2026 tax year
Forming in Montana or South Dakota
Two cheap states, and they are cheap in completely different ways.
Forming in Wyoming, Delaware or Nevada does not remove tax or registration obligations in the state where your business actually operates. An out-of-state entity doing business in its owner's state must usually register there as a foreign entity and pay that state's taxes anyway.
These two turn up together in formation advice and they are not interchangeable. Montana has no general sales tax but does tax income. South Dakota taxes no income at all, personal or corporate. But has an ordinary sales tax.
Which of those matters depends entirely on your business, and for most readers the honest answer is neither, because both only apply if you are actually there.
What these states charge
| State | Entity | Formation | Foreign registration | Annual report | Annual tax |
|---|---|---|---|---|---|
| Montana | LLC | $35 | not established | $20 | not established |
| Montana | Corporation | not established | not established | not established | not established |
| South Dakota | LLC | $150 | $750 | $55 | not established |
| South Dakota | Corporation | $150 | $750 | $55 | not established |
A figure above is marked as not established because it came from an older version of this site and has not been confirmed against the state's own fee schedule. It is excluded from every total.
What each is actually good for
Montana’s absence of sales tax is a genuine advantage to a business selling physical goods from Montana. It does nothing for a business selling from anywhere else, because sales tax follows the customer.
South Dakota’s absence of income tax is a genuine advantage to someone who lives in South Dakota. It does nothing for someone who lives elsewhere, because income tax follows the owner.
Both states also charge a foreign entity substantially more than a domestic one to register, so using either from outside is the expensive direction.
What it costs you to use these states
Set where you live and where the work actually happens. The comparison keeps your operating state's obligations on every column, which is the whole point, because those do not go away when you form somewhere else.
What decides the numbers
Registered agent prices are a typical market range, not an official fee. Acting as your own agent needs an address in that state, so it is only offered where you live or work.
What changes the warnings, not the arithmetic
Set your states and figures above, then press Compare.
Questions
People register vehicles in Montana to avoid sales tax. Is that the same thing?
No, and it is a different area of law with its own consequences. This calculator compares the cost of forming and maintaining a business entity, and nothing here should be read as advice about vehicle registration.
South Dakota has no income tax. Why does the comparison still charge me income tax?
Because you are taxed where you live, not where the entity is filed. If you do not live in South Dakota, South Dakota having no income tax does not reduce your bill by a dollar.
Why is one of the Montana figures marked unverified?
Because it came from an older version of this site and has not been confirmed against Montana’s own fee schedule. Rather than present it as established, it is shown as a lead and excluded from totals.
Related
- Compare every state
- Forming in Delaware
- Forming in Wyoming
- Delaware franchise tax calculator
- Sole proprietor, S corp or C corp?
General information about what states charge, not tax advice. And not legal advice either. Choosing where and how to form a business involves legal questions beyond cost. Take advice before filing.