How Much Does Your State Collect in Corporate Income Taxes Per Capita?

This week’s state taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. map continues our collections per capita series by examining corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. collections per capita in each of the 50 states.

In fiscal year (FY) 2017, corporate income tax collections per capita were highest in New Hampshire ($427), Massachusetts ($320), Tennessee ($257), and Delaware and California (both at $256). At the other end of the spectrum, states with the lowest corporate income tax collections per capita were South Dakota ($35), Oklahoma ($40), New Mexico ($44), Missouri ($50), and Arizona ($52).

Six states—Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming—do not levy a corporate income tax. However, in some states without a corporate income tax, a small amount of corporate income tax revenue is shown (such as in Ohio and South Dakota) due to taxes on specific types of businesses (such as financial institutions), which are sometimes structured as corporationAn S corporation is a business entity which elects to pass business income and losses through to its shareholders. The shareholders are then responsible for paying individual income taxes on this income. Unlike subchapter C corporations, an S corporation (S corp) is not subject to the corporate income tax (CIT). s.

It is important to note that among the states without a corporate income tax, four of the six (Nevada, Ohio, Texas, and Washington) instead have state-levied gross receipts taxes on businesses. The Census Bureau does not classify revenue from gross receipts taxA gross receipts tax is a tax applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding. es as corporate income tax revenue, but gross receipts taxes are generally considered more economically harmful than corporate income taxes due to tax pyramiding and their lack of transparency. Delaware, among the states with the highest corporate income tax collections per capita, has both a corporate income tax and a gross receipts tax levied by the state.

When thinking about business taxes, the corporate income tax may be among the first that comes to mind, but it is far from the only tax businesses pay. In addition to corporate income taxes, corporations are subject to sales, property, unemployment insurance, excise, payroll, and business license taxes, among others. In FY 2017, corporate income taxes accounted for only 14.4 percent of all taxes paid by businesses to state governments.

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