Types of business taxes in Nevada
In Nevada, a state that does not enforce a traditional state income tax on businesses or individuals, there are different types of taxes to understand, like payroll taxes. Traditional sales and use taxes, commerce taxes, and self-employment taxes may be required, depending on the type of business you have registered and your preferred tax structure.
Federal taxes
You'll be responsible for federal taxes in whatever state you open a business in. Unfortunately, there are dozens of federal tax forms with unique due dates and requirements. Using an accountant or small business accounting software can be helpful in avoiding mistakes that can lead to overpayment or penalties.
As a business owner, you have both personal and business tax filing obligations. Here’s what you need to know:
Personal tax filing
Federal income tax returns:
Every individual is required to file and pay federal personal income tax. This forms the foundation of your overall tax responsibility.
Business tax filing
Business owners have additional filing requirements, depending on the business structure:
- Sole proprietorship: Income and expenses are reported on your personal tax return using Schedule C (Form 1040).
- Partnership: A partnership must file an information return (Form 1065) to report income, deductions, and other relevant details, while each partner reports their share of income on their personal return.
- Corporation: A corporation files a corporate tax return (Form 1120), paying taxes on its profits.
- S corporation: An S corporation files an informational return (Form 1120S). Its income, losses, and deductions pass through to shareholders, who report them on their personal returns.
- Limited liability companies (LLCs): LLCs are not classified separately for federal tax purposes and are taxed based on their ownership structure. Single-member LLCs default to sole proprietorship taxation or may elect corporate taxation, while multi-member LLCs default to partnership taxation or may elect corporate taxation.
Self-employment tax
If you work for yourself and earn more than $400 a year, you pay toward Social Security and Medicare programs through a self-employment tax. The Social Security system provides retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits.
Employment taxes
As an employer, you are responsible for withholding and depositing federal income tax and the employee contribution to Social Security and Medicare taxes. You must also pay the employer portion of Medicare and Social Security and pay federal unemployment tax (FUTA).
State taxes
If you're learning about payroll taxes, it's important to familiarize yourself with Nevada state taxes, which you will also be responsible for as a business owner with employees. Software solutions such as QuickBooks Payroll can streamline the process of managing state taxes and federal filings for your business in Nevada.
Nevada Modified Business Tax (MBT)
The Nevada Modified Business Tax (MBT) is a payroll tax levied on employees' gross wages minus any healthcare benefits provided by the employer. Employers who pay their workers more than $50,000 per business quarter are subject to the MBT. See the State of Nevada Department of Taxation for exceptions.
Nevada franchise taxes
In some states, a franchise tax is imposed on companies wishing to open a business there. Nevada is unique, though, because it doesn't impose a franchise tax. However, the state does impose a Commerce Tax.
What is the franchise tax rate?
While Nevada doesn't currently have a traditional franchise tax for business owners, the Commerce Tax applies to all Nevada-based businesses generating revenue exceeding $4 million annually. This tax rate will vary based on your industry. Each business sector has its own tax rate, which applies only to the portion of gross revenue over $4 million during a fiscal year. To find the exact rate for your industry, check out the official resources on the Nevada Department of Taxation's website.
How is the franchise tax calculated?
The Commerce Tax in Nevada is based on the revenue your business earns in the state during the fiscal year (July 1 to June 30). It only applies if your Nevada gross revenue exceeds $4 million. The tax rate depends on your business's industry, as defined by North American Industry Classification System (NAICS) codes. Here's how it works:
- Calculate gross revenue: Add up all the revenue your business earns in Nevada.
- Subtract exemptions/deductions: Some types of revenue may not count, based on Nevada law.
- Apply the $4 million threshold: If your revenue is over $4 million, the tax only applies to the amount above that.
- Use your industry’s tax rate: Multiply the taxable revenue (over $4 million) by your specific industry’s tax rate.
For step-by-step examples, see the Commerce Tax Return Instructions on the Nevada Department of Taxation's website.
Who may be liable for a franchise tax?
Any business operating in Nevada must pay the Commerce Tax if it earns more than $4 million in gross revenue during the fiscal year. This applies to:
- Corporations
- Partnerships
- LLCs (Limited liability companies)
- Sole proprietorships
- Joint ventures
- Other types of businesses
Some organizations are exempt, like nonprofits under section 501(c), government entities, and credit unions. For a full list of exemptions, see the Nevada Department of Taxation’s Commerce Tax FAQs.
If your business earns $4 million or less in Nevada, you don’t have to file a Commerce Tax return. But if your revenue goes over this amount, you’ll need to file and pay the tax.
Nevada excise taxes
Excise taxes are special taxes imposed on specific goods or services. In Nevada, these taxes apply to a wide range of products and activities, including:
Alcoholic beverages: Nevada imposes an excise tax on the sale of alcoholic beverages. The tax rates per gallon are:
- Malt beverage: $0.16
- Alcohol content 0.5% to 14%: $0.70
- Alcohol content 14.1% to 22%: $1.30
- Alcohol content 22.1% to 80%: $3.60
Tobacco products: The state levies taxes on cigarettes and other tobacco products (OTP). For cigarettes, the rates are:
- $1.80 for a pack of 20 cigarettes
- $2.25 for a pack of 25 cigarettes
The tax rate for OTP in Nevada is generally 30% of the wholesale price, with an exception for premium cigars. Here’s how the tax is calculated for premium cigars:
- If 30% of the wholesale price is greater than $0.50 per cigar, the tax is capped at $0.50 per cigar
- If 30% of the wholesale price is less than $0.30 per cigar, the minimum tax is $0.30 per cigar
- For wholesale prices between these thresholds, the tax remains 30% of the wholesale price
Cannabis: Nevada applies two types of taxes on cannabis:
- Wholesale tax: 15% of the fair market value at the cultivation level.
- Retail tax: 10% of the retail sales price for recreational cannabis sold to consumers.
Gold and silver mining: Nevada charges an excise tax on businesses extracting gold and silver. A 0.75% tax is applied to taxable revenue between $20 million and $150 million, while a 1.1% tax is applied to any taxable revenue over $150 million.
Live Entertainment Tax (LET): LET applies to venues providing live entertainment, such as concerts and shows, with specific criteria determining applicability. The current LET rate is 9% of the admission charge for venues with a capacity of 200 or more people.
Unemployment tax
Business owners in Nevada with employees are required to pay state unemployment insurance (SUI) tax. This tax covers workers who need unemployment benefits due to injury, illness, or even a poor economy.
As of January 1, 2025, Nevada's taxable wage base is $41,800, up from $40,600 in 2024. This means employers pay state UI taxes on each employee's wages up to this amount annually. The SUI tax rates in Nevada range from 0.25% to 5.40%, depending on employer experience. New employers have a tax rate of 2.95%. There’s also an additional 0.05% tax charged for the Career Enhancement Program (CEP).
You can learn more about the unemployment insurance tax in Nevada on the official Nevada Department of Employment, Training and Rehabilitation website.
Local taxes
In addition to federal and state taxes, many cities, counties, and other jurisdictions in Nevada levy other kinds of local taxes to fund essential services and infrastructure such as schools, roads, police, and fire protection.
For example, hotels and motels in Nevada charge a transient lodging tax, which varies by location. In unincorporated Clark County (including the Las Vegas Strip), the tax ranges from 10.5% to 13.38%, depending on the location.
Sales and use tax
Nevada has a base sales tax rate of 6.85% on certain services and tangible goods. However, it's important to note that some jurisdictions in Nevada have sales tax rates as high as 8.375%.
Because Nevada's sales tax rate comprises a state base rate and local surtaxes, you may need to research cities and counties to find an optimal location for your business. While Nevada's state base tax rate is currently 6.85%, some counties generally add between 1.25% and 3.75% to their local tax rates to help cover the cost of local and community-centric services. Some cities charge sales taxes, too. Ultimately, average local tax rates anywhere in Nevada range between 6.85% and 8.375%. A few county examples in Nevada include:
- Douglas County: The current local sales tax rate is 7.10%
- Clark County (Las Vegas): The current local tax rate is 8.375%, making it one of the highest-taxed regions in Nevada
- Washoe County (Reno): The current local county tax rate in Washoe County, Nevada, is 8.265%
Remote seller tax considerations
Since the 2018 South Dakota v. Wayfair, Inc. decision, Nevada requires remote sellers—businesses without a physical presence in the state—to collect and pay sales tax if they meet these certain thresholds:
- Makes over $100,000 in gross sales to Nevada customers, or
- Completes 200 or more separate transactions with Nevada customers.
If you exceed either threshold, you need to register with the Nevada Department of Taxation and start collecting sales tax. Registration must be completed by the first day of the month after 30 days from when you meet the threshold. For example, if your sales exceed $100,000 on October 1, you must register and collect tax by November 1.
Property taxes
Some local governments, cities, and school districts in Nevada levy property taxes. Funds collected from owned properties support community services involving road repairs, public safety, and education.
Property in Nevada is assessed at 35% of its taxable value, which is based on the property’s market value and depreciation. Tax rates are set in dollars per $100 of assessed value. For example, if a property’s assessed value is $100,000 and the tax rate is $3.20 per $100, the annual property tax would be $3,200.
When real property is sold or transferred in Nevada, a Real Property Transfer Tax (RPTT) is imposed. The general rate is $1.95 for every $500 of the property's value. Additional county rates may apply. For instance, the total RPTT rate in Clark County is $2.55 per $500.
