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Do I need to file a state income tax return for my business?

by TurboTax•2• Updated 1 month ago

A business that conducts in-state activities may need to file a state’s income tax return if:

  1. The business is either a C corporation, S corporation, limited liability company (LLC), or partnership, and
  2. There is a nexus between that state and the business.

There's a nexus between a state and a business if it has enough activity in the state to connect it with that state. Each state has variations in their income tax nexus rules and policies, but common requirements include:

  • Being qualified or registered to do business in the state
  • Being organized or incorporated under state law
  • Having property or business in the state
  • Conducting business in the state
  • Having income derived from a source in the state (in some cases, above a minimum threshold)

Before filling, business tax filing requirements for your state should be reviewed in full. Select a state below to review it's specific policy.

Note: Details do not include information regarding sole proprietorship businesses or other taxes, such as sales taxes.

  • C corporation: Is required to file if it’s doing business in Alabama, or if it has Alabama-sourced income, unless it’s exempt under state law. More info
  • S corporation: Is required to file if it’s doing business in Alabama, and is an S corporation federally. More info
  • Partnership or LLC: Is required to file if it operates only in Alabama or has an Alabama business activity apportionment factor. More info (includes instructions)
  • General: More info (includes instructions)
  • C corporation: Is required to file if it has a nexus with Alaska. More info
  • S corporation: Is required to file if it's doing business in Alaska. More info
  • Partnership or LLC: Is required to file if it's doing business in Alaska unless all partners or LLC members are natural persons. An LLC files according to its federal tax status (corporation or partnership). More info
  • C corporation: Is required to file if it's subject to the Arizona Income Tax Act of 1978. More info (includes instructions)
  • S corporation: Is required to file if it’s taxed as an S corporation for federal purposes. More info (includes instructions)
  • Partnership, syndicate, group, pool, joint venture, foreign partnership: Is required to file if it's doing business in Arizona. More info (includes instructions)
  • LLC: Is required to file if If it's doing business in Arizona, according to its federal tax status (corporation or partnership)
  • C corporation: Is required to file if it’s organized or registered under Arkansas law, or has Arkansas-sourced income, unless it’s exempt under Arkansas law. More info (includes instructions)
  • S corporation: Is required to file if it’s doing business in Arkansas and files as an S corporation federally. More info (includes instructions)
  • Partnership: Is required to file if it’s doing business in Arkansas or has Arkansas-sourced income. More info (2017, includes instructions), More info (current)
  • LLC: Is required to file if it’s doing business in Arkansas. It files an Arkansas return consistent with its federal tax status. 
  • C corporation, S corporation: Is required to file for income tax and not franchise tax if it has California-sourced income, but doesn’t do business in California. More info (C corporation, includes instructions) More info (S corporation, includes instructions)
  • Other business entity, including a partnership, electing to be taxed as a corporation: Is required to file if it has California-sourced income, but doesn’t do business in California
  • Partnership: Is required to file if it engages in a trade or business in California, or has California-sourced income. More info
  • LLC: Is required to file if it's:
    • Doing business in California
    • Has California-sourced income or 
    • Is organized in California or is organized elsewhere and is registered with the California Secretary of State
    • More info from the California State Franchise Board about LLCs
  • More info from the California State Franchise Board about S corporations, Partnerships and LLCs
  • C corporation: Is required to file if it's doing business in Colorado or if it has Colorado-sourced income. More info (includes instructions)
  • S corporation or Partnership or LLC- every pass-through entity: Is required to file if it does business in Connecticut, or has Connecticut-sourced income. More info
  • C corporation: Is required to file if carries on (or has the right to carry on) business in Connecticut, unless exempt under Connecticut law. More info (includes instructions)
  • Partnership or S corporation: Is required to file if it's doing business in Colorado. More info (includes instructions)
  • C corporation: Is required to file if it’s doing business in Delaware, unless specifically exempt under Delaware law. More info (includes instructions)
  • S corporation: Is required to file if it has Delaware-sourced income. More info (includes instructions)
  • Partnership or LLC: Is required to file if it has Delaware-sourced income and is a partnership federally. More info (includes instructions)

C corporation, S corporation, Partnership, or LLC: Is required to file if it’s doing trade, business, or commercial activity in DC, or if it has income from DC sources. More info (includes instructions)

  • C corporation: Is required to file if it’s:
    • A corporation, bank, association, or entity doing business, earning income, or existing in Florida
    • A foreign corporation that’s in a Florida partnership or joint venture
    • A corporate owner of an LLC that’s a partnership for Florida and federal income tax
    • A homeowner or condominium association that files federal Form 1120
    • A political organization that files federal Form 1120-POL or
    • A tax-exempt organization that has unrelated trade or business taxable income
    • More info (includes instructions)
  • S corporation: Is required to file if it pays federal income tax on line 23c of federal Form 1120-S. More info (includes instructions) 
  • Partnership or LLC: Is required to file if it’s:
    • A Florida partnership with any partner who’s subject to the Florida Corporate Income Tax Code or
    • An LLC with a corporate partner who’s a partnership federally
    • More info (includes instructions)
  • C corporation or S corporation: Is required to file if it has property or business in Georgia or income from Georgia. More info: 600 Corporation Tax Return, 600S Corporation Tax Return
  • Partnership or LLC: Is required to file if it’s required to file a federal income tax Form 1065 and it:
    • Owns property or does business in Georgia
    • Has income from a Georgia source or
    • Has members living in Georgia 
    • More info
  • C corporation: Is required to file if it:
    • Has revenue from: Property it owns, a trade, a business, or other source in Hawaii, unless exempt or
    • Is domestic and nonexempt and has: Revenue from property it owns, a trade, a business, or a source outside Hawaii, unless it’s taxed by another jurisdiction
    • More info (includes instructions)
  • S corporation: Is required to file if it:
    • Is an S corporation federally
    • More info (includes instructions)
  • Partnership or LLC: Is required to file if it’s a partnership, including if it’s an LLC federally, unless exempted. More info (includes instructions)
  • C corporation: Is required to file if it's doing business in Idaho, or has income from Idaho, unless it’s exempt under Idaho law. More info (includes instructions)
  • S corporation: Is required to file if it’s filing as an S corporation federally and if it’s doing business in Idaho. More info (includes instructions)
  • Partnership: Is required to file if it’s doing business in Idaho. More info (includes instructions)
  • LLC: Is required to file if it’s treated as a partnership federally and is doing business in Idaho
  • C corporation: Is required to file if:
    • It has net income or loss under the Illinois Income Tax Act or
    • It’s qualified to do business in Illinois and is is required to file a federal income tax return (regardless of net income or loss)
    • More info (includes instructions)
  • S corporation: Is required to file if it's a small business corporation that has elected to be an S corporation and if it:
    • Has net income or loss under the Illinois Income Tax Act or
    • Is qualified to do business in the state of Illinois and is required to file federal Form 1120-S 
    • More info (includes instructions)
  • Partnership or LLC: Is required to file if it has base income or loss under the Illinois Income Tax Act. More info (includes instructions)
  • C corporation: Is required to file if it's doing business and has gross income in Indiana, unless it’s specifically exempt
  • S corporation: Is required to file if it's doing business in Indiana and is earning gross income from Indiana sources. A corporation with federal S corp status is exempt from Indiana adjusted gross income tax, except on passive income and built-in gains.
  • Partnership: Is required to file if it’s:
    • Earning income from sources in, or doing business in Indiana or
    • Has a partner residing in Indiana who’s required to file a return, even if the partnership isn’t doing business in Indiana
  • More info
  • C corporation: Is required to file if it's earning income from sources in, or is doing business in Iowa, unless it’s exempt under Iowa law. More info (includes instructions)
  • S corporation: Is required to file if its business, its income source, or its location is in Iowa. More info (includes instructions)
  • Partnership, LLC, syndicate, pool, joint venture: Is required to file if it’s earning income or loss from property owned in Iowa, or a business in Iowa. More info  (includes instructions)
  • C corporation or S corporation: Is required to file if its business or its income source is in Kansas and it files a federal income tax return, unless it’s exempt under Kansas law. More info (includes instructions)
  • Partnership syndicate, pool, joint venture or other joint enterprise: Is required to file if it has Kansas-sourced income. More info
  • C corporation or pass-through entity: Is required to file (unless exempted by law) if it’s
    • Organized under the laws of Kentucky
    • Has its commercial domicile in Kentucky
    • Owns or leases property in Kentucky
    • Has one or more individuals performing services in Kentucky
    • Has an interest in a pass-through entity doing business in Kentucky
    • Earns Kentucky-sourced income 
    • Earns income from a trust doing business in Kentucky 
    • Earns income from a single-member LLC doing business in Kentucky and is disregarded as a separate entity federally or 
    • Directs activities or sells goods and services to Kentucky customers
  • More info (includes instructions) More info (pass-through entity)
  • C corporation: Is required to file if organized under the laws of:
    • Louisiana, unless exempt from both income tax and franchise tax or
    • A state other than Louisiana, if it has Louisiana-sourced income
    • More info (includes instructions)
  • S corporation: Is required to file in the same way as a C corporation. Louisiana law doesn't recognize S corporation status. More info
  • Partnership: Is required to file if it’s a partnership doing business in Louisiana, or if it has Louisiana-sourced income. More info (includes instructions)
  • C corporation: Is required to file if it files a federal income tax return, and has Maine net income. It’s subject to tax if its business has a nexus with Maine, unless it’s exempt. More info  (includes instructions)
  • S corporation, Partnership: Isn't ‌required to file. Pass-through entities with nonresident (of Maine) members file a withholding tax return. More info
  • C corporation: Is required to file if:
    • It's a Maryland corporation or
    • It's subject to Maryland income tax law and has Maryland-sourced income. More info  (includes instructions)
  • S corporation, partnership, LLC, business trust: Is required to file:
    • Even if it has no income or is inactive
  • An S corporation subject to federal tax on passive income or built-in gains files a Maryland corporate income tax return (Form 500) in addition to a PTE return. (Forms 510 or 511). More info
  • C corporation, S corporation: Is required to file a corporation excise tax return if it:
    • Does business in Massachusetts
    • Exercises its charter in Massachusetts
    • Owns or uses any part of its capital, plant, or other property in Massachusetts
    • Owns or rents property in Massachusetts, even without a place of business in Massachusetts or
    • Is a C corporation and has no other contacts with the state but has more than $500,000 in Massachusetts sales
    • More info (includes instructions)
    • Note: S corporations for federal purposes, are S corporations for Massachusetts purposes. More info
  • Partnership: Is required to file if:
    • It has a usual place of business in Massachusetts
    • Receives revenues federally of more than $100 during the year or
    • Is an out-of-state partnership that pays the PTE excise, even if not otherwise required to file 
    • More info
  • LLCs and LLPs: Are treated in the same manner as they are treated federally
  • C corporation: Is required to file if its apportioned gross receipts are $350,000 or more and its tax liability is over $100. Insurance companies and financial institutions have special rules. More info (includes instructions)
  • FTE, i.e. S corporation, general partnership, limited partnership, limited liability partnership, or LLC not taxed federally as a C corporation, doesn’t file its own Michigan return unless it elects to pay tax at the entity level. More info
  • C corporation: Is required to file if it has business or owns property in Minnesota, regardless of the state of incorporation. More info (includes instructions)
  • S corporation: Is required to file if it's doing business in Minnesota and is an S corporation federally. More info (includes instructions)
  • Partnership: Is required to file if it also files a federal partnership return, has Minnesota gross income, is located in Minnesota, or has a business presence in Minnesota. More info
  • LLC: If the LLC is a partnership federally, it’s also a partnership for Minnesota purposes, and the members are considered to be partners.
  • C corporation: Is required to file if it’s:
    • Domesticated or qualified to do business in Mississippi, even if inactive
    • Note: If the corporation is foreign, has business or income sources in Mississippi, and isn't qualified through the Secretary of State, it's subject to the income and franchise tax levy.
    • More info (includes instructions)
  • S corporation: Is required to file, even if it’s inactive, if it’s:
    • Domesticated or qualified to do business in Mississippi or
    • Engaged in business in Mississippi or has Mississippi-sourced income
  • Partnership, LLP or LLC: Is required to file if it’s earning income from property owned in Mississippi, or if its business, trade, profession, or occupation is in Mississippi
  • More info (includes instructions)
  • C corporation: Is required to file if it files a federal income tax return, unless its Missouri-sourced gross income is under $100. More info (includes instructions)
  • S corporation or partnership: Is required to file if it:
    • Files a federal S corporation or partnership income tax return and it has a Missouri resident shareholder or partner or
    • Has any income from Missouri sources
    • More info (includes instructions)
  • C corporation: Is required to file if it's engaged in business in Montana. Corporation includes associations, joint stock companies, LLCs taxed as C corporations federally, common law trusts, and organized business trusts
  • More info (includes instructions)
  • S corporation or partnership: Is required to file if:
    • It has any amount of Montana-sourced income and hasn't previously filed a final return or 
    • Is registered by the Montana Secretary of State to do business
    • More info
  • Single-member LLC: Is required to file Form DER-1if:
    • It's a single-member LLC owned by a nonresident doing business in Montana
    • Note: A disregarded entity owned by an S corporation, C corporation or partnership reports its Montana source income on its owner’s return.
  • C corporation: Is required to file if it's doing business in Nebraska, or has Nebraska-sourced income and files federally for corporate income tax. More info (includes instructions)
  • S corporation: Is required to file if it has Nebraska-sourced income or it distributes Nebraska incentive credits to shareholders. More info (includes instructions)
  • Partnership or LLC: Is required to file if:
    • It’s a partnership with Nebraska-sourced income or distributes Nebraska incentive credits to partners or
    • It’s a LLC that has elected federally to be a partnership has Nebraska-sourced income
  • More info (includes instructions)

Nevada has no business income tax. More info

  • Any business organization, including a corporation, fiduciary or partnership: Is required to file a business profits tax return if it's doing business inside New Hampshire. More info
    • Corporation: More info (includes instructions)
    • Partnership: More info (includes instructions)
  • C corporation: Is required to file if it exists in New Jersey. More info (includes instructions)
  • S corporation: Is required to file if it’s filing as an S corporation federally. More info (includes instructions)
  • Partnership: Is required to file if has New Jersey-sourced income, or has a New Jersey resident partner. More info 
  • LLC: Is required to file if filing as a partnership federally
  • C corporation: Is required to file if it’s:
    • Filing a federal corporate return and has New Mexico-sourced income or
    • Organized under New Mexico laws
    • More info
  • S corporation: Is required to file if it’s
    • Registered to do business in New Mexico
    • Does business in, into, or from New Mexico or 
    • Earns income from property or employment in New Mexico
    • More info
  • Partnership, joint venture, common trust fund, limited association, pool, or working agreement or LLC: Is required to file if it's doing business in, into, or from New Mexico, or if it's earning income from property or employment in New Mexico
  • More info
  • C corporation: Is required to file if it’s:
    • Incorporated in New York State or
    • Incorporated outside New York State and it’s doing business, using capital, owning, or leasing property, or maintaining an office in New York. More info (includes instructions)
  • S corporation: Is required to file if it has approval from the New York State Tax Department to be treated as a New York S corporation. More info
  • Partnership: Is required to file if it has:
    • At least one partner who's an individual, estate, or trust that's resident in New York State or
    • Any New York State-sourced income, gain, loss, or deduction
    • More info
  • LLC: Is required to file if it has any New York state-sourced income, gain, loss, or deduction and it’s:
    • A disregarded LLC federally
    • A domestic or foreign LLC that’s required to file partnership Form  IT-204 or
    • A regular partnership (not LLC or LLP) having prior-year’s New York gross income of at least $1,000,000
  • C corporation or S corporation: Is required to file if it’s doing business, or is inactive and was chartered in North Carolina. C corporation More info (includes instructions) S corporation More info (includes instructions)
  • Partnership or LLC: Is required to file if:
    • It’s a partnership doing business in North Carolina and it files a federal partnership return, unless its only activity is as an investment partnership
    • It’s a LLC classified as a partnership federally (in which case it’s a partnership for state purposes)
    • More info
  • Corporation: Is required to file if it does business in North Dakota, or has North Dakota sourced income. More info (includes instructions)
  • S corporation: Is required to file if files as an S corporation federally and it has business in, or North Dakota-sourced income. More info (includes instructions)
  • Partnership: Is required to file if it files a federal partnership return and it has North Dakota-sourced business or income.
  • LLC: If it’s treated as a partnership federally, it’s a partnership for North Dakota purposes
  • More info
  • C corporation: Ohio has no corporate income tax. It has a commercial activity tax. More info
  • Pass-through entities: are subject to a pass-through entity withholding tax. More info
  • C corporation: Is required to file if it has Oklahoma-sourced business or income. More info (includes instructions)
  • S corporation: Is required to file if it has elected under IRC Subchapter S, it does business, or earns income from property in Oklahoma, and it’s an S corporation federally More info (includes instructions)
  • Partnership or LLC: Is required to file if it’s:
    • A partnership, syndicate, group, pool, joint venture, LLC, LLP, or organization (but not certain trusts, estates, or corporations) and 
    • Earns Oklahoma-source income
    • More info (includes instructions)
  • C corporation: Is required to file if earns Oregon-sourced income, but isn’t doing business in Oregon. More info (includes instructions)
  • S corporation: Is required to file if it's doing business in Oregon or it has Oregon-sourced income. More info (includes instructions)
  • Partnership or LLC: Is required to file if it has:
    • Oregon-sourced income or
    • One or more Oregon resident partners
    • More info (includes instructions)
  • C corporation, business trust, LLC, S corporation with built-in gains, or anything else filing as a corporation federally: Is required to file if it has business, activities, capital, or property used in Pennsylvania, or if it owns property in Pennsylvania. More info (includes instructions)
  • S corporation, partnership, or LLC classified as a partnership or S corporation federally: May be required to file an additional form PA-20S/PA-65 Information Return. More info
  • Business corporation, joint stock company, or corporate association: Is required to file if exercising corporation functions or doing business in Rhode Island. More info
  • Federal S corporation: Is required to file and attach RI Schedule S if it's doing business in Rhode Island
  • LLC, LLP, limited partnership, general partnership, and single-member limited liability company not treated as a corporation federally: Is required to file if it's doing business in Rhode Island
  • More info
  • Every corporation: Is required to file if it’s doing business in South Carolina and is chartered or qualified by the Secretary of State. More info (includes instructions)
  • S corporation: Is required to file if it has a valid S election and is doing business in South Carolina. More info
  • Partnership: Is required to file if it's doing business or owns property in South Carolina. More info (includes instructions)
  • LLC: Is required to file if taxed as a partnership federally

South Dakota has no business income tax. More info

  • Corporation, limited partnership, LLC, business trust: Is required to file a Franchise and Excise Tax Return if chartered or organized in Tennessee or is doing business in Tennessee. Excise tax is 6.5% of Tennessee taxable income. More info (includes instructions)
  • Corporation, LLC, bank, state limited banking association, savings and loan association, S corporation, professional corporation, partnership, trust, professional association, business association, joint venture, other legal entity: Is required to file if organized in or doing business in Texas. More info
  • Corporation (including C corporation, S corporation): Is required to file income tax rather than franchise tax if it has Utah-sourced income and
    • Isn’t qualified to do business in Utah
    • Has no regular place of business in Utah and
    • Doesn’t have inventory or employees in Utah
    • More info (includes instructions)
  • Partnership or LLC: Is required to file a Utah partnership return if
    • It’s a partnership federally and 
    • It has any partners or members who are businesses, trusts, estates, or nonresident individuals
      • A Utah partnership return isn't required if:
        • All partners are Utah resident individuals
        • It isn’t a pass-through entity
        • It has records with each partner’s share of income, losses, credits
        • More info (includes instructions)
  • C corporation: Is required to file if it:
    • Was registered with the Secretary of State during the tax year
    • Was incorporated in Vermont 
    • Had business activity or income or loss attributable to Vermont or 
    • Has an open corporate income tax account
    • More info (includes instructions)
  • S corporation, partnership or LLC: Is required file if it has activities in Vermont, unless federally it’s a disregarded entity and files federal Form 1040 or Form 1120. More info (includes instructions)
  • C corporation: Is required to file if it:
    • Has Virginia-sourced income
    • Is organized under Virginia laws or
    • Is a foreign corporation registered with the State Corporation Commission 
    • Unless it’s specifically exempt
    • More info (includes instructions)
  • S corporation, general partnership, limited partnership, LLP, LLC, electing large partnership, business trust: Is required to file if it has Virginia-sourced income, unless it’s a single-member LLC that's disregarded federally. More info (includes instructions)

Washington doesn't have a corporate income tax. More info

  • C corporation: Is required to file if it's doing business, or has West Virginia-sourced income from property or activity. More info (includes instructions)
  • S corporation, partnership, or LLC: Is required to file if:
    • It’s an S corporation federally and
    • It does business in West Virginia or has West Virginia-sourced income from property or activity
    • More info
  • Corporation: Is required to file if it’s organized under Wisconsin laws or licensed for business in Wisconsin, unless it’s exempt. More info (includes instructions)
  • Partnership or LLC: Is required to file if it’s treated as a partnership and has income from Wisconsin sources. More info (includes instructions)

Wyoming doesn't have a corporate income tax. More info

Companies that are based in a US territory are usually considered foreign corporations for US tax purposes and are subject to the tax laws of the territory where they reside, with a few exceptions. For business conducted in the US, foreign corporations must file federal tax form 1120-F. 

For corporations based in Guam, American Samoa, the Northern Mariana Islands, and the Virgin Islands, corporations are not considered foreign if:

  1. During the tax year, less than 25% of a corporation’s stock was owned by a foreign person,
  2. For the last 3 years, at least 65% of a corporation's gross income was generated through business conducted in the United States, and
  3. No substantial portion of a company’s income is used to pay people outside the United States or its territories.

In addition, corporations based in Puerto Rico are not considered foreign if they meet these requirements and they were created or organized in Puerto Rico. 

Visit the tax websites of these US territories for specific details on filing business taxes:

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