Corporate Tax Law in The U.S.

Tax on the income of those organizations treated as corporations for the purpose of taxation is known as corporate tax. Just like individuals, corporate are also required to submit their tax returns every year. In the United States, the corporate tax law governs these taxes. These taxes are imposed by the federal government, state governments as well as the local governing bodies.

Tax Rates Under Federal Corporate Tax Law

  • The federal corporation tax rate varies from 15% to 35%.
  • For income up to $50,000, the applicable rate is 15%.
  • For income ranging from $50,000 to 75,000, the tax is $7500 plus 25% of the income above $50,000.
  • For income above $75,000 and below $100,000, corporations have to pay $13,750 plus 34% for the amount above $75,000.
  • For corporations with the taxable income of $100,000 to $335,000, the tax to be paid as $22,250 plus 39% of the income above $100,000.
  • For corporations with taxable income between $335,000 to $10,000,000, corporate tax to be paid is $113,900 plus 34% of the income above $335,000.
  • Companies with income between $10,000,000 and $15,000,000 have to pay a tax of $3,400,000 along with 35% of the income above $10,000,000.
  • Companies earning income between $50,000,000 and 18,333,333 should pay a corporate tax of $5,150,000 along with 38% of the income above $15,000,000.
  • The highest tax bracket for corporate income tax under corporate tax law is for income above $18,333,333 and the tax rate is 35%.

Tax on Shareholders

Shareholders are taxed differently. They are taxed on the basis of the amount distributed to them as dividend.

Tax Payment

According to corporate tax law, companies have to pay corporate tax in advance, in installments based on income estimates of the company.

State and Local Taxes

Corporate tax law in states varies from state to state. Also, state laws do not allow for any deductions. In addition, any tax treaties between states do not apply to corporate taxes.

Tax Credits

Corporations in the U.S. can get tax credits which will result in lower tax payments. One such tax credit is the federal foreign tax credit. There are also credits for specific wage payments, credit related to use of natural resources etc.

Corporate Tax Returns

The tax returns to be submitted in accordance with corporate tax law can be quite complicated. The returns have to be filed on time and without error to avoid penalty. Errors committed intentionally when filing tax returns will attract criminal penalty.

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