Limited liability company taxes are the combination of federal pass-through treatment and state-level obligations that apply to an LLC's income. The federal side is consistent everywhere. The state side is where owners operating in more than one place get surprised, and for a business spread across Chicago, Miami, and Houston, the three states could hardly be more different.
At the federal level, your LLC's default classification, disregarded entity if single-member or partnership if multi-member, determines how profit flows to your personal return, and every state generally follows that federal classification. What varies is what each state stacks on top.
Here is how the three markets actually compare in 2026.
| State | Key LLC-level obligation | Rate / threshold |
|---|---|---|
| Illinois (Chicago) | Personal Property Replacement Tax on partnerships, S-corps, and LLCs taxed as either | 1.5% of net Illinois income, no minimum threshold (Illinois Dept. of Revenue) |
| Texas (Houston) | Franchise "margin" tax on most entities including LLCs | 0.75% standard, 0.375% retail/wholesale, no tax due below $2.47M revenue (Texas Comptroller) |
| Florida (Miami) | No state personal income tax | Pass-through LLC income generally not taxed at the state level |
A few things worth pulling out. Illinois charges its 1.5% replacement tax on net income with no revenue floor, so even a small profitable LLC owes it. Texas has no income tax but its franchise tax catches owners off guard, and a filing can be required even when no tax is due. Florida has neither a personal income tax nor an LLC income tax, which makes it the friendliest of the three for pass-through owners, though multi-state owners still have to track where income was actually earned, because other states will claim their share.
The federal QBI deduction, up to 20% of qualified pass-through profit and now permanent under the 2025 law, generally follows you regardless of state. But not every state conforms to it, so your effective savings can look different depending on where you file.
The pattern I see most: an owner sets the structure up once, in one state, and never revisits it as the business expands. Paperwork that made sense at $80,000 of revenue in a single state stops making sense once there is activity in three.
Common questions
Do LLC taxes change between states? Yes. Federal treatment is uniform, but state obligations vary widely. Illinois charges a 1.5% replacement tax, Texas a franchise tax, Florida no income tax.
Does Florida tax LLC income? Florida has no state personal income tax, so pass-through LLC income is generally untaxed at the state level.
Does Texas tax LLCs? Texas applies a franchise tax to most LLCs, though no tax is due below $2.47 million in revenue for 2026.
HYON Q handles multi-state exposure and entity structure together, from all three cities. Free 30-minute call: https://www.hyonq.com/book-consultation