (estimate)	$1,800
Massachusetts corporate excise minimum (S corporation)mass.gov, checked Oct 23, 2026	$456
Massachusetts pass-through entity tax, paid by the company (elected)bakertilly.com, checked Oct 23, 2026	$2,709
Federal income taxirs.gov, 2026 rates	$9,027
State income tax, after the PTET creditmass.gov, checked Oct 23, 2026	$2,051
Yearly cost	$22,860

C corporation

$32,165

+$5,373

$275

Itemized: $32,165

Annual Reportsec.state.ma.us, checked Oct 23, 2026	$100
Payroll tax on your salaryirs.gov, 2026 rates	$6,533
State disability and paid leavemass.gov, checked Oct 23, 2026	$184
Payroll service and tax return (estimate)	$2,000
State corporate income taxmass.gov, checked Oct 23, 2026	$4,354
Federal corporate income tax (21%)irs.gov, 2026 rates	$10,515
Federal income taxirs.gov, 2026 rates	$4,721
State income taxmass.gov, checked Oct 23, 2026	$3,758
Yearly cost	$32,165

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 Massachusetts

Electing S corp tax treatment for an LLC starts to pay in Massachusetts at about $55,000 of profit, with the default salary and $1,800 a year for payroll and the extra tax return.

An S corp in Massachusetts can elect to pay the state's income tax itself, a pass-through entity tax of 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 totalbakertilly.com.

Profit	Sole prop	LLC	LLC as S corp	C corp
$30,000	$6,355	$6,724	$8,851	$8,819
$50,000	$11,835	$12,197	$12,719	$14,643
$75,000	$18,760	$19,122	$16,369	$22,382
$100,000	$26,792	$27,116	$23,171	$32,165
$150,000	$44,357	$44,683	$38,063	$53,634
$200,000	$62,504	$62,843	$53,775	$74,284
$300,000	$106,132	$106,290	$87,559	$116,830

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 Massachusetts

	LLC	Corporation
Filing to form	$500Certificate of Organization	$275Articles of Organization	malegislature.gov
Yearly report	Annual Report, $500 a year	Annual Report, $100 a year	sec.state.ma.us
Report due	Anniversary date of the original filing	Within 2.5 months after the close of the fiscal year (March 15 for calendar year)
Massachusetts corporate excise minimum (S corporation)$456	if taxed as S corp	S corp only	mass.gov

Massachusetts taxes personal income in 2 brackets, from 5% to 9% (2026, single filer). mass.gov
C corporations pay 8% of net income, with a minimum of $456. mass.gov
Massachusetts follows the federal S corp election.
New employers pay state unemployment tax of 2.42% on the first $15,000 of each employee's wages. That applies to an owner's salary from an S or C corp. oui.doleta.gov
MA PFML employee share (family 0.18% + medical 0.28%): 0.46% withheld from wages up to $184,500. mass.gov
Both fees are set by statute at $500 (M.G.L. c. 156C s. 12).
Annual report is $100 filed electronically, $125 on paper, $150 if late. Formation fee covers up to 275,000 authorized shares, plus $100 per additional 100,000.

Not in the calculator: No local income taxes. Cities and towns levy property tax on business personal property and some local fees.

Switching calculators for Massachusetts

By profession in Massachusetts

Questions

Is an S corp worth it in Massachusetts?

On these figures, from about $55,000 of profit. At $100,000 an LLC taxed as an S corp costs $23,171 a year against $27,116 for a plain LLC, $3,945 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 Massachusetts?

The state charges Annual Report, $500 a year. Forming one costs $500.

Does Massachusetts recognise the S corp election?

Yes. The federal election carries over with no separate state form. Massachusetts follows the federal S election; S corps file Form 355S and pay the corporate excise minimum or non-income measure, plus the 2% or 3% entity-level income measure when total receipts are $6 million or more.

What income tax does Massachusetts charge?

Massachusetts taxes personal income in 2 brackets, from 5% to 9% (2026, single filer). C corporations pay 8% of net income, with a minimum of $456.

How this page models Massachusetts (3)

The COVID-19 Recovery Assessment is not added to the 2.42% new employer rate: DUA's COVID-19 Recovery Assessment rates page (mass.gov/info-details/covid-19-recovery-assessment-rates) exempts "New employers (less than 3 years) who pay new employer rates".
The 0.056% rate is set by M.G.L. c. 151A s. 14L as in force today; no separate 2026 rate notice could be read because the DUA employer's guide on mass.gov answered 403.
The Secretary of the Commonwealth's fee schedule charges $125 on paper and $100 filed electronically; the electronic fee is used.

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

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