Self-employed taxes and LLC costs in Tennessee, 2026
Tennessee does not tax what you earn as a person, yet it taxes an LLC as a business even when the IRS ignores it.
Total tax on this income in 2026
$17,800
Put aside 21% of each payment · $4,450 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| Tennessee income tax | $0 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 20.9% |
With an S corp election and a $34,000 salary, about $3,747 less tax (check it).
Computed by Radif Partners from IRS and Tennessee agency documents read on October 15, 2026 · How we calculate
A sole proprietor in Tennessee pays no state income tax in 2026: wages and self-employment profit are untaxed, so a single filer with $75,000 of profit owes only federal income tax and self-employment tax, about $15,495 in total, or $3,874 a quarter. The picture changes with an LLC. Tennessee subjects LLCs, including single-member LLCs that are disregarded for federal tax, to its franchise tax on net worth and its excise tax on net earnings, unless the LLC qualifies as an obligated member entity. The Secretary of State also charges formation and annual report fees per member, with a floor and a ceiling. Tennessee does not recognize the S corporation election for these taxes, so an S corp pays them at the entity level like any corporation. The calculator above leaves the franchise and excise tax out because their 2026 rates could not be read on the Department of Revenue site today; on federal taxes alone, the S election saves about $5,312 at $120,000 of profit.
Tennessee at a glance, 2026
| LLC filing fee | not verified |
| Annual Report | not verified |
| Income tax | none on wages or business income |
| S corporation election | not recognized |
| Tax on $75,000 of profit (single) | $15,495 in all, $0 to Tennessee |
Tennessee is the odd one among the states without an income tax. Texas and Washington tax businesses on revenue; Tennessee taxes them on net worth and on earnings, through two levies collected together as franchise and excise tax. The Department of Revenue applies both to LLCs, limited partnerships and corporations, and a single-member LLC owned by a person is not excused simply because the IRS treats it as disregarded. A freelancer working under their own name, with no entity, stays outside both.
Sole proprietor or LLC: the Tennessee fork
That makes the first question here different from most states. Elsewhere an LLC adds a filing fee and liability protection; in Tennessee it also adds an entity tax return. The franchise and excise rates and the minimum are published on the due dates and tax rates page, which could not be read directly when this page was checked, so we do not quote them and the calculator does not add them. Some LLCs owned by individuals can qualify as obligated member entities, which shifts the tax treatment; the department's guidance explains the conditions.
Your set-aside rate by state
Set aside in Tennessee
20%
| Per quarter | $3,297 |
| Tennessee income tax | $0 |
The set-aside rate above is federal only, which is the honest number for a sole proprietor. On $90,000 of profit a single filer sets aside about 21 % for federal income tax and $12,717 of self-employment tax. An LLC owner should add the franchise and excise bill on top once it is known.
Fees counted per member
The Secretary of State does not charge a flat price. The articles of organization form SS-4270 sets the filing fee per member, with a minimum and a maximum, and the business FAQ applies the same per-member logic to the annual report, due on or before the first day of the fourth month after the fiscal year closes. A one-owner LLC pays the minimum; the cost rises once there are more than six members. Our LLC cost by state page lists the states that charge this way.
No S corp relief at the state level
Because Tennessee does not follow the S election for franchise and excise purposes, an S corporation pays both taxes like a C corporation would. The federal saving shown by the LLC vs S corp comparison is real, but it has to cover payroll costs and the same Tennessee entity taxes the LLC already pays, so the state does not tilt the choice either way. Kentucky and Georgia, both neighbors, tax personal income instead.