Corporate Income Tax at a Glance

Corporate Income Tax Rate.jpg

FORMS AND INSTRUCTIONS
FORM 1120 U.S. Corporation Income Tax Return
FORM 1120 INSTRUCTIONS

Alabama : 6.5%
Alaska : 1~9.4%
Arizona : 6.968%
Arkansas : 1~6.5%
California : 8.84%
Colorado : 4.63%
Connecticut : 7.5%
D.C : 9.975%
Delaware : 8.7%
Florida : 5.5%
Georgia : 6%
Hawaii : 4.4%~6.4%
Idaho : 7.6%
Illinois : 7.0% income tax and (2.5% replacement tax)
Indiana : 6.5%
Iowa : 6%~12%
Kansas : 4~7%
Kentucky : 4~6%
Louisiana : 4%~8%
Maine : 3.5%~8.93%
Maryland : 8.25%
Massachusetts : 8.25%
Michigan : None (Receipt Tax)
Minnesota : 9.8%
Mississippi : 3%~5%
Missouri : 6.25%
Montana : 6.75%
Nebraska : 5.58%~7.81%
Nevada : None
New Hampshire : 8.5%
New Jersey : 9%
New Mexico : 4.8%~7.6%
New York : 7.1%
North Carolina : 6.9%
North Dakota : 2.1%~6.4%
Ohio : None (Receipt Tax)
Oklahoma : 6%
Oregon : 6.6%~7.6%
Pennsylvania : 9.99%
Rhode Island : 9%
South Carolina : 5%
South Dakota : None
Tennessee : 6.5%
Texas : None (Receipt Tax)
Utah : 5%
Vermont : 6%~8.5%
Virginia : 6%
Washington : None (Receipt Tax)
West Virginia : 8.5%
Wisconsin : 7.9%
Wyoming : None

Corporate taxes in the United States are a direct tax imposed on the profits of all businesses, except non profit businesses, such as charities. Corporate taxes can include capital gain taxes on any profit from the sale of items such as used businesses supplies. A corporate tax is levied after the business subtracts expenses from their profits.

Generally, a business will have to pay a corporate tax to the federal government and to their state's government. Federal corporate taxes are imposed according to specific standards. However, state corporate taxes are different within each jurisdiction. Each state's tax laws will allow different deductions as well as taxing businesses at differing rates. State corporate taxes are generally much lower than those imposed by the federal government.

Most businesses will be subject to corporate taxes. There are some exceptions and those exceptions can vary according to each state's tax laws. In fact, some businesses may be required to pay federal corporate taxes but not a state corporate tax. Some foreign companies may even have to pay a corporate tax to the United States, depending on trade and employment factors. Foreign companies that operate a Branch within the United States, must pay income taxes on profits for that branch.

The distinction of what qualifies as a branch, will vary based on several factors. A sole employee that works from home, will likely not be counted as a branch but they may be if they make a certain percentage of profits for the foreign company. Many employees that receive dividends as part of a salary, or retirement package, must also pay taxes on those dividends. Many people claim that factor represents a double taxation on income. In that case, the employer and the employee pay a tax on the dividend.

Corporate tax rates are determined based on many factors. Companies are taxed according to their profit margin. For example, a company that makes a profit of fifty thousand dollars may be taxed at twenty fiver percent, where a company that makes a profit of one hundred thousand dollars, will be taxed at a rate of thirty four percent.

Corporations in the United States, are often expected to make estimated tax payments four times a year. Their corporate taxes due at the end of that tax year, will be adjusted accordingly. Those payments are really no different than individual tax payers having taxes taken out of their paycheck, in order to put money towards their estimate income tax.

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