Corporate Income Tax
Understanding Corporate Income Taxes
Since the Tax Cuts and Jobs Act (TCJA) of 2017, the statutory corporate income tax rate—state and federal combined—is 25.8 percent. The TCJA reduced the federal corporate income tax rate from 35 percent to 21 percent, dropping the combined rate from 38.9 percent to 25.8 percent and placing the U.S. nearer to the worldwide average.
State-level corporate income tax rates vary across the country. Six states (Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming) levy no corporate income tax, while the other 44 states and the District of Columbia do tax corporate profits.
Corporate Tax Forms
States take approaches to tax business and corporations
Form 1120 S
S Corporations Tax Incomes
Form 1065
Partnership Incomes
Who Pays Corporate Income Tax?
While C corporations are required to pay the corporate income tax, the burden of the tax falls not only on the business but also on its consumers and employees through higher prices and lower wages.
Businesses in America broadly fall into two categories: C corporations, which pay the corporate income tax, and pass-throughs—such as partnerships, S corporations, LLCs, and sole proprietorships—which “pass” their income “through” to their owner’s income tax returns and pay the ordinary individual income tax. Some states have not corporate income tax:
- Nevada
- Ohio
- South Dakota
- Texas
- Washington
- Wyoming
Individual or Business?
Looking For Consulting In Any of Our Services?
Our experts in Divine Group LLC will guide you through any process or paperwork correctly and professionally. Contact us today for more information.
Corporate Tax Revenue
Overall, corporate tax revenue as a percent of total tax revenue has been declining over the last 50 years. This is partly because C corporations tend to be taxed more heavily than pass-through businesses, which has led to a decline in C corporations and an increase in pass-through businesses.
Corporate Tax Base
The CIT generally taxes a business’ profits, which are revenues (what a business makes in sales) minus costs (the cost of doing business).
However, costs of capital investments—such as equipment, machinery, and buildings—can not be deducted when they incur. Instead, they have to be deducted over an extended period of time, inflating a business’ taxable income and thus increasing the cost of capital.
- Sole Proprietorships
- Partnerships
- Organizations
- LLCs
- C Corporations
- S Corporations
Competitive Rates & Services
We Can Help You In Any Of Our Services!
Our experienced staff in Divine Group LLC will use all of their knowledge to work alongside you correctly and on time. Contact us today for more information.