Does Nevada Have a Corporate Income Tax?
Understand Nevada's corporate tax policies. Learn if the state imposes an income tax on businesses and explore its actual tax structure.
Nevada’s tax landscape presents a distinct environment for businesses. This guide provides clarity on the state’s approach to corporate taxation and outlines the primary taxes businesses typically encounter.
No Corporate Income Tax in Nevada
Nevada stands out as one of the few states that does not impose a state corporate income tax. This policy can be a significant draw for businesses seeking to minimize their state income tax liabilities. However, simply incorporating in Nevada does not automatically exempt a business from corporate income taxes in other states where it generates revenue or has a physical presence.
Nevada’s Primary Business Taxes
While a corporate income tax is not present, businesses in Nevada are subject to several other types of taxes. These include a Commerce Tax, a Modified Business Tax (MBT), sales and use taxes, and property taxes on business personal property.
Key Business Tax Considerations
The Commerce Tax applies to businesses whose Nevada gross revenue exceeds $4 million in a fiscal year. This tax is categorized by industry based on the North American Industry Classification System (NAICS) codes, with rates ranging from 0.051% to 0.331% depending on the primary business activity. The tax year for the Commerce Tax runs from July 1 to June 30, and returns are generally due 45 days after the fiscal year ends. Businesses subject to both the Commerce Tax and the Modified Business Tax may be able to claim a credit against their MBT liability for Commerce Tax payments.
The Modified Business Tax (MBT) is a payroll tax levied on employers based on the total wages paid to their employees. For most general businesses, the MBT rate is 1.17% on gross wages exceeding $50,000 per calendar quarter, after accounting for employer-sponsored healthcare benefit deductions. Financial institutions, however, are subject to a different rate, currently 1.554% on all wages after health benefit deductions, without the $50,000 quarterly exemption. Businesses typically file MBT returns on a quarterly basis.
Nevada also imposes sales and use taxes on the retail sale, lease, or rental of tangible personal property and certain services. The statewide sales tax rate is 6.85%. Local jurisdictions can add surtaxes, leading to combined sales tax rates that can range from 4.6% to over 8% depending on the specific location of the transaction. Businesses with a physical presence or economic nexus in Nevada are generally responsible for collecting and remitting these taxes.
Finally, businesses in Nevada are subject to personal property tax on assets used in their operations, such as equipment, furniture, and fixtures. This tax is calculated based on an “assessed value,” which is derived by reducing the original acquisition cost of the property by applicable depreciation factors. The assessed value is generally computed as 35% of the taxable value. Business inventory held for resale is typically exempt from this property tax.