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Can I deduct an annual state tax (on an LLC) on Form 1040 Schedule C?

Personal Finance & Money Asked on March 12, 2021

On Form 1040 Schedule C – "Profit or Loss From Business (Sole Proprietorship)" , the instructions for line 23 ("taxes and licenses" under "Expenses") have a list of what taxes can and cannot be deducted as expenses. But I can’t seem to find an exact match there for an annual state tax (on a disregarded-entity single-owner LLC), neither in the "you can deduct" nor in the "do not deduct" lists. (For example this annual state tax – scroll to the "LLC/Partnership Tax Information" heading.)

So can an annual tax on an LLC be deducted in Schedule C as an expense, or not?

One Answer

The LLC tax falls into the "you can deduct" IRS category here:

Licenses and regulatory fees for your trade or business paid each year to state or local governments.

Correct answer by Orange Coast- reinstate Monica on March 12, 2021

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