Regular readers of Tax Foundation reports know that we publish estimates of the distributional impact of federal tax changes: that is, we estimate how a tax reform might affect the after-tax incomes of taxpayers at...
- How High Are Corporate Income Tax Rates in Your State?
How High Are Corporate Income Tax Rates in Your State?
This week’s map shows top corporate marginal tax rates in each state (full report on state corporate income tax rates: here). Corporate income taxes vary widely, with Iowa taxing corporate income at a top rate of 12.0 percent (though the state offers deductibility of federal taxes paid), followed by Pennsylvania (9.99 percent), Minnesota (9.8 percent), Alaska (9.4 percent), the District of Columbia (9.4) and Connecticut and New Jersey (9.0 percent each). At the other end of the spectrum, North Dakota taxes corporate income at a top rate of 4.53 percent, followed by Colorado (4.63 percent), and Mississippi, North Carolina, South Carolina, and Utah (5.0 percent each).
Some states do not levy a corporate income tax at all, but instead levy gross receipts taxes, which are more harmful. Ohio levies the Commercial Activities Tax (CAT), Texas levies the Margin Tax, and Washington levies the Business and Occupation (B&O) tax. Virginia and Delaware levy both gross receipts taxes and corporate income taxes. Nevada, South Dakota, and Wyoming do not levy a corporate income tax or a gross receipts tax, although the Nevada Senate recently passed legislation (now pending in the Assembly) that would impose a gross receipts tax in that state.
Economic studies find that corporate income taxes are among the most harmful to economic growth, while sales and property taxes have less of an impact on growth.
For more information on state tax rates, check out the 2015 edition of Facts and Figures: How does your state compare?
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