Kentucky LLET minimum tax 2026: how to calculate what your LLC owes
Updated April 2026
The Kentucky Limited Liability Entity Tax is the compliance requirement that generates more confusion — and more panicked Google searches — than almost any other state-specific business tax in the country. If you're searching for what the LLET minimum is, how to calculate it, or when it's due, here's everything you need in one place.
The LLET minimum: $175 per year, no exceptions
Every Kentucky LLC owes a minimum LLET of $175 per year regardless of revenue, profit, or business activity. If your LLC was formed in Kentucky and exists as a legal entity, you owe $175. This applies even if your LLC earned zero dollars, operated at a loss, or was completely dormant for the entire year. There is no exemption for small businesses, new businesses, or inactive businesses.
The $175 minimum catches many new LLC owners off guard because they assume a tax based on "gross receipts or gross profits" means they owe nothing if they have no receipts or profits. That's not how the LLET works. The $175 is a floor — you'll always pay at least that amount.
How the LLET is calculated above $3 million
For LLCs with gross receipts or gross profits exceeding $3 million, the LLET is calculated using a formula. You compute two numbers and pay whichever is lower (but never less than $175).
Calculation 1: Gross receipts method. Multiply your Kentucky gross receipts by 0.095% (that's $0.095 per $100 of gross receipts).
Calculation 2: Gross profits method. Multiply your Kentucky gross profits by 0.75% (that's $0.75 per $100 of gross profits).
Your LLET is the lesser of these two calculations — but never below $175.
Here's what this looks like in practice for different revenue levels:
An LLC with $500,000 in gross receipts and $100,000 in gross profits is below the $3 million threshold, so it pays the $175 minimum.
An LLC with $4 million in gross receipts and $800,000 in gross profits would calculate $3,800 (gross receipts method: $4M × 0.095%) or $6,000 (gross profits method: $800K × 0.75%). The LLET would be $3,800 — the lesser of the two.
An LLC with $10 million in gross receipts and $1.5 million in gross profits would calculate $9,500 (gross receipts method) or $11,250 (gross profits method). The LLET would be $9,500.
For most small LLCs — those with under $3 million in gross receipts — you simply pay the $175 minimum every year.
When the LLET is due
The LLET is due on the 15th day of the 4th month after the close of your taxable year. For LLCs using a calendar year (January through December), that means April 15. This is the same day your federal income tax return is due, which means the LLET competes for attention with your biggest annual tax obligation. Many LLC owners focus entirely on their federal return and forget the LLET exists until they receive a notice from the Kentucky Department of Revenue.
The LLET is filed using Form 725 (Kentucky Single Member LLC Individually Owned LLET Return) or as part of Form 720 (Kentucky Corporation Income Tax and LLET Return) or Form 765 (Kentucky Partnership Income and LLET Return), depending on how your LLC is structured and taxed.
Can the LLET be credited against other Kentucky taxes?
Yes — the LLET can be used as a credit against Kentucky corporation income tax. However, since most LLCs are pass-through entities and don't pay corporate income tax at the entity level, this credit has limited practical value for the typical small LLC. In effect, the $175 minimum is simply an annual cost of doing business as an LLC in Kentucky.
The LLET is separate from the annual report
This is critical to understand: Kentucky has two separate annual compliance obligations for LLCs, filed with two different agencies on two different deadlines.
The LLET is filed with the Kentucky Department of Revenue by April 15. The annual report is filed with the Kentucky Secretary of State by June 30 with a $15 fee. These are completely independent filings. Completing one does not satisfy the other. Missing either one creates a separate compliance problem.
Your total minimum annual compliance cost for a Kentucky LLC is $190: $175 for the LLET plus $15 for the annual report.
What happens if you don't pay the LLET
Failure to file and pay the LLET triggers penalties and interest from the Kentucky Department of Revenue. The penalty for late filing is typically 2% of the tax due per month (up to a maximum of 20%), plus interest on the unpaid balance. Combined with a missed annual report (which can trigger administrative dissolution through the Secretary of State), LLET non-compliance can create a cascading compliance failure that puts your LLC's existence at risk.
The complete picture for Kentucky LLC compliance
The LLET is the most-searched Kentucky compliance topic, but it's only one piece of the puzzle. Kentucky LLCs also face state income tax obligations (Kentucky's flat individual income tax rate is 3.5% for 2026), sales tax requirements (6% state rate with no local add-ons), employer withholding and unemployment insurance (if you have employees), and local occupational license taxes in Louisville, Lexington, and other Kentucky cities.
Our complete Kentucky compliance guide covers every one of these requirements — the LLET calculation, the annual report, state and local tax registrations, employer obligations, and every deadline with step-by-step filing instructions.
Get the complete Kentucky compliance guide — 27 pages of every requirement, every deadline, every fee, for $37.