Jeffrey Kwall, professor of law at Loyola University Chicago School of Law, notes that: The greater propensity toward single-rate systems for corporate tax than individual income tax is likely because there is no meaningful “ability to pay” concept in corporate taxation. Twenty-nine states and the District of Columbia have single-rate corporate tax systems. South Dakota and Wyoming levy neither corporate income nor gross receipts taxes, and with the enactment of a budget which includes the multiyear phaseout of its corporate income tax, North Carolina is due to join them by 2030. Delaware, Oregon, and Tennessee impose gross receipts taxes in addition to corporate income taxes, as do several states, like Pennsylvania, Virginia, and West Virginia, which permit gross receipts taxes at the local (but not state) level. Nevada, Ohio, Texas, and Washington forgo 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. Seven other states impose top rates at or below 5 percent: Colorado (4.55 percent), Arizona and Indiana (4.9 percent), Utah (4.85 percent), and Kentucky, Mississippi, and South Carolina (5 percent). Two other states (Alaska and Illinois) impose rates greater than 9 percent.Ĭonversely, North Carolina’s flat rate of 2.5 percent is the lowest in the country, followed by rates in Missouri and Oklahoma (both at 4 percent) and North Dakota (4.31 percent). New Jersey levies the highest top statutory corporate tax rate at 11.5 percent, followed by Pennsylvania (9.99 percent) and Iowa and Minnesota (both at 9.8 percent). Though often thought of as a major tax type, corporate income taxes accounted for an average of just 4.93 percent of state tax collections and 2.26 percent of state general revenue in fiscal year 2020. South Dakota and Wyoming are the only states that levy neither a corporate income nor gross receipts tax.Ĭorporate income taxes are levied in 44 states and DC.Gross receipts taxes are generally thought to be more economically harmful than corporate income taxes. Nevada, Ohio, Texas, and Washington impose gross receipts taxes instead of corporate income taxes.Eleven states-Arizona, Colorado, Indiana, Kentucky, Mississippi, Missouri, North Carolina, North Dakota, Oklahoma, South Carolina, and Utah-have top rates at or below 5 percent.

Six states-Alaska, Illinois, Iowa, Minnesota, New Jersey, and Pennsylvania-levy top marginal corporate income tax rates of 9 percent or higher.Rates range from 2.5 percent in North Carolina to 11.5 percent in New Jersey. Forty-four states levy a corporate income tax.

Nys 2022 tax brackets