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Current Corporate Income Tax Rates for 2026 (by State)
A direct tax levied by government authorities on a corporation's net income or profits is known as the corporate income tax. If your business operates as a C corporation, it will almost certainly be obligated to pay this tax. However, most small businesses aren't C corps, but must still pay attention to state rules and regulations. State rules matter and will impact your business entity selection, multistate expansion strategy, and any planned distributions.
Use this guide to determine your state's corporate income tax rate, learn about notable changes for 2026, and tax strategies you can implement to reduce your business's corporate income tax liability.
Key takeaways
The federal corporate income tax rate impacting C corporations remains 21% in 2026.
State corporate income tax rates range from 0% in a handful of states to a maximum tax rate of over 11% in others.
Some states have no corporate income tax but instead impose gross receipts-style business taxes.
Your entity type, including limited liability companies (LLCs), partnerships, S corps, and C corps, determines how you are taxed, underscoring the importance of a strategic election.
Tax strategies and supporting tactics can be implemented to reduce your corporate income tax liability.
State income taxes, entity selection, and ongoing compliance are best handled by accounting professionals familiar with the nuances of your state and industry.
Federal corporate income tax rate for 2026
Since 2018, the federal corporate tax rate has been 21%. This rate applies to taxable income, which is determined by a business's revenue minus expenses.
Calculating your federal corporate income tax burden is simple. In this example, annual revenue is $100,000, and expenses are $20,000.
1) Subtract expenses from your revenue.$100,000 - $20,000 = $80,000 in federal taxable income.
2) Multiply your taxable income by the federal tax rate.
$80,000 x .21 = $16,800, you owe in federal corporate taxes.
State corporate income tax rates for 2026
So, who pays state corporate income tax in 2026?
C corporations pay corporate income tax at the state and federal levels.
Businesses formed as pass-through entities (LLC, S corp) pass income and deductions to the business owners, who must report distributions on their personal income tax returns.
While some entities feature pass-through taxation by default, they can elect to be taxed as a corporation.
Nevada, Texas, and a handful of other states lack a corporate income tax, but effectively make up for it via a gross receipts tax. A gross receipts tax applies to a business's total revenue and is considered a more stable revenue stream. Unfortunately for small business owners, this tax often creates a high compliance burden.
2026 corporate income tax rates by state
The corporate tax rates for 2026 are:
State | Tax Rate/Ranges |
|---|---|
6.5% | |
0% – 9.4% | |
4.90% | |
1% – 4.3% | |
8.84% | |
4.4% | |
7.5% (plus a higher rate for very large income) | |
8.25% | |
8.7% | |
5.5% | |
5.19% | |
4.4% – 6.4% | |
5.3% | |
9.5% | |
4.9% | |
5.5% – 7.1% | |
4% – 7% | |
5% | |
5.5% | |
3.5% – 8.93% | |
8.25% | |
8% | |
6% | |
9.8% | |
4% – 5% | |
4% | |
6.75% | |
4.55% | |
No corporate income tax* (commerce-style tax) | |
7.5% | |
6.5% – 11.5% | |
5.9% | |
6.5% – 7.25% | |
2% | |
1.41% - 4.31% | |
No corporate income tax* (CAT) | |
4% | |
6.6% – 7.6% | |
7.49% | |
7% | |
5% | |
No corporate income tax* | |
6.5% + GR | |
No corporate income tax* (franchise tax) | |
4.5% | |
7% – 8.5% | |
6% | |
No corporate income tax* (B&O tax) | |
6.5% | |
7.9% | |
No corporate income tax* |
*May still owe gross receipts-style business taxes.
It's important to understand that rates can vary by income level, industry, and special tax bases. In addition to state tax, local taxes and add-on taxes may apply.
Notable state changes going into 2026
Each year, state changes can affect your business planning. Notable 2026 changes include:
State tax rate reductions and phasedowns. Several states, sometimes as part of years-long reduction plans, have changed. Examples include Georgia reducing its flat income tax rate, Indiana lowering its rate, and Iowa completely transitioning to a flat tax.
Corporate income and business taxes updates. Examples include North Carolina reducing its corporate income tax rate, Mississippi phasing out capital stock taxes, and Pennsylvania increasing the cap on net operating loss deductions.
Other business tax changes (sales, excise, etc.). Examples included Illinois eliminating its state-level grocery taxes, while New Jersey is imposing a hotel occupancy tax targeted to certain cities in the state.
Several states are expected to continue adopting flat tax systems, which are thought to be less burdensome and complex for small business owners to manage.
Tax strategies to reduce corporate income tax liability
Consider using these strategies to reduce your business's corporate income tax liability in 2026.
Entity Review. Reduce corporate income tax liability by reviewing how your small business is structured. Correct entity classification will reduce your annual tax burden. If raising capital is important to your 2026 strategy, converting to a C corporation may be advantageous. If reducing your self-employment tax burden is a priority, convert to an S corporation and pay yourself a reasonable salary. Learn about key C corp and S corp differences in this article.
Tax Deductions and Credits. Eligible tax deductions and credits will help minimize your business tax liability. Consider the Research and Development (R&D) tax credit if you plan to create or invest in new products or processes, and ensure you properly depreciate tangible assets (motor vehicles, machinery, buildings) you purchase during the year. Depreciation is an accounting method that spreads the cost of a tangible asset over its useful life as defined by the Internal Revenue Service (IRS), rather than expensing it immediately.
Tax Planning. It's critical toadopt proper tax planning and management for your small business. Multistate tax nexus and apportionment rules determine if your small business is required to pay taxes in a state typically outside of your own, along with how much of your total income is taxable by that state. As your business expands across state lines, which is relatively common for ecommerce, you must navigate complex rules and regulations while ensuring compliance.
Work with a tax professional
Growing your business while managing state and federal corporate tax responsibilities in 2026 is difficult and time-consuming without experts on your side. When you trust 1-800Accountant, America's leading virtual accounting firm, with this complex work, you're paired with a dedicated tax professional who will:
Help you choose the optimal entity for your business
Maintain compliance throughout the tax year
Reduce your total tax liability
Whether you need business tax advisory or professional tax preparation, we offer a suite of professional accounting solutions for an affordable, tax-deductible fee. This way, you can be confident in your corporate income tax situation in 2026 and beyond.
Schedule a quick consultation – usually 30 minutes or less – to learn more and get started.
Corporate Tax FAQ
What is the corporate tax rate in my state for 2026?
Use the chart above to identify your corporate tax rate 2026. The state list is presented in alphabetical order.
Which states have no corporate income tax?
Six states do not currently levy a corporate income tax, including Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming. Of those states, South Dakota and Wyoming also lack a gross receipts tax.
Do LLCs pay corporate income tax?
LLCs typically don't pay corporate income tax because they are pass-through entities, with revenue flowing through to owners for reporting on their personal income tax returns. However, if an LLC elects to be taxed as a corporation, it will be subject to this tax.
Do S corps pay corporate income tax?
S corporations are typically considered pass-through entities, in which the business's profits, losses, and deductions are passed through to shareholders for tax purposes. Because of this, S corps do not pay federal corporate income tax, although they may be subject to state-level taxes, such as in California.
What is the difference between corporate income tax and gross receipts taxes?
The main difference between corporate income and gross receipts tax is what is being taxed. Corporate income taxes are levied on your business's profits, while gross receipts taxes are levied on your business's total sales. Gross receipt taxes are owed even if you're operating at a loss.
How do state corporate taxes work if I operate in multiple states?
If you operate your business in multiple states, you are subject to multistate taxation, meaning you must file income tax returns in every state where nexus has been established. Nexus is determined by physical presence (office, warehouse, employee) or via economic activity, such as $100,000 or more in sales or 200 or more transactions.
How do pass-through entities’ federal taxes work?
Pass-through entities are not taxed at the federal level on business income. Instead, profits are passed through to the owners, who report them on their individual income tax returns. Generally, personal income tax rates are more favorable than the federal corporate tax rate for owners.
What are non-taxable corporate transactions?
Certain corporate transactions are considered non-taxable, meaning some business activities are not subject to taxation. Corporate acquisitions in which the buyer pays the seller primarily in stock are among the more common examples of a non-taxable transaction.
What is withholding tax?
The money employers deduct from their W-2 employees' gross wages and pay directly to the government is known as a withholding tax. The withheld amount serves as a credit applied to a W-2 employee's federal income taxes. W-2 employees will receive a tax refund if too much money is withheld throughout the fiscal year, and may owe the IRS if too little is taken out.