Operating a business in Utah requires a solid understanding of the state's tax framework. The base state sales tax rate is 6.1%, with local jurisdictions adding up to 2.95%. LLC formation costs $54 in 2026.
Economic Nexus in Utah
Remote sellers must collect Utah sales tax if they exceed $100,000 in annual sales or 200 transactions within the state. This threshold has been in effect since 2019-01-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Utah State Tax Commission enforces these provisions and provides registration guidance at https://tax.utah.gov.
LLC Formation in Utah (2026)
Forming an LLC in Utah costs $54 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $20. Utah imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Utah State Tax Commission.
Key Tax Rules
• Utah has a combined state rate of 6.1% (4.85% state + 1.25% local).
• Additional local taxes can push combined rates to 9.05%.
• Groceries are taxed at a reduced 3% combined rate.
• Economic nexus: $100,000 in sales or 200 transactions.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Utah: groceries (reduced rate), prescription drugs, medical devices. Businesses should maintain proper documentation for exempt transactions.