Corporate tax in the United States is imposed at the federal, most state, and some local levels on the income of entities treated for tax purposes as corporations. Since January 1, 2018, the federal corporate income tax has been a flat 21% under the Tax Cuts and Jobs Act of 2017 (TCJA, P.L. 115-97), signed December 22, 2017, replacing a graduated structure ranging from 15% to 35%. State and local taxes and rules vary by jurisdiction, although many are based on federal concepts and definitions. Forty-four states and the District of Columbia impose a corporate income tax, with top rates in 2026 ranging from 2.0% in North Carolina to 11.5% in New Jersey.
The Inflation Reduction Act of 2022 (IRA, P.L. 117-169) added two significant federal corporate-level taxes effective for tax years beginning after December 31, 2022: a 15% corporate alternative minimum tax (CAMT) on the adjusted financial statement income of large corporations, and a 1% excise tax on stock repurchases by publicly traded domestic corporations. The One Big Beautiful Bill Act (OBBBA, P.L. 119-21), signed July 4, 2025, made most TCJA business provisions permanent, restored immediate domestic research and experimental expensing under , restored 100% bonus depreciation permanently, and renamed GILTI as Net CFC Tested Income (NCTI) and FDII as Foreign-Derived Deduction Eligible Income (FDDEI), with revised effective rates of 12.6% and 14% respectively for tax years beginning after December 31, 2025.
Most domestic corporations are taxed on their worldwide income, with foreign-source income taxed under a quasi-territorial regime that includes a participation exemption for certain foreign-source dividends (), current inclusion of low-taxed foreign earnings under NCTI (), Subpart F anti-deferral rules (), the base erosion and anti-abuse tax (BEAT, ), and retained passive foreign investment company (PFIC) reporting under Form 8621. Foreign corporations generally are taxed only on business income when the income is effectively connected with the conduct of a U.S. trade or business (i.e., in a branch). Tax is imposed at the corporate level under and again at the shareholder level on dividend distributions, producing the classical "double taxation" of corporate earnings.
In fiscal year 2024, the federal corporate income tax produced $529.9 billion (about 10.8% of total federal receipts and 1.84% of gross domestic product), the highest absolute level in U.S. history. Receipts fell to $452.1 billion (8.6% of total receipts) in fiscal year 2025, primarily because of the OBBBA's restoration of immediate expensing for research and development and capital investment. The Congressional Budget Office projects corporate income tax receipts at 1.2% to 1.3% of GDP over the 2026–2036 budget window, below the 50-year historical average of 1.7% of GDP and within a historical range of 1.0% to 2.7%.
The corporate income tax applies to only part of the U.S. business sector. Almost half of all private employment in the United States is within businesses that pass income through to their owners' individual income tax returns rather than paying tax at the entity level; academic research finds that the pass-through share of private for-profit employment rose from approximately 15% in 1982 to 49% by 2020. S corporations, partnerships, limited liability companies, regulated investment companies, and real estate investment trusts are subject to specialized regimes that wholly or partially shift the tax burden to owners or shareholders.
Overview
Corporate income tax is imposed at the federal level on all entities treated as corporations (see Entity classification below), and by 44 states and the District of Columbia. State corporate income taxes are not imposed in Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming; however, all of these states except South Dakota and Wyoming impose a gross receipts tax or business privilege tax on corporations. Delaware, Oregon, and Tennessee impose gross-receipts taxes in addition to a corporate income tax. Some local governments also impose a corporate income tax. The gross-receipts and franchise alternatives are not always less onerous than a net-income tax: Washington's business and occupation tax, for example, is computed as a percentage of gross revenue rather than net income, with the result that loss-making enterprises remain liable for the tax.
The federal corporate tax rate is a flat 21% under . A 15% corporate alternative minimum tax applies to "applicable corporations" with average annual adjusted financial statement income exceeding $1 billion. The base erosion and anti-abuse tax applies an additional layer at 10.5% (for tax years beginning after December 31, 2025; previously 10%) for certain large multinationals making cross-border deductible payments. A 1% excise tax applies to stock buybacks of publicly traded domestic corporations under . The personal holding company tax (20%) and accumulated earnings tax (20%) remain in force as anti-avoidance backstops.
State corporate tax rates in 2026 range from a 2.0% flat rate in North Carolina (scheduled to be eliminated by 2030) to 11.5% in New Jersey. Corporate income tax is based on net taxable income as defined under federal or state law. Generally, taxable income for a corporation is gross income (business and possibly non-business receipts less cost of goods sold) less allowable tax deductions. Certain income, and some corporations, are subject to tax exemption. Interest and certain other expenses paid to related parties may be limited under various anti-base-erosion rules including (interest), (hybrid arrangements), and (BEAT).
Corporations may choose their tax year. Generally, a tax year must be 12 months or 52/53 weeks long. The tax year need not conform to the financial reporting year, and need not coincide with the calendar year, provided books are kept for the selected tax year.. Corporations may change their tax year, which may require IRS consent.; . Most state income taxes are determined on the same tax year as the federal tax year.
Groups of companies are permitted to file single returns for the members of a controlled group or unitary group, known as consolidated returns, at the federal level, and are allowed or required to do so by certain states. The consolidated return reports the members' combined taxable incomes and computes a combined tax. Where related parties do not file a consolidated return in a jurisdiction, they are subject to transfer pricing rules. Under these rules, tax authorities may adjust prices charged between related parties under .
Shareholders of corporations are taxed separately upon the distribution of corporate earnings and profits as a dividend. Tax rates on dividends are at present lower than on ordinary income for both corporate and individual shareholders. Qualified dividends received by individuals are taxed at preferential rates of 0%, 15%, or 20% (plus the 3.8% net investment income tax in some cases). To ensure that shareholders pay tax on dividends, two withholding tax provisions may apply: withholding tax on foreign shareholders, and "backup withholding" on certain domestic shareholders.
Corporations must file tax returns in all U.S. jurisdictions imposing an income tax. Such returns are a self-assessment of tax. Corporate income tax is payable in advance installments, or estimated payments, at the federal level and for many states.
Corporations may be subject to withholding tax obligations upon making certain varieties of payments to others, including wages and distributions treated as dividends. These obligations are generally not the tax of the corporation, but the system may impose penalties on the corporation or its officers or employees for failing to withhold and pay over such taxes. The company number used by U.S. tax administration is the Employer Identification Number (EIN).
The architecture of U.S. business taxation is summarized in the diagram below. C corporations are subject to the regular 21% rate and (for the largest corporations) the 15% CAMT, plus a layered international regime; pass-through entities are taxed at the owner level; and a separate state layer applies that cannot be summarized by a single jurisdiction count, because some non-income-tax states impose franchise or gross-receipts taxes instead.
U.S. business activity C corporations Regular federal corporate income tax — 21% under IRC §11 Large-corporation minimum tax — 15% CAMT on AFSI Anti-base-erosion overlay — 10.5% BEAT Stock repurchase excise tax — 1% under IRC §4501 International regime IRC §245A participation exemption Subpart F NCTI (formerly GILTI) — 12.6% effective FDDEI (formerly FDII) — 14% effective Pass-through entities S corporations Partnerships Disregarded LLCs IRC §199A — 20% QBI deduction State business taxation Corporate income tax — 44 states + D.C. Gross receipts / franchise / margin taxes — NV, OH, TX, WA (with DE, OR, TN supplements) No state corporate income or gross-receipts tax — SD, WY
Table of corporate income taxes as a percentage of GDP for the US and OECD countries, 2008 Country Tax/GDP Country Tax/GDP Norway 12.4 Switzerland 3.3 Australia 5.9 Netherlands 3.2 Luxembourg 5.1 Slovakia 3.1 New Zealand 4.4 Sweden 3.0 Czechia 4.2 France 2.9 South Korea 4.2 Ireland 2.8 Japan 3.9 Spain 2.8 Italy 3.7 Poland 2.7 Portugal 3.7 Hungary 2.6 Britain 3.6 Austria 2.5 Finland 3.5 Greece 2.5 Israel 3.5 Slovenia 2.5 OECD avg. 3.5 United States 2.0 Belgium 3.4 Germany 1.9 Canada 3.4 Iceland 1.9 Denmark 3.3 Turkey 1.8
Federal corporate tax rate and structure
Statutory rate
For tax years beginning after December 31, 2017, the federal corporate income tax rate is a flat 21% on all corporate taxable income.. The 21% rate replaced the prior graduated structure that ranged from 15% (on the first $50,000 of income) to 35% (on income over $18.3 million for most corporations); personal service corporations formerly faced a flat 35% rate. The 21% rate is permanent under current law.
The top corporate tax rate fell from a high of 53% in 1942 to 38% in 1993, although corporations in the top bracket were taxed at 35% between 1993 and 2017. The present 21% rate was adopted by TCJA effective for tax years beginning after December 31, 2017.
In addition to the regular 21% tax, the following federal corporate-level taxes may apply:
Tax Rate Statutory authority Applies to Regular corporate income tax 21% All C corporations Corporate alternative minimum tax (CAMT) 15% of adjusted financial statement income , , "Applicable corporations" (3-year average AFSI > $1 billion); foreign-parented groups also subject to $100 million U.S. AFSI test Base erosion and anti-abuse tax (BEAT) 10.5% (10% for years before 2026) Large multinationals (3-year average gross receipts ≥ $500 million; base erosion percentage ≥ 3% (2% for banks/securities dealers)) Stock repurchase excise tax 1% of net repurchases Publicly traded domestic corporations Personal holding company tax 20% of undistributed PHC income – Closely held corporations meeting PHC tests Accumulated earnings tax 20% – Corporations accumulating earnings beyond reasonable business needs
The 21% rate is among the lower statutory rates in the OECD, although several other countries have enacted reductions since 2017. Combined with the average state corporate tax burden, the integrated U.S. federal-state statutory rate as of 2026 is approximately 25.7%.