Understanding the corporate tax rate in the United States is important for businesses planning their taxes, estimating after-tax profits, and comparing the tax costs of operating in different states.
For 2026, the federal corporate income tax rate is 21% for corporations subject to the regular corporate income tax.
However, the actual tax burden for a corporation can be different because businesses may also owe state corporate income tax, local business taxes, franchise taxes, gross receipts taxes, and other taxes.
What Is the Federal Corporate Tax Rate?
The federal corporate income tax rate is 21% of taxable income for corporations subject to the standard corporate income tax.
This rate generally applies to C corporations rather than businesses whose income is passed through to their owners.
For example, if a corporation has $500,000 of taxable income:
$500,000 × 21% = $105,000
The estimated federal corporate income tax would therefore be $105,000 before considering applicable credits, deductions, or other tax adjustments.
The corporation’s taxable income—not simply its total revenue—is what matters.
Corporate Tax Rate vs. Taxable Income
A business does not generally calculate federal corporate income tax by multiplying its total sales by 21%.
Instead, a corporation starts with its income and applies the applicable tax rules to determine taxable income.
For example:
Business revenue: $1,000,000
Deductible business expenses: $600,000
Taxable income: $400,000
At a 21% federal corporate tax rate:
$400,000 × 21% = $84,000
Actual corporate tax calculations can be more complicated because corporations may have deductions, credits, depreciation, losses, limitations, and other tax adjustments.
State Corporate Income Tax Rates
Federal corporate income tax is only one part of the picture.
Many states impose their own corporate income tax. In 2026, 44 states levy a corporate income tax, while other states use different types of business taxes.
State corporate tax rates vary considerably.
Examples of 2026 state corporate income tax rates include:
| State | Corporate Income Tax Rate |
|---|---|
| Alabama | 6.50% |
| Arizona | 4.90% |
| California | 8.84% |
| Florida | 5.50% |
| Georgia | 5.19% |
| Illinois | 9.50% |
| Louisiana | 5.50% |
| Massachusetts | 8.00% |
| Michigan | 6.00% |
| New York | 6.50% |
| North Carolina | 2.00% |
| Pennsylvania | 7.49% |
| Texas | No corporate income tax; gross receipts tax applies |
| Tennessee | 6.50% |
| Virginia | 6.00% |
| Washington | No corporate income tax; gross receipts tax applies |
| Wyoming | No corporate income tax |
State rules can include brackets, minimum taxes, franchise taxes, gross receipts taxes, or other business taxes, so the headline rate does not tell the entire story.
Which States Have No Corporate Income Tax?
Some states do not impose a traditional corporate income tax.
As of 2026, South Dakota and Wyoming impose neither a corporate income tax nor a gross receipts tax. Nevada, Ohio, Texas, and Washington do not have a traditional corporate income tax but impose gross receipts-type business taxes instead.
This distinction is important because “no corporate income tax” does not necessarily mean a business has no state business tax liability.
Highest State Corporate Tax Rates
State corporate tax rates can be significantly higher than others.
In 2026, New Jersey has a top corporate income tax rate of 11.5% for corporations with $10 million or more of taxable income. Minnesota’s top rate is 9.8%, while Illinois has a combined corporate income tax rate of 9.5%.
These rates should not be interpreted as the total tax burden of every corporation in those states because different tax bases, deductions, credits, minimum taxes, and other rules can apply.
Lowest State Corporate Tax Rates
Several states have relatively low corporate income tax rates.
For 2026:
- North Carolina: 2.00%
- North Dakota: up to 4.31%
- Arkansas: up to 4.30%
- Oklahoma: 4.00%
- Missouri: 4.00%
- Kansas: up to 7.00%, depending on income
- Arizona: 4.90%
- Indiana: 4.90%
- Kentucky: 5.00%
State tax structures differ, so comparing only the statutory corporate income tax rate can be misleading.
How Much Tax Does a Corporation Pay?
A corporation’s total tax bill depends on several factors, including:
- Taxable income
- Federal corporate tax rate
- State corporate tax rate
- Business location
- Business activity
- Tax deductions
- Tax credits
- Depreciation
- Payroll
- Property
- Franchise taxes
- Gross receipts taxes
- Other state and local taxes
For this reason, a corporation with $1 million in revenue could have a very different tax bill from another corporation with the same revenue.
C Corporation Tax Rate vs. S Corporation Tax
The distinction between C corporation and S corporation taxation is extremely important.
A C corporation generally pays federal corporate income tax on its taxable income.
An S corporation generally uses pass-through taxation, meaning income, deductions, and other tax items generally flow through to shareholders and are reported on their individual tax returns.
Therefore, there is no single “corporate tax rate” that applies to every business incorporated in the United States.
A business can be legally incorporated while having a different federal tax classification.
What Tax Return Does a Corporation File?
A regular domestic C corporation generally files Form 1120, U.S. Corporation Income Tax Return. The IRS currently provides Form 1120 for corporations to report income, deductions, credits, and tax liability.
S corporations generally file Form 1120-S.
The correct tax return depends on the company’s federal tax classification.
Federal Corporate Tax Rate and State Tax Combined
A corporation may have both federal and state income tax obligations.
For example, a corporation operating in a state with a 5% corporate income tax rate may face:
21% federal corporate tax + state corporate tax
However, you should not simply add the two rates and assume that represents the corporation’s exact effective tax rate. Federal and state tax calculations interact, and deductions, credits, apportionment, and other rules can affect the final liability.
The Tax Foundation estimates that the current U.S. combined federal and state statutory corporate income tax rate is approximately 25.57% on a weighted-average basis.
Corporate Tax Planning
Businesses commonly consider several factors when planning for corporate taxes:
- Business structure
- State of operation
- Taxable income
- Business expenses
- Depreciation
- Tax credits
- Employee compensation
- Retirement plans
- Equipment purchases
- Research and development
- State tax obligations
- Estimated tax payments
Tax planning should be based on the actual circumstances of the business rather than simply choosing a state with a lower advertised corporate tax rate.
Corporate Tax Rate Calculator
To estimate corporate taxes, you generally need more than annual revenue.
Important information can include:
- Total business income
- Deductible business expenses
- Taxable income
- Federal tax rate
- State tax rate
- Applicable credits
- Other corporate tax adjustments
A corporate tax calculator can provide an estimate, but an actual corporate tax return may involve substantially more calculations.
Frequently Searched Corporate Tax Questions
What is the corporate tax rate in the United States?
The federal corporate income tax rate is 21% for corporations subject to the regular federal corporate income tax.
What is the federal corporate tax rate for 2026?
The federal corporate tax rate is 21% for the regular corporate income tax.
Do corporations pay state income tax?
Many corporations do, but state rules vary. Forty-four states impose a corporate income tax, while other states use different business taxes.
Does an LLC pay corporate tax?
Not necessarily. An LLC can have different federal tax classifications, including taxation as a partnership, disregarded entity, S corporation, or C corporation.
What is the highest corporate tax rate by state?
For 2026, New Jersey has a top corporate income tax rate of 11.5% for corporations with taxable income of $10 million or more.
Which states have no corporate income tax?
South Dakota and Wyoming have neither a corporate income tax nor a gross receipts tax. Several other states do not impose a traditional corporate income tax but use other business taxes.
The U.S. corporate tax rate consists of more than one number. The federal corporate income tax rate is 21%, but corporations may also face state and local taxes depending on where they operate and how their business is structured.
When estimating corporate taxes, C corporation taxes, federal corporate income tax, state corporate tax, business tax liability, or corporate tax rates by state, businesses should consider taxable income and the complete tax structure rather than looking only at the federal rate.