Kentucky · LLC tax election
Kentucky LLC: S corp or C corp?
Kentucky's LLET applies whether you elect S, elect C, or do nothing at all.
See Kentucky at a glanceShort answer
Kentucky taxes a C corporation at a flat 5% and individuals at a flat 3.5% for 2026, so S status usually saves state tax. But every LLC, S corporation and C corporation also pays the limited liability entity tax on gross receipts, with a $175 minimum, so the entity cost does not go away.
Last checked .Kentucky at a glance
| Question | Kentucky |
|---|---|
| S election recognized? | Yes, Kentucky follows the federal election1 |
| Separate state form and deadline | No separate state form2 |
| Tax the S corp itself pays | minimum $1753 |
| C corp rate and minimum | 5% flat, minimum $1754 |
| Entity tax on a default LLC | $175 a year5 |
| Personal income tax | Yes, on wages and pass-through income6 |
What is different about Kentucky?
Most state tax questions turn on a rate comparison. Kentucky adds a twist: the limited liability entity tax. It is charged on gross receipts or gross profits to LLCs, S corporations and C corporations alike, with a $175 minimum. If your receipts or profits are $3 million or less, you pay just the $175. That means the S election does not remove an entity-level cost here; the LLET stays. What it changes is the income tax. A C corporation pays a flat 5% while the personal rate is a flat 3.5% for 2026. Because the LLET also gives shareholders a credit against their own income tax, the net cost is lower than it sounds.
Does Kentucky recognize a federal S corp election?
Kentucky treats an S corporation as a limited liability pass-through entity, so the company itself does not pay the 5% corporate income tax; shareholders pay individual income tax at 3.5% for 2026. The company does pay the LLET, the greater of a gross-receipts or gross-profits formula or $175. At $3 million or less of receipts or profits you pay only the $175. Shareholders can claim a credit for the LLET above the $175 minimum.
Does my LLC need a separate Kentucky election or form?
Kentucky has no separate S election; an S corporation files a pass-through entity (PTE) return due the 15th day of the 4th month after year-end.2
What does Kentucky tax an S corp or LLC at the entity level?
- A Kentucky S corporation pays the limited liability entity tax, never less than $175.3
- A Kentucky LLC doing business in the state pays the LLET, with a $175 minimum: a business with gross receipts or gross profits of $3 million or less pays only that minimum, and one above $6 million pays the full formula.5
- Kentucky imposes the LLET on every business protected from liability by state law, including corporations, LLCs and S corporations, with a $175 minimum.7
Is a Kentucky LLC taxed as a C corp ever better?
A Kentucky C corporation pays a flat 5% on its income, a rate fixed since 2018 when the brackets were replaced. On top of that it pays the LLET, with the same $175 minimum. The two taxes are separate, and the C corporation gets no credit that passes through to you. Dividends are taxed again at the 3.5% personal rate.
Run your Kentucky numbers
With a 5% corporate rate against a 3.5% personal rate for 2026, the S election pays on state income tax alone, in addition to federal payroll savings. The LLET is the same either way, so it should not decide the question. At $175 for small companies, it barely registers.
Result
How much would a Kentucky LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 + Kentucky LLC tax $0 | $21,194self-employment tax $21,194 + Kentucky LLC tax $0 |
| S corp | $9,344payroll tax $7,344 + Kentucky S corp tax $0 + $2,000 payroll and prep | $15,770payroll tax $13,770 + Kentucky S corp tax $0 + $2,000 payroll and prep |
| C corp | $17,328payroll tax $7,344 + Kentucky tax $1,600 + federal $6,384 + $2,000 payroll and prep | $30,740payroll tax $13,770 + Kentucky tax $3,000 + federal $11,970 + $2,000 payroll and prep |
Assumes a 60% salary9 and a single filer. Income tax is left out. C corp dividends are taxed again. Kentucky's $175 minimum LLET applies to LLCs and S corps alike, so it is left out.
When is the Form 2553 deadline for a Kentucky LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on Kentucky: How to start a Kentucky LLC · How to start a Kentucky corporation · Kentucky LLC cost · Kentucky annual report · Annual report late fees by state
File the S-Corp Election for your Kentucky LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
What is the Kentucky limited liability entity tax?
An annual tax paid by every corporation and limited liability pass-through entity doing business in Kentucky, unless excluded. The minimum is $175.
Does an S corporation pay the Kentucky LLET?
Yes. Kentucky classifies an S corporation as a limited liability pass-through entity, so it owes the LLET. Shareholders can use a credit for the amount above $175.
What is the Kentucky corporate income tax rate?
A flat 5% since tax years beginning on or after January 1, 2018, according to the Department of Revenue.
What is Kentucky's individual income tax rate for 2026?
3.5%, according to the Department of Revenue's tax year 2026 e-file handbook.
How much is the LLET for a small business?
If total gross receipts or total gross profits are $3 million or less, you pay only the $175 minimum. Between $3 million and $6 million a sliding scale applies.
Sources 10 links, checked Nov 6, 2026
- Kentucky treats an S corporation as a pass-through entity that owes the limited liability entity tax; it owes corporation income tax only on built-in gains, passive investment income or LIFO recapture installments. revenue.ky.gov, checked Nov 6, 2026
- Kentucky has no separate S election; an S corporation files a pass-through entity (PTE) return due the 15th day of the 4th month after year-end. revenue.ky.gov, checked Nov 6, 2026
- A Kentucky S corporation pays the limited liability entity tax, never less than $175. revenue.ky.gov, checked Nov 6, 2026
- Kentucky taxes C corporation income at a flat 5%, plus the limited liability entity tax with a $175 minimum. revenue.ky.gov, checked Nov 6, 2026
- A Kentucky LLC doing business in the state pays the LLET, with a $175 minimum: a business with gross receipts or gross profits of $3 million or less pays only that minimum, and one above $6 million pays the full formula. revenue.ky.gov, checked Nov 6, 2026
- Kentucky taxes individuals at a flat 3.5% for 2026. revenue.ky.gov, checked Nov 6, 2026
- Kentucky imposes the LLET on every business protected from liability by state law, including corporations, LLCs and S corporations, with a $175 minimum. revenue.ky.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.