Among aspiring entrepreneurs, Nevada has a reputation for being one of the best states in the US to start a new business.
This year, the Silver State came in seventh in the Tax Foundation’s list of tax-friendly states for businesses. And according to the Kauffman Indicators of Entrepreneurship, 83.21% of Nevada startups survive their first year of operations. Perhaps this is why the same report found that 76.36% of entrepreneurs in the state started a business out of choice rather than necessity.
Of course, if you plan on building a successful business with limited funds, you’ll need to be mindful of your business expenses and tax obligations. Here, we’ll look at what taxes business owners in Nevada are responsible for, including:
What business taxes do you pay in Nevada?
When they launch their new venture, most business owners fully expect to pay a series of taxes to keep their business legally compliant. But if your company is located in Nevada, your tax obligations will look much different than those of businesses in other states.
Nevada business owners don’t pay personal income tax or corporate share tax, while the businesses themselves aren’t responsible for state income tax or franchise tax either. Companies only pay the modified business tax, commerce tax, sales tax, unemployment tax, and any industry-specific or local taxes that might apply to their business. We’ll take a closer look at these below.
Nevada commerce tax
Instead of the typical franchise tax or corporate income tax levied by other states, Nevada assesses a commerce tax on businesses with gross receipts of over $4,000,000.
The tax code divides the local economy according to the North American Industry Classification System (NAICS), assigning each industry a unique tax rate between 0.051% and 0.331%. The rate applied to each company is determined by its business activities. For businesses that operate in multiple industries, their tax rate is determined by the category that earns most of the company’s revenue.
After their first year, companies that pay the commerce tax and the modified business tax (also known as the MBT—more on this tax later) can deduct up to 50% of their commerce tax payments from their MBT liability. You can find more information on this tax credit on the Nevada Department of Taxation website.
How to file and pay
Companies with over $4,000,000 in gross revenue during the state’s fiscal year (which runs from July 1 to June 30) must file commerce tax returns by August 14.
But before you can file your tax return, you must register your business with the Department of Taxation. Fill out this commerce tax nexus questionnaire to determine whether your business must register for the tax. If you qualify, then mail the form to the address below to complete the registration process:
Nevada Department of Taxation
1550 College Pkwy Ste. 115
Carson City, NV 89706
Once your business is registered with the state, you’ll receive a welcome letter that includes an access code you’ll need to sign up for online filing via the Nevada Tax Center. Tax returns and payments can also be made through this platform. But if you prefer, you can file paper returns by sending them to the following address:
Nevada Department of Taxation
Attention: Commerce Tax Remittance
P.O. Box 51180
Los Angeles CA 90051-5480
However, note that businesses with an annual tax liability of $10,000 or more must submit payments electronically.
To learn more about the Nevada commerce tax, visit the Department of Taxation’s webpage on frequently asked commerce tax questions.
Sales and use tax
Companies that sell physical products are required to collect sales tax at the point of purchase and send it to the Nevada Department of Taxation. Additionally, businesses that store, use, or consume tangible personal property purchased outside of the state are subject to Nevada’s use tax.
The state sales and use tax rate in 2023 is 6.85%.
How to file and pay
Before a business can collect Nevada sales tax, they need to register with the Department of Taxation and receive a sales tax permit. After that, they are assigned a monthly, quarterly, or yearly filing frequency based on their sales revenue.
No matter the filing frequency, all registered businesses file sales tax returns by the last business day of the month after the end of the tax period. Returns can be filed online via the Nevada Tax Center. Companies must file even if they don’t have any taxes to report for the period.
Unemployment insurance tax
If your business hires employees, you’ll also need to pay unemployment insurance taxes to the state of Nevada. This tax covers unemployment benefits for eligible employees who leave the company.
In 2023, new employers pay 2.95% on the first $40,100 of each employee’s wages. Experience-rated employers are assigned a tax rate ranging from 0.25% to 5.4%. Additionally, all employers that don’t pay the maximum 5.4% rate must pay an additional 0.05% tax for the state’s Career Enhancement Program.
How to file and pay
Before you can file and pay unemployment taxes, you need to register your business with the Nevada Department of Employment, Training & Rehabilitation (DETR) Employer Self Service (ESS) website.
All registered employers must file quarterly contribution and wage reports with the Nevada Employment Security Division (ESD), even if no wages were paid during the tax period. File these reports via ESS by the last day of the month following the end of the calendar quarter (April 30, July 31, October 31, and January 31).
Taxes can be paid electronically through one of the methods listed on the DETR website or mailed (along with a payment coupon, which can be created in ESS) to the address below:
Department of Employment, Training and Rehabilitation
Employment Security Division, Contributions Section
500 East Third Street
Carson City, Nevada 89713-0030
However, tax payments of $10,000 or more must be paid electronically.
Nevada modified business tax
The Nevada modified business tax is a payroll tax levied against employers that operate in the state—and, more specifically, employers with taxable wages exceeding $62,000 in a quarter.
The current MBT rate for general businesses is 1.378% 1.17% on gross wages over $50,000 after deducting employer-sponsored healthcare benefits. For financial institutions, the MBT rate is 1.853% 1.554% on all wages after health insurance deductions.
How to file and pay
All employers file MBT returns quarterly, even if they don’t have any wages to report during the tax period. The tax filing deadline for these returns is the last business day of the month following the end of the calendar quarter.
First, you’ll need to register your business on the DETR website (if you haven’t already done so). Registering your business with the ESD will automatically register you with the Department of Taxation as well.
You can file your MBT returns online through the Nevada Tax Center portal. Alternatively, if you want to file by mail, you can use the paper tax forms that the Department of Taxation will send to your business.
Learn more about the Nevada modified business tax by referring to the modified business tax FAQ page on the Department of Taxation website.
In addition to the taxes levied by the state, local municipalities in Nevada also impose their own taxes on the businesses in their jurisdictions.
For instance, many cities and counties charge a local sales tax on top of the statewide one. Because Nevada sets the maximum local sales tax rate at 1.53%, the average combined state and local sales tax rate comes to 8.23%.
Other taxes your business might be responsible for include excise taxes levied on products like alcohol, cigarettes, and fuel.
Because these taxes ultimately depend on the location and nature of your business, it’s best to talk with your tax advisor or accountant to get a complete picture of your Nevada business tax obligations.
Nevada business tax breakdown by business type
To help you and your business stay compliant, below we’ve included a chart breaking down your federal and state tax obligations by business entity.
Remember that pass-through entities—which include sole proprietorships, partnerships, and limited liability companies (LLCs)—don’t pay federal income taxes on the entity level. Instead, their taxes are passed on to their business owners, who pay taxes through their personal tax returns.
|Business type||Commerce tax||Sales and use tax||Unemployment tax||Modified business tax||Federal income taxes|
|C corporation||Yes, if they meet the commerce tax threshold||Yes, if applicable||Yes, if you have employees||Yes, if you have employees||Yes|
|S corporation||Yes, if they meet the commerce tax threshold||Yes, if applicable||Yes, if you have employees||Yes, if you have employees||Yes (pass-through)|
|LLC||Yes, if they meet the commerce tax threshold||Yes, if applicable||Yes, if you have employees||Yes, if you have employees||Yes (pass-through)|
|Partnership||Yes, if they meet the commerce tax threshold||Yes, if applicable||Yes, if you have employees||Yes, if you have employees||Yes (pass-through)|
|Sole proprietorship||Yes, if they meet the commerce tax threshold||Yes, if applicable||Yes, if you have employees||Yes, if you have employees||Yes, by way of individual income tax|