Forty-four American states levy a corporate income tax, ranging from 2.5 percent in North Carolina to 12 percent in Iowa. Four states—Nevada, Ohio, Texas, and Washington—impose a “gross receipts tax” on sales and receipts instead of a corporate income tax, while Delaware, Pennsylvania, Virginia, and West Virginia levy a gross receipts tax in addition to a corporate income tax. South Dakota and Wyoming are the only states that do not levy a corporate income or gross receipts tax.
Thirty-four states and the District of Columbia have single-rate corporate tax systems, while the remainder has rates that vary by income bracket. Iowa has the highest top statutory corporate tax rate at 12 percent, followed by New Jersey (11.5 percent), Pennsylvania (9.99 percent), and Minnesota (9.8 percent).
Meanwhile, eight states have a top rate of 5% or below:
- Arizona
- Colorado
- Kentucky
- Mississippi
- North Carolina
- North Dakota
- South Carolina
- Utah
Even in states with high corporate tax rates, however, these taxes collect relatively little revenue, since companies are able to engage in extensive tax planning to reduce their income. Corporate income taxes account for an average of just 3.38 percent of state tax collections and 2.24 percent of state general revenue.
The federal corporate tax is based on a percentage of the income that a company or corporation generates within the United States. The corporate tax rate in the U.S. ranges based on income bracket from 15 percent to 35 percent.