Massachusetts LLC Taxes: The Complete Filing Guide (2025)
Running an LLC in Massachusetts means dealing with taxes at federal, state, and sometimes local levels. This guide simplifies everything you need to know to stay compliant and avoid surprises, from income tax and sales tax to city-specific requirements.
Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.
Massachusetts LLC Tax Basics
Navigating your Massachusetts LLC tax obligations doesn’t have to be complicated. We’ll walk you through the essentials of pass-through taxation, explain Massachusetts’s specific requirements, and highlight strategies to stay compliant and organized. This guide covers everything from federal income taxes to city-specific requirements and filing deadlines.
Use the links below to jump directly to the section you need:
- Massachusetts LLC Taxes at a Glance
- Understanding LLC Taxation Basics
- Federal Tax Obligations
- Massachusetts State Taxes
- Local Tax Considerations
- Tax Calendar and Filing Tips
- Tax Strategies for Massachusetts LLCs
- Forms and Resources
Massachusetts LLC Taxes at a Glance
| Tax Type | Rate | Filing Deadline | Forms Required |
|---|---|---|---|
| Federal Income Tax | 10-37% (personal brackets) | April 15, 2025 | Form 1040 + Schedule C or Schedule E/K-1 |
| Self-Employment Tax | 15.3% | April 15, 2025 | Schedule SE |
| Massachusetts Income Tax | 5% (flat rate) | April 15, 2025 | Form-1 |
| Massachusetts Corporate Income Tax | 8% ($456 minimum tax) | April 15, 2025/March 15, 2025 (s corps) | Form 355 (must be filed electronically) |
| Federal Payroll Taxes (If Employees) | 7.65% employer + 7.65% employee (FICA) | Quarterly (April 30, July 31, October 31, January 31) | Form 941 |
| Massachusetts Unemployment Tax (If Employees) | 2.13% (new employers) | Quarterly | Filed online |
| Federal Unemployment (FUTA) | 6% on first $7,000 per employee (0.6% after credits) | January 31, 2026 (annual) | Form 940 |
| Sales & Use Tax | 6.25% | Monthly, quarterly, or annually based on sales volume | Filed online |
| Annual Report | $500 fee | Varies by registration date | Form D |
Understanding LLC Taxation Basics
How Massachusetts LLCs Are Taxed By Default
Your Massachusetts LLC doesn’t pay taxes itself. Instead, profits flow through to you and your members, who report them on personal tax returns. This is called pass-through taxation.
Here’s how it works:
- Your LLC earns income from business activities
- The LLC itself files no tax return (unless you elect otherwise)
- Profits “pass through” to members based on ownership percentage
- Each member reports their share on their personal tax return
- Members pay tax at their individual income tax rates
What this means for you: Unlike corporations, your business profits are only taxed once, which typically saves money.
Time-Saving Tip: If you’re uncertain about your LLC’s tax classification, a tax professional can review your LLC’s tax setup in 30 minutes and help you choose the most tax-efficient option.
Tax Classification Options
While pass-through taxation is the default, your Massachusetts LLC can choose alternative tax treatments:
Default LLC Tax Status:
- Single-member LLC: Taxed as a sole proprietorship
- Multi-member LLC: Taxed as a partnership
Optional Tax Classifications:
- S Corporation: Can reduce self-employment taxes by paying “reasonable salaries”
- C Corporation: LLC pays corporate tax on profits, members pay personal tax on distributions (creates double taxation)
Not sure which tax classification is right for your business? Schedule a free consultation with 1-800Accountant.
Federal Tax Obligations
Income Tax
As a Massachusetts LLC owner, you’ll report your share of business profits on your personal tax return using:
- Form 1040 + Schedule C (single-member LLCs)
- Form 1040 + Schedule E + Schedule K-1 (multi-member LLCs)
Federal income tax rates range from 10% to 37% based on your tax bracket (actual brackets will depend on inflation adjustments and any tax law changes).
Simply Put: Whatever money your business makes (after expenses) gets added to your personal tax return, just like income from a job.
Self-Employment Tax
LLC members actively involved in the business must pay self-employment tax of 15.3% (covering Social Security and Medicare) on their share of LLC profits.
Key points:
- Applies to net earnings of $400 or more
- Calculated on Schedule SE
- You can deduct 50% of the self-employment tax as an “above-the-line” deduction, which lowers your adjusted gross income
What happens if I miss this payment? The IRS charges penalties of 0.5% per month plus interest. However, first-time mistakes can often qualify for penalty abatement if you have a clean compliance history.
Employment Taxes
If your LLC has employees, you must:
- Withhold federal income tax
- Pay and withhold FICA taxes (7.65% each for employer and employee)
- Pay federal unemployment tax (FUTA)
- File quarterly employment tax returns (Form 941)
- Provide W-2 forms annually
Estimated completion time: 2-3 hours per quarter (significantly less with payroll software or professional help)
Estimated Tax Payments
Because no tax is withheld from your LLC profits, you’ll likely need to make quarterly estimated tax payments using Form 1040-ES. These payments cover both income and self-employment taxes on your share of the business income. Missing deadlines or underpaying can lead to IRS penalties, even if you pay in full later.
Working with an accountant can help ensure accurate calculations, on-time payments, and a smarter overall tax strategy.
Key deadlines:
- April 15
- June 16
- September 15
- January 15
Pro Tip: Set calendar reminders 15 days before each deadline. This gives you time to prepare without the last-minute rush that leads to mistakes.
Massachusetts State Taxes
Massachusetts Income Tax
Massachusetts has a flat personal income tax rate of 5% that applies to your LLC’s profits on your personal return. There’s also a 4% surtax on income exceeding $1 million, bringing the total rate to 9% for any income above that threshold
Filing requirements:
- Use Massachusetts Form-1
- Due April 15, 2025
Bottom Line: For every $1,000 your LLC earns, expect to pay about $50 in Massachusetts state income tax (in addition to federal taxes).
Massachusetts Corporate Income Tax
If your LLC has elected to be taxed as an s corp or c corp, it will be subject to the state’s 8% corporate income tax. This is also referred to as corporate excise tax.
Filing requirements:
- Use Massachusetts Form 355 (must be filed electronically)
- Due April 15, 2025 for C corporations
- Due March 15, 2025 for S corporations
- Minimum tax is $456
Sales and Use Tax
If your Massachusetts LLC sells physical products or certain services:
- Collect 6.25% sales tax on taxable sales
- Register for a sales tax license through the MassTaxConnect website
- File and pay collected taxes monthly, quarterly, or annually based on sales volume
- Due dates vary based on filing frequency
60-Second Check: Do I Need to Collect Sales Tax?
- Do you sell physical products in Massachusetts? → Yes, collect tax
- Do you sell digital products? → Generally not taxable if delivered electronically
- Do you provide services? → Many services are taxable (see exceptions below)
- Do you sell online to Massachusetts customers? → Yes, collect tax
Services typically exempt from sales tax include:
- Professional services (legal, accounting)
- Personal services (haircuts, fitness training)
- Shipping and transportation services
Products exempt from sales tax include:
- Food for human consumption and clothing (up to $175)
- Newspapers and magazines
- Tickets for sporting and amusement events
Payroll Taxes
If you have employees in Massachusetts, you will be responsible for two types of payroll taxes.
Unemployment Insurance (UI) Tax
- Register through the Massachusetts Department of Unemployment Assistance (DUA)
- Rate is 2.13% for new employers (rate varies after three-year period)
- Due quarterly
Withholding Tax
- Register through the Massachusetts Department of Revenue
- Flat rate of 5%
- Due monthly, quarterly, or annually (frequency determined by Department of Revenue)
Annual Report Filing
While not a tax, your Massachusetts LLC must file an annual report:
- Due annually by the LLC’s formation anniversary date
- $500 filing fee
- Filed online or by mail with the Massachusetts Secretary of Commonwealth
Calendar Alert: Set a reminder for the month prior to your LLC’s formation anniversary date to ensure you don’t miss this easy but required filing.
Local Tax Considerations
Local Option Excise Taxes
Massachusetts allows cities and towns to impose their own local option excise taxes.
Examples of local option taxes:
- Meals tax (0.75% on sales of restaurant meals)
- Room occupancy tax (6% or 6.5% for Boston)
- Short-term rental tax (6%)
- All local option excise taxes
Filing requirements:
- Tax is remitted alongside state taxes to the Massachusetts Department of Revenue
- Due dates vary by tax type
Property Taxes
If your LLC owns real property in Massachusetts:
- Rates vary by locality
- Assessed annually
- May qualify for various exemptions based on business type
- Personal property tax may apply to business equipment
Tax Calendar and Filing Tips
Key Deadlines for Massachusetts LLCs
January:
- January 15: Final estimated tax payment for previous year
- January 31: Issue W-2s/1099s to employees/contractors
- January 31: Fourth quarter payroll tax payment due (state and federal)
March:
- March 15: S-Corp tax returns due
April:
- April 15: Personal or corporate income tax returns due
- April 15: Federal income and self-employment tax returns due
- April 15: First quarter estimated tax payment due
- April 30: First quarter payroll tax payment due (state and federal)
June:
- June 16: Second quarter estimated tax due
July:
- July 31: Second quarter payroll tax payment due (state and federal)
September:
- September 15: Third quarter estimated tax payment due
October:
- October 31: Third quarter payroll tax payment due (state and federal)
Record-Keeping Checklist
Keep these records for at least 7 years:
- Business income records (invoices, receipts)
- Expense receipts and documentation
- Bank and credit card statements
- Asset purchase and improvement records
- Vehicle mileage logs
- Home office documentation
- Payroll records
- Previous tax returns
Tax Strategies for Massachusetts LLCs
S Corporation Election Benefits
Converting your LLC to an S Corporation for tax purposes can save on self-employment taxes:
- File Form 2553 with the IRS
- Pay yourself a “reasonable salary” subject to employment taxes
- Take remaining profits as distributions exempt from self-employment tax
Example: An LLC making $100,000 in profit pays 15.3% self-employment tax on the entire amount. As an S Corp, if $60,000 is a reasonable salary and $40,000 is taken as distributions, only the $60,000 is subject to employment taxes.
Potential Savings: In this example, you’d save about $6,120 in self-employment taxes.
Business Expense Deductions
Common deductions Massachusetts LLC owners often overlook:
- Home office deduction
- Business mileage (70¢ per mile for 2025)
- Health insurance premiums
- Retirement plan contributions
- Professional development expenses
- Business meals (50% deductible)
Forms and Resources
Federal Tax Forms
- Schedule C: Profit or Loss From Business (sole proprietors)
- Form 1065: U.S. Return of Partnership Income
- Schedule K-1: Partner’s Share of Income, Deductions, Credits
- Form 1120-S: U.S. Income Tax Return for an S Corporation
- Form 2553: Election by a Small Business Corporation (S Corp)
- Form 8832: Entity Classification Election
Massachusetts Tax Forms
- Form-1: Massachusetts Individual Income Tax Return
- Form 355: Massachusetts Corporate Income Tax Return
- Form D: Massachusetts Annual Report
Helpful Resources
Massachusetts LLC Taxes FAQs
This will depend on several factors, including the LLC’s location, industry, and tax classification.
Generally speaking, LLCs in Massachusetts are taxed as pass-through entities, however they can also elect to be taxed as C or S Corporations.
For more information, you can have a look at our LLC taxes guide.
Yes, there is an annual LLC fee in Massachusetts. All LLCs in Massachusetts need to file an annual report, which costs $500 by mail or $520 via online. The report is due each year on the anniversary date of the filing of the original certificate of organization.
Yes, an LLC that is classified as a corporation for federal tax purposes must pay the Massachusetts corporate excise tax. The tax is calculated based on a combination of taxable tangible property and net income, and the minimum excise tax is $456.
Massachusetts can be a good location to form an LLC due to its strong economy and access to innovation hubs. However, its regulatory environment and higher operating costs may be challenging.
All in all, we recommend considering your business’s unique needs before deciding if Massachusetts aligns with your goals.
If you’re interested in forming an LLC, check out our article on how to start an LLC in Massachusetts.
Need Professional Help? While this guide covers the essentials, tax laws are complex and constantly changing. Schedule a free consultation with 1-800Accountant to ensure your Massachusetts LLC remains fully compliant while minimizing your tax burden.