Corporate income taxes are levied in 44 states. Though often thought of as a major tax type, corporate income taxes account for just 5. Iowa levies the highest top statutory corporate tax rate at 12 percent. Iowa is closely followed by Pennsylvania 9. Three other states Alaska, Connecticut, and New Jersey and the District of Columbia levy rates of 9 percent or higher. Four other states impose rates at or below 5 percent: Arizona at 4.
Nevada, Ohio, Texas, and Washington forego corporate income taxes but instead impose gross receipts taxes on businesses, which are generally thought to be more economically harmful due to tax pyramiding and nontransparency.
South Dakota and Wyoming levy neither corporate income nor gross receipts taxes. Twenty-nine states and the District of Columbia have single-rate corporate tax systems. Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
Indeed, low-income corporations may be owned by individuals with high incomes, and high-income corporations may be owned by individuals with low incomes.
A single-rate system minimizes the incentive for firms to engage in economically wasteful tax planning to mitigate the damage of higher marginal tax rate s that some states levy as taxable income rises. Several states passed corporate income tax rate reductions and other reforms, taking effect in or Notable corporate income tax changes for include:.
The following table includes the most up-to-date data available on state corporate income tax rates and brackets. Of those states taxing wages, eight have single-rate tax structures, with one rate applying to all taxable income.
Conversely, 33 states levy graduated-rate income taxes, with the number of brackets varying widely by state. Kansas, for example, imposes a two-bracket income tax system. At the other end of the spectrum, two states—California and Missouri—each have 10 tax bracket s. Some states tie their standard deduction s and personal exemptions to the federal tax code, while others set their own or offer none at all.
In the following table, we provide the most up-to-date data available on state individual income tax rates, brackets, standard deductions, and personal exemptions for both single and joint filers. Several states changed key features of their individual income tax codes between and These changes include:. The Tax Foundation works hard to provide insightful tax policy analysis.
Our work depends on support from members of the public like you. Would you consider contributing to our work? Jared Walczak. Scott Drenkard. Download PDF. Local sales taxes are collected in 38 states. Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy. Sales tax rate differentials can induce consumers to shop across borders or buy products online. Introduction Retail sales taxes are one of the more transparent ways to collect tax revenue.
State Rates California has the highest state-level sales tax rate, at 7. Was this page helpful to you? Thank You! Let us know how we can better serve you! Give Us Feedback. Share Tweet Share Email. Tags local option sales tax local taxes sales tax. About the Authors. Follow Jared Walczak. Claim for Earned Income Credit. See Form DTF for recordkeeping suggestions for self-employed persons claiming the earned income credit.
Claim for Child and Dependent Care Credit. See Form DTF for recordkeeping suggestions for child care expenses.
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