Are LLC fees and business licenses tax deductible?
Yes. State LLC fees, business licenses, permits and professional license renewals are deductible.
The rule
Fees a state or city charges to run the business are deductible: an LLC’s annual report fee or franchise tax, a business license, a sales tax permit, a professional license renewal.
The fees to form the LLC in the first place are startup costs, deductible up to $5,000 in the first year.
Federal income tax and your own state income tax aren’t business expenses. Half of self-employment tax is deducted, but off income, not on Schedule C.
California’s $800 LLC annual tax is deductible in full.
Priced at 36¢ on the dollar, the rate of a $95,000 sole proprietor in California. Work out yours.
- Where it goes
- Schedule C line 23, taxes and licenses
- What to keep
- The receipt or confirmation from the state.
Checked on September 25, 2026 against Instructions for Schedule C and Publication 334, Tax Guide for Small Business. An estimate for your records, not tax advice.
By the kind of work
What else each of these can deduct, and what they tend to miss.
See it on every receipt.
Snap it and Reimburse files it on the right Schedule C line, takes the deductible share and shows what it puts back.