Corporate income taxes vary widely across the U.S. Some states impose flat rates, while others apply graduated brackets based on taxable income, and a few have no corporate tax at all. The variation in corporate tax rate per state is significant enough that it can influence where businesses choose to operate, expand or incorporate. As of 2025, rates range from zero in states like South Dakota and Wyoming to over 11% in states such as New Jersey.
A financial advisor with tax planning expertise can help you create a plan to manage your liability.
What Is Corporate Tax?
Corporate tax is a levy imposed by federal and state governments on the profits earned by corporations. At the federal level, the corporate income tax rate is currently 21%, applied uniformly across all corporations. In addition to federal taxes, most states also assess their own corporate taxes, which can be based on net income, gross receipts or a combination of both.
State-level corporate taxes vary in structure. Some states apply a flat rate, meaning all corporate income is taxed at the same percentage. Others use a graduated system that taxes higher earnings at higher rates. A few states don’t tax corporate income at all but may impose other business-related taxes. Corporate tax revenue supports various public services, including infrastructure, education and economic development.
For corporations, the total tax burden depends not just on the statutory rate but also on deductions, credits and how taxable income is calculated under each state’s rules.
Corporate Tax Rates and Brackets By State
Corporate tax structures vary across the United States, with some states imposing no corporate income tax, while others implement flat or graduated rates.
States With No Corporate Tax
As of 2025, six states do not levy a corporate income tax: Nevada, Ohio, South Dakota, Texas, Washington and Wyoming.
Nevada, Ohio, Texas and Washington do not have a corporate income tax but impose a gross receipts tax in its place:
- Nevada has a Commerce Tax on gross revenue
- Ohio levies the Commercial Activity Tax (CAT)
- Texas imposes the Franchise Tax, calculated on gross receipts
- Washington assesses the Business & Occupation (B&O) Tax
A gross receipts tax differs from corporate income tax in that it applies to a company’s total revenue, regardless of whether the business is profitable. In contrast, a corporate income tax is based on net income after deducting expenses. Because gross receipts taxes are levied on revenue rather than profit, businesses with thin margins may face higher effective tax rates under a gross receipts regime than they would under an income-based system.
States With Corporate Tax
The remaining 44 states and the District of Columbia impose corporate income taxes, with rates and structures varying by state. Some states apply a flat rate to all corporate income, while others use a graduated system with multiple brackets.
| State | Tax Rate(s) and Brackets | Corporate Tax Brackets |
|---|---|---|
| Alabama | 6.5% flat rate | All income taxable |
| Alaska | 0%–9.4% (graduated) | 0% up to $25,000; 2% to $49,000; up to 9.4% above $222,000 |
| Arizona | 4.9% flat rate | All income taxable |
| Arkansas | 1%–5.3% (graduated) | 1% up to $3,000; 2% to $6,000; up to 5.3% above $11,000 |
| California | 8.84% flat rate | All income taxable |
| Colorado | 4.4% flat rate | All income taxable |
| Connecticut | 7.5% flat rate | 8.25% rate for Income over $100 million |
| Delaware | 8.7% flat rate | All income taxable |
| Florida | 5.5% flat rate | First $50,000 exempt |
| Georgia | 5.39% flat rate | All income taxable |
| Hawaii | 4.4%–6.4% (graduated) | 4.4% up to $25,000; 5.4% to $100,000; 6.4% above $100,000 |
| Idaho | 5.695% flat rate | All income taxable |
| Illinois | 9.5% flat rate | All income taxable |
| Indiana | 4.9% flat rate | All income taxable |
| Iowa | 5.5%–7.1% (graduated) | 5.5% up to $100,000; 7.1% above $100,000 |
| Kansas | 3.5%–6.5% (graduated) | 3.5% up to $50,000; 6.5% above $50,000 |
| Kentucky | 5% flat rate | All income taxable |
| Louisiana | 5.5% flat rate | 3.5% up to $50,000; 5.5% to $150,000; 7.5% above |
| Maine | 3.5%–8.93% (graduated) | 3.5% up to $350,000; 8.93% over $3.5 million |
| Maryland | 8.25% flat rate | All income taxable |
| Massachusetts | 8% flat rate | All income taxable |
| Michigan | 6% flat rate | All income taxable |
| Minnesota | 9.8% flat rate | All income taxable |
| Mississippi | 4%–5% (graduated) | 4% over $5,000; 5% above $10,000 |
| Missouri | 4% flat rate | All income taxable |
| Montana | 6.75% flat rate | All income taxable |
| Nebraska | 5% | All income taxable |
| Nevada | No corporate income tax | N/A/ |
| New Hampshire | 7.5% flat rate | All income taxable |
| New Jersey | 6.5%–11.5% (graduated) | 6.5% up to $100,000; 9% to $1M; 11.5% above $10 million |
| New Mexico | 5.9% | All income taxable |
| New York | 6.50%–7.25% | 6.5% up to $5 million; 7.25% above $5 million |
| North Carolina | 2.25% flat rate | All income taxable |
| North Dakota | 1.41%–4.31% (graduated) | 1.41% up to $25,000; up to 4.31% above $50,000 |
| Ohio | No corporate income tax | N/A |
| Oklahoma | 4% | All income taxable |
| Oregon | 6.6%–7.6% | 6.6% up to $1 million; 7.6% above $1million |
| Pennsylvania | 7.99% flat rate | All income taxable |
| Rhode Island | 7% flat rate | All income taxable |
| South Carolina | 5% flat rate | All income taxable |
| South Dakota | No corporate income tax | N/A |
| Tennessee | 6.5% flat rate | All income taxable |
| Texas | No corporate income tax | N/A |
| Utah | 4.55% flat rate | All income taxable |
| Vermont | 6%-8.5% (graduated) | 6% up to $10,000; 7% to $25,000; 8.5% above $25,000 |
| Virginia | 6% flat rate | All income taxable |
| Washington | No corporate income tax | N/A |
| West Virginia | 6.5% flat rate | All income taxable |
| Wisconsin | 7.90% flat rate | All income taxable |
| Wyoming | No corporate income tax | N/A |
| District of Columbia | 8.25% flat rate | All income taxable |
How Much Is the Federal Corporate Tax Rate?
As of 2025, the federal corporate income tax rate in the United States is 21%. This flat rate was established under the Tax Cuts and Jobs Act of 2017, which lowered the previous top rate of 35% to make U.S. corporations more globally competitive. The 21% rate applies to all C corporations, regardless of size or industry, and is calculated based on a company’s taxable income after deductions and credits.
Unlike individuals, corporations do not pay a graduated tax at the federal level. Instead, the single-rate structure simplifies compliance and forecasting for businesses. However, corporations may still face additional taxes on specific income types or international earnings, depending on how they operate. While proposals have surfaced to raise the federal rate—particularly for large multinational firms—no legislative changes have taken effect as of early-2025.
The federal corporate tax remains distinct from state-level taxes, which can significantly affect a company’s total tax liability.
Bottom Line
Corporate tax obligations in the U.S. reflect a mix of federal rules and diverse state-level approaches. With policies ranging from flat-rate systems to tiered brackets—and some states foregoing corporate income taxes altogether—businesses face a wide spectrum of tax considerations depending on where they operate. These differences play a role in shaping both short-term planning and long-term growth strategies, particularly for companies comparing potential tax burdens across jurisdictions.
Tax Planning Tips
- A financial advisor can help your business identify deductions, credits and strategies to reduce your overall tax burden. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- One common way businesses can reduce taxable income is by accelerating deductible expenses into the current tax year. This can be done by prepaying rent or buying necessary equipment before year-end. Here are seven tax-planning strategies for your business.
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