Texas vs. New York LLC — 2026 Cost, Publication & Income Tax Comparison

1. Understand the New York publication requirement — the #1 founder surprise Before comparing TX vs. NY costs, founders must understand New York's mandatory newspaper publication requirement. Every LLC formed in — or registering to do business in — New York must publish a formation notice in two county-designated newspapers for 6 consecutive weeks within 120 days. In NYC counties (Manhattan, Brooklyn, Queens, Bronx, Staten Island), this costs $700–$2,000. Upstate counties: $100–$200. It is not optional, not avoidable, and applies even to Texas LLCs that register to operate in New York.
2. Compare year-one formation costs: TX ~$300 vs. NY ~$925–$2,225+ Year 1 total: Texas ~$300 (formation only). New York (NYC county): ~$925–$2,225+ ($200 filing + $700–$2,000 publication + $50 affidavit + $25 annual LLC fee). Even for upstate NY: ~$375–$475 ($200 + $100–$200 + $50 + $25). Texas's $300 formation is 3–7× cheaper than NYC LLCs in the first year.
3. Model cumulative costs over years 1, 3, and 5 Year 1: TX ~$300 vs. NYC LLC ~$925–$2,225+. Year 3 cumulative: TX ~$300 vs. NYC LLC ~$975–$2,275+ ($200 + publication + $50 + 3×$25 annual fee). Year 5 cumulative: TX ~$300 vs. NYC LLC ~$1,025–$2,325+ ($200 + publication + $50 + 5×$25 annual fee + $9 biennial). The publication cost dominates early; the annual LLC fee adds $25/yr for single-member LLCs. Texas's zero ongoing cost structure means the TX vs. NY cost gap widens continuously for remote-first businesses with no NY nexus.
4. Evaluate state income tax: TX $0 vs. NY graduated rates + NYC UBT Texas has no state income tax. New York taxes LLC members' pass-through income at 4%–10.9%. NYC residents additionally owe NYC income tax (3.078%–3.876%) on top of NY state. NYC LLCs with net income above $95,000 also owe the NYC Unincorporated Business Tax (UBT) at 4%. For a NYC founder with $200K in LLC net income: NY state tax ~$18,000–$21,000 + NYC income tax ~$7,000–$8,000 + NYC UBT on income above $95K ~$4,200. Texas: $0. The income tax differential is massive and permanent.
5. Apply the operating-state rule For most purposes, form in the state where you actually operate. If you live and operate in New York, forming in Texas doesn't help — New York will require a foreign LLC registration ($250 application fee + the full publication requirement + ongoing NY annual obligations). The operating-state rule is especially strict in New York: any meaningful NY business activity triggers NY registration requirements regardless of formation state.
6. Identify who should choose Texas vs. New York Texas is strongly preferred for: remote-first businesses with no NY nexus, businesses owned by TX-domiciled founders, and any LLC where the owner lives and works entirely outside New York. New York formation is required when: the founder lives in New York, the business has significant NY operations, revenue, employees, or clients. There is no tax-advantaged way to 'escape' New York's tax system by forming a Texas LLC if the economic activity occurs in New York.

Texas Business Organizations Code Ch. 101 (Franchise Tax: TX Tax Code Ch. 171); New York LLC Law §§ 201 et seq. (Publication: NY LLC Law § 206; Annual Fee: NY Tax Law § 802; NYC UBT: NYC Administrative Code Title 11, Ch. 5); IRS guidance on single-member LLC disregarded entity treatment.

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Texas vs. New York LLC — common questions