Tennessee: what each business structure costs a year

At $100,000 profit, an S corporation costs $1,540 a year less than a sole proprietorship in Tennessee. All figures are 2026 tax and fees.

$1,540 a year

less as an S corporation than as a sole proprietorship in Tennessee, at these numbers.

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

Structure

Yearly cost

vs yours

To set up

Sole proprietorship yours

$22,365

Itemized: $22,365

Self-employment taxirs.gov, 2026 rates	$14,130
Federal income taxirs.gov, 2026 rates	$8,235
Yearly cost	$22,365

Single-member LLC

$27,161

+$4,796

$300

Itemized: $27,161

Annual Reportsos.tn.gov, checked Oct 23, 2026	$300
Tennessee franchise taxtn.gov, checked Oct 23, 2026	$100
Tennessee excise taxtn.gov, checked Oct 23, 2026	$6,500
Self-employment taxirs.gov, 2026 rates	$13,155
Federal income taxirs.gov, 2026 rates	$7,106
Yearly cost	$27,161

LLC taxed as an S corp

$21,055

−$1,310

$300

Itemized: $21,055

Annual Reportsos.tn.gov, checked Oct 23, 2026	$300
Payroll tax on your salaryirs.gov, 2026 rates	$6,351
Payroll service and tax return (estimate)	$1,800
Tennessee franchise taxtn.gov, checked Oct 23, 2026	$100
Tennessee excise taxtn.gov, checked Oct 23, 2026	$3,569
Federal income taxirs.gov, 2026 rates	$8,935
Yearly cost	$21,055

S corporation lowest

$20,825

−$1,540

$100

Itemized: $20,825

Annual Reportsos.tn.gov, checked Oct 23, 2026	$20
Payroll tax on your salaryirs.gov, 2026 rates	$6,351
Payroll service and tax return (estimate)	$1,800
Tennessee franchise taxtn.gov, checked Oct 23, 2026	$100
Tennessee excise taxtn.gov, checked Oct 23, 2026	$3,569
Federal income taxirs.gov, 2026 rates	$8,985
Yearly cost	$20,825

C corporation

$27,579

+$5,214

$100

Itemized: $27,579

Annual Reportsos.tn.gov, checked Oct 23, 2026	$20
Payroll tax on your salaryirs.gov, 2026 rates	$6,351
Payroll service and tax return (estimate)	$2,000
Tennessee franchise taxtn.gov, checked Oct 23, 2026	$100
Tennessee excise taxtn.gov, checked Oct 23, 2026	$3,556
Federal corporate income tax (21%)irs.gov, 2026 rates	$10,717
Federal income taxirs.gov, 2026 rates	$4,835
Yearly cost	$27,579

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 Tennessee

Electing S corp tax treatment for an LLC starts to pay in Tennessee at about $35,000 of profit, with the default salary and $1,800 a year for payroll and the extra tax return.

Profit	Sole prop	LLC	LLC as S corp	C corp
$30,000	$5,181	$7,025	$7,160	$7,293
$50,000	$9,732	$12,541	$10,829	$12,380
$75,000	$15,495	$19,554	$14,698	$18,914
$100,000	$22,365	$27,161	$21,055	$27,579
$150,000	$37,607	$44,663	$35,056	$46,634
$200,000	$53,430	$62,569	$49,877	$64,871
$300,000	$92,125	$100,567	$81,765	$102,669

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 Tennessee

	LLC	Corporation
Filing to form	$300Articles of Organization (Form SS-4270)	$100Charter (For-Profit Corporation)	sos.tn.gov
Yearly report	Annual Report, $300 a year	Annual Report, $20 a year	sos.tn.gov
Report due	1st day of the 4th month after fiscal year end (April 1 for calendar year)	1st day of the 4th month after fiscal year end (April 1 for calendar year)
Tennessee franchise tax$100	yes	yes	tn.gov
Tennessee excise tax6.5% of net income	yes	yes	tn.gov

Tennessee has no personal income tax on wages or business income. revenue.support.tn.gov
Tennessee has no corporate income tax. tn.gov
Tennessee does not recognise S corporations: they pay state tax as C corporations.
New employers pay state unemployment tax of 2.7% on the first $7,000 of each employee's wages. That applies to an owner's salary from an S or C corp. tn.gov
Fees are $300 for up to 6 members, plus $50 per member over 6, capped at $3,000.
An extra $20 applies if the registered agent or office changes with the report.

Not in the calculator: Businesses with $100,000 or more in gross receipts owe the state business tax and, in cities that levy it, the city business tax, both on gross receipts at rates set by business classification. Not modelled.

Switching calculators for Tennessee

By profession in Tennessee

Questions

Is an S corp worth it in Tennessee?

On these figures, from about $35,000 of profit. At $100,000 an LLC taxed as an S corp costs $21,055 a year against $27,161 for a plain LLC, $6,106 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 Tennessee?

The state charges Annual Report, $300 a year. LLCs can also owe Tennessee franchise tax and Tennessee excise tax. Forming one costs $300.

Does Tennessee recognise the S corp election?

No. Tennessee taxes S corporations as C corporations at the state level, and the calculator does the same. Tennessee does not follow the S election for franchise and excise tax: S corps and LLCs pay excise tax on their income like C corps. No personal income tax, so there is no pass-through benefit.

What income tax does Tennessee charge?

Tennessee has no personal income tax on wages or business income. Tennessee has no corporate income tax.

How this page models Tennessee (1)

New employers' UI rate is set by industry; the rate for professional services (NAICS 54) is used.

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

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