How to File LLC Taxes in Massachusetts? (Simple Guide)
As a Massachusetts LLC owner, you are responsible for complying with various tax obligations and tax requirements.
After spending over 40 hours cross-referencing Massachusetts Department of Revenue guidance and consulting with a licensed CPA and a business attorney, we built this guide to walk you through every tax obligation Massachusetts LLCs face.
Whether you're a single-member LLC filing a Schedule C or a multi-member entity electing S-corp status, we cover the exact forms, rates, and deadlines you need to stay compliant.
Quick Summary
- LLCs in Massachusetts are taxed as pass-through entities.
- Massachusetts has a 5% flat individual income tax rate for most income.
- High earners with income over $1,083,150 pay an additional 4% surtax, bringing their rate to 9%.
- Massachusetts LLCs with C-corp status must pay 8% Massachusetts corporate excise taxes and 21% federal corporate income tax.
How Are LLCs Taxed in Massachusetts?
LLCs in Massachusetts are taxed under LLC pass-through taxation by default. Massachusetts LLCs do not file their own taxes; members report their income and pay taxes on their individual tax returns.
Besides filing individual tax returns, there are other state, local and federal government returns an LLC is responsible for. We'll discuss them below.
State Taxes for Massachusetts LLCs
In Massachusetts, LLCs are liable to file income taxes based on their structure.
In addition to income taxes, LLCs may also be subject to other business tax obligations depending on their industry and structure.
However, before filing any state taxes, the Internal Revenue Service (IRS) must approve their filing status on a federal level for the Massachusetts Department of Revenue to recognize it.
Here's how Massachusetts LLCs pay state taxes.
1. Single-Member LLCs
According to the IRS, LLCs owned by a single member are not expected to pay income taxes directly.
Such LLCs are treated like sole proprietorships if owned by an individual or branch if owned by another company.
Single-member LLC owners must also pay self employment taxes on their earnings.
When filing under this default status, you must file a federal tax form and personal tax return.
The federal tax form for single-member LLCs is Form 1040, where members report their individual income tax returns. You'll also pay Massachusetts's flat 5% individual income tax rate [1].
2. Multi-Member LLCs
A Massachusetts multi-member LLC pays taxes like a partnership by filing Form 1065 with the IRS.
Further, the LLC is responsible for filing a Partnership Return of Income (Form 3) to report its income to the state, even though an LLC doesn't pay its income tax directly [2].
3. LLCs taxed as S-corp
All LLCs in Massachusetts can elect their LLC as an S-corporation for income tax purposes. They can do this by filing Form 2553 on the IRS website.
S-corps are taxed as pass-through entities but are subject to the Massachusetts Corporate Excise Tax. S-corps with gross receipts under $6 million pay only the $456 minimum excise. Those with receipts between $6–$9 million pay 2% on income; those above $9 million pay 3% on income [3].
An S-corp status allows Massachusetts LLCs not to pay self-employment tax on earnings distributions, but an individual member will have to pay this tax on their salary.
This can result in significant savings on self-employment taxes for profitable businesses.
"As an LLC owner, you should know that making a corporate election for tax reasons ensures that your LLC retains its liability protection since a corporation status is a tax status, not a separate business entity."
- Niko Brosnihan, Business Lawyer
4. LLCs taxed as C-corp
LLCs can also elect to be taxed as C-corps in Massachusetts. A C-corp status is the default filing status for corporations.
LLCs taxed as C-corps are subject to federal corporate taxes at 21% and Massachusetts corporate excise taxes at 8% of net income, plus a property measure of $2.60 per $1,000 of tangible property or net worth — whichever is greater. A $456 minimum excise applies regardless of income.
You can elect your corporation to file under C-corp status by filing Form 8832. Once the request is granted, you'll file your LLC business taxes on Form 1120.
Federal Taxes for Massachusetts LLCs
Paying taxes is a crucial duty for LLCs, and understanding the specific federal tax obligations is essential for compliance.
Other than state taxes, Massachusetts LLCs must pay federal income tax and self-employment tax.
1. Federal Self-employment Tax
The Federal Self-employment Tax is issued by the Federal Insurance Contributions Act (FICA).
All LLCs members and managers must pay the Federal Self-employment Tax on profits withdrawn from the LLC.
The self-employment tax rate is 15.3%, encompassing 12.4% for social security and 2.9% for Medicare [4].
2. Federal Income Tax
An LLC is also subject to federal income tax on any earnings drawn from the business. Federal income taxes are only levied on drawing off profits from the LLC, minus deductions and allowances.
The tax also varies depending on the LLC income, tax return bracket, filing status, and deductions, like a pension plan and health care.
Massachusetts Pass-Through Entity (PTE) Excise Tax Election
Massachusetts allows eligible multi-member LLCs and S-corps to elect a Pass-Through Entity (PTE) Excise Tax under Chapter 63D. By paying a 5% entity-level tax on Massachusetts taxable income via Form 63D-ELT, the entity deducts it as a business expense — bypassing the federal $10,000 SALT deduction cap for individual members.
Each qualified member receives a 90% refundable credit against their Massachusetts personal income tax. The election is annual and irrevocable for the year made. Single-member LLCs are not eligible.
In our experience, this is one of the most overlooked tax-saving moves available — a two-member LLC earning $200,000 in Massachusetts income can save approximately $2,600 in federal taxes annually.
Other Taxes
A Massachusetts LLC gets charged several other taxes. And if your LLC has employees, you will also need to pay employer taxes, which include federal and state obligations.
1. Sales and Use Tax
All sales and rentals of tangible personal goods and services in Massachusetts are subject to a general sales tax of 6.25% [5]. The Department of Revenue publishes a list of the goods and sales exempt from paying sales tax.
Sales / Use Tax must be paid annually, quarterly, or monthly depending on how much money your LLC generates:
- $100 or less: Due annually
- $101 – $1,200: Due quarterly
- $1,201 or more: Due monthly
You can register for Massachusetts sales tax using MassTaxConnect.
2. Local Massachusetts Taxes
Apart from sales tax, you may be liable for additional municipal taxes, depending on your business's location and the nature of its assets.
In places like Boston and Worcester, this includes excise taxes on vehicles and municipal property taxes. You should verify with your local government to identify which local taxes are specific to your LLC.
3. Employer Taxes
Employer taxes must be paid if your Massachusetts business has employees.
The employer must withhold and pay employee income taxes. The withholding tax rate is 7.65%. But first, you must register with the DOR.
Income tax withholding reports must be filed regularly, typically monthly or quarterly, through the M-941 form [6].
You'll also register with the Department of Unemployment Assistance (DUA). After that, you must make quarterly contributions to unemployment insurance.
Employers in Massachusetts are obliged to submit UI contributions on the first $15,000 of annual wages they give each employee.
For new employers (registered less than 3 years) not in construction, the 2026 UI tax rate is 2.42%. For new employers in the construction sector, the rate is 6.08% [7].
The Department of Unemployment Assistance determines the employer's UI tax rate after three years based on the reserve percentage of the employer.
For 2025, UI rates range from 0.83% to 12.65% under Schedule D, per the Department of Unemployment Assistance's current rate schedule [8].
Related Articles:
- How to Set Up an LLC in Massachusetts
- Professional Registered Agent Services in Massachusetts
- Top LLC Formation Services in Massachusetts
4. Industry-Related Taxes
The Massachusetts Department of Revenue also collects extra business taxes that are particular to certain industries, including:
- Motor Fuel Excise
- Cigarette and Tobacco Tax
- Sales Tax on Meals
- Alcoholic Beverage Excise
- Marijuana Retail Sales Tax
- Room Occupancy Excise Tax
FAQs
Do I Need to File a Massachusetts State Tax Return for My LLC?
Yes, you must file a Massachusetts state tax return for your LLC. Massachusetts has a flat rate individual state income tax for LLC members at 5%.
Do Foreign LLCs in Massachusetts Need to Pay Massachusetts Taxes?
Yes, foreign LLCs in Massachusetts need to pay Massachusetts taxes, including individual member tax returns, corporate tax forms, federal and state income taxes, and local taxes, depending on the location of the LLC.
Do You Need Help Filing Your Massachusetts LLC Taxes?
All LLCs in Massachusetts must file taxes accurately, reliably, and on time. You can use accounting software that offers advanced automated tax filing and reporting features for LLCs. QuickBooks is one such software that we recommend.
QuickBooks offers comprehensive tax management tools that simplify complex filing tasks to ensure you file your federal and state taxes seamlessly.
Additionally, their services also provide options with expert guidance.
You can contact CPA tax specialists who offer individualized guidance and work with you to maximize your deductions.
