US LLC Tax Treatment Guide & Rate Reference (2025)
How LLCs are Taxed by the IRS
A Limited Liability Company (LLC) is a state legal entity, but the IRS taxes it based on its chosen classification. An LLC can be taxed in one of several ways:
- Disregarded Entity: A single-member LLC (an LLC with only one owner) is automatically taxed as a Sole Proprietorship unless it elects otherwise. The LLC's income and expenses are reported on the owner's personal tax return (Form 1040, Schedule C).
- Partnership: A multi-member LLC (an LLC with two or more owners) is automatically taxed as a Partnership unless it elects otherwise. The LLC files an information return (Form 1065), and each owner receives a Schedule K-1 showing their share of the income/loss, which they report on their personal tax return.
- S-Corporation: An LLC can elect to be taxed as an S-Corporation by filing Form 2553. Like Partnerships, income/loss is passed through to owners, but S-Corp owners who work for the business are often treated as employees, receiving a salary subject to payroll taxes. Remaining profits can be distributed without being subject to Self-Employment tax.
- C-Corporation: An LLC can elect to be taxed as a C-Corporation by filing Form 8832. The LLC is then taxed as a separate entity on its profits (Form 1120) at corporate income tax rates.
The applicable tax rates depend entirely on which of these classifications your LLC uses for federal income tax purposes.
This guide provides information on U.S. federal income tax rates for the 2025 tax year based on your LLC's classification. State tax rules also apply and vary.
Select how your LLC is taxed for U.S. federal income tax purposes. If you have a multi-member LLC and have not filed an election (Form 2553 or 8832), your default classification is Partnership. If you have a single-member LLC and have not filed an election, your default is Disregarded Entity (taxed as a Sole Proprietor).
Selecting your classification here will show the relevant federal income tax rates in the next tab.
Select your LLC's federal tax classification in the previous tab to see the applicable tax rates for the 2025 tax year.
Remember that state income tax rates also apply and vary significantly.
This tool provides educational information on U.S. federal LLC tax classifications and associated tax rates for the 2025 tax year. It is not tax advice. Consult a professional for personalized guidance.