Corporate tax in the United States
From Wikipedia, the free encyclopedia
| Taxation in the United States | ||
| Image:US-GreatSeal-Obverse.svg This article is part of the series: | ||
|
|
| Federal taxation | |
|---|---|
| History Internal Revenue Service Court · Forms · Code | |
| Income tax · Payroll tax Alternative Minimum Tax Estate tax · Excise tax Gift tax · Corporate tax Capital gains tax | |
| State & local taxation | |
| State income tax Sales tax · Use tax Property tax State tax levels | |
| FairTax · Flat tax
| |
| Tax protester arguments | |
| Constitutional Statutory · Conspiracy | |
|
| |
| Part of the Taxation series | |
| • project |
Corporate tax in the United States is a tax on the taxable income of a C corporation or an entity taxed as a C corporation. The corporate tax is the default tax levied on a business entity unless the entity qualifies to be taxed under different tax rules such as those for non-profit organizations and S corporations. The corporation is taxed under and Subchapter C ( et seq.) of Chapter 1 of the Internal Revenue Code.
Contents |
[edit] Tax rates
The corporate tax uses a marginal tax rate system as its base, then additional taxes may be levied based on systems such as the corporate Alternative Minimum Tax or an accumulated earnings tax. The marginal rates have shifted over time resulting in the current system with marginal rates that rise with taxable income, then fall, then rise, only to fall again for the bracket with the highest taxable income. In addition to the rates below, depending on tax preference items, a corporation may be subject to alternative minimum tax if their tax under the marginal tax rate system is less than the alternative minimum tax.
| Taxable Income ($) | Tax Rate | Deduction ($) |
|---|---|---|
| 0 to 50,000 | 15% | 0 |
| 50,000 to 75,000 | 25% | 5,000 |
| 75,000 to 100,000 | 34% | 11,750 |
| 100,000 to 335,000 | 39% | 16,750 |
| 335,000 to 10,000,000 | 34% | 0 |
| 10,000,000 to 15,000,000 | 35% | 100,000 |
| 15,000,000 to 18,333,333 | 38% | 550,000 |
| 18,333,333 and up | 35% | 0 |
The tax rates listed above do not apply to a "qualified personal service corporation."
[edit] Qualified personal service corporations
Qualified personal services corporations are taxed at a flat rate of 35% unlike other corporations. A "qualified personal service corporation" is a corporation, substantially all of the activities of which involve the performance of services in the field of law, health, engineering, architecture, accounting, actuarial science, performing arts, or consulting. To be classified as a qualified personal service corporation, at least 95% of the corporation's stock, by value, must be owned directly or indirectly by employees performing the services, retired employees who performed the services, an estate of one of the aforementioned employees, or certain persons who acquired the stock as a result of the death of such an employee.[1]
[edit] Accumulated earnings tax
In addition to the marginal and alternative minimum taxes a corporation that accumulates excess earnings without paying them out to shareholders as dividends may be subject to a 15% accumulated earnings tax.
[edit] Estimated payments
Corporations are generally required to make installment payments of their expected tax liability each quarter.
[edit] Notes
- ^ Internal Revenue Service, U.S. Dep't of the Treasury, Instructions for 2006 Form 1120, page 15.
