Illinois LLC vs Kentucky LLC (2026)
Compare Illinois LLC vs Kentucky LLC on filing fees, taxes, privacy laws, and annual costs. Find out which state is actually better for your business.
By Edmond Hui · Last updated: August 4, 2026
Verdict: Illinois wins for most businesses
For most Illinois-based businesses, forming locally in Illinois is the smarter choice. You avoid paying fees in two states and managing compliance in both. Kentucky only makes sense if your business genuinely operates there, and even then the total costs deserve a hard look.
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| Factor | Illinois | Kentucky |
|---|---|---|
| Filing Fee | $150 | $40 |
| Processing Time | Not published by the state | Not published by the state |
| Annual Report Fee | $75 | $15 |
| Annual Report Due | Before 1st of anniversary month | June 30 |
| State Income Tax | Yes | Yes |
| Anonymous LLC | No | No |
| Publication Requirement | No | No |
| Foreign LLC Cost (if forming out-of-state) | N/A, you're in your home state | $150 + registered agent ~$150/yr |
Full fee breakdown for either state: Illinois LLC cost and Kentucky LLC cost.
Business Climate: Illinois vs Kentucky
| Factor | Illinois | Kentucky |
|---|---|---|
| 5-year business survival rate | 55.6% (#3 of 51) | 54.1% (#11 of 51) |
| Business application growth (2026 YTD (Jan to Jul) vs 2025 YTD (same months)) | +7.7% YoY (#7 of 51 by volume) | +34.1% YoY (#26 of 51 by volume) |
Sources: U.S. Bureau of Labor Statistics, Business Employment Dynamics · U.S. Census Bureau, Business Formation Statistics (BFS)
Compare LLC Costs: Illinois vs Kentucky
Illinois
Kentucky
Costs include every mandatory state charge: the filing fee, the report fee (annualised where a state files biennially), any state entity-level tax shown in its own row above, a one-time publication cost where a state requires publication, and any one-time registration charge a state requires before the LLC may trade. Annualising makes the 1, 3 and 5 year rows a cost of ownership rather than a payment schedule: a biennial state charges its whole report fee in the years it falls due and nothing in between. Entity-level taxes that only apply after a corporate election, or above an owner or income threshold, are excluded and flagged on the state's own cost page. New York's publication cost is carried at a $250 floor, roughly $200 of newspaper cost in a low-cost county plus the $50 Certificate of Publication fee. No county-clerk-designated New York City newspaper publishes a rate card, so the four-figure NYC estimates in wide circulation cannot be traced to a primary source and are not asserted here; budget for materially more than the floor if you file in a NYC county. Montana's annual report is free when filed by April 15 and $35 after, a waiver the Secretary of State applies at its discretion. Every fee was verified against the state's own fee schedule, statute, or revenue authority on 29 July 2026. Excludes registered agent and legal fees. For informational purposes only, not legal or tax advice.
Filing Fees & Formation Costs
Illinois charges $150 to form an LLC, while Kentucky charges $40. Kentucky is $110 cheaper upfront. The cost that usually gets overlooked: if you form in Kentucky but operate in Illinois, you must also register as a foreign LLC in Illinois (a $150 filing) and maintain a registered agent in Kentucky (typically around $150 per year). That puts the realistic first-year cost of the Kentucky route at roughly $340, versus $150 for simply forming in Illinois. Speed isn't a basis for choosing between them: neither Illinois nor Kentucky publishes a standard processing time, so any figure comparing the two is guesswork.
Taxes: Illinois vs Kentucky
Both Illinois and Kentucky levy a personal income tax on pass-through business income, and your LLC's profits will be taxed where you live and operate. Forming in Kentucky doesn't change what an Illinois-based owner pays. Illinois levies a flat 4.95% personal income tax. Kentucky levies a flat 4% personal income tax. Kentucky imposes the Limited Liability Entity Tax (LLET), $175 minimum per year.
Privacy & Asset Protection
Neither Illinois nor Kentucky offers anonymous LLC formation: both states require owner or manager information on public filings. Kentucky's annual report confirms the names and addresses of members/managers. Business owners who prioritize privacy typically form a holding company in a state like Wyoming or New Mexico instead. Both states provide charging-order protection for LLC members, and for most small businesses the practical difference in asset protection between the two is minimal.
Annual Maintenance Costs
Illinois LLCs file an annual report ($75, due in the anniversary month), and Kentucky LLCs file an annual report ($15, due June 30). If you form in Kentucky while operating in Illinois, you maintain filings in both states, Kentucky's report plus Illinois's equivalent for your foreign registration, and pay a Kentucky registered agent roughly $150 per year. That brings ongoing costs of the Kentucky route to roughly $240 per year, versus about $75 to keep a domestic Illinois LLC in good standing. One more recurring cost to budget for: Kentucky imposes the Limited Liability Entity Tax (LLET), $175 minimum per year.
When Kentucky Actually Makes Sense
Forming in Kentucky makes sense in a few specific situations: your business genuinely operates in Kentucky, with a real office, employees, or property there, or you're relocating to Kentucky in the near future. For a typical small business based in Illinois, none of these usually apply. Registering a Kentucky LLC to do business back home means $150 in Illinois foreign-registration fees, on top of Kentucky's $40 formation fee, while Illinois's own annual report runs $75 a year and is due in the anniversary month. When in doubt, form where you actually do business.
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<iframe src="https://www.mystatellc.com/tools/compare-states?embed=1&stateA=IL&stateB=KY" width="100%" height="720" frameborder="0" style="border:0;max-width:900px;display:block;margin:0 auto;" title="Illinois vs Kentucky LLC Cost Comparison" loading="lazy"></iframe> <p style="text-align:center;font-size:.8125rem;color:#6b7280">Source: <a href="https://www.mystatellc.com/llc/compare/illinois-llc-vs-kentucky-llc">MyStateLLC, Illinois vs Kentucky LLC Comparison</a></p>