South Dakota and Wyoming levy neither corporate income nor gross receipts taxes. Delaware and Oregon 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: Florida (4.458 percent), Colorado (4.63 percent), Arizona (4.9 percent), Utah (4.95 percent), and Kentucky, Mississippi, and South Carolina (5 percent). Two other states (Alaska and Illinois) levy rates of 9 percent or higher.Ĭonversely, North Carolina’s flat rate of 2.5 percent is the lowest in the country, followed by rates in Missouri (4 percent) and North Dakota (4.31 percent). Iowa levies the highest top statutory corporate tax rate at 12 percent, followed by New Jersey (10.5 percent), Pennsylvania (9.99 percent), and Minnesota (9.8 percent). Though often thought of as a major tax type, corporate income taxes account for an average of just 4.73 percent of state tax collections and 2.27 percent of state general revenue. South Dakota and Wyoming are the only states that do not levy a corporate income or gross receipts tax.Ĭorporate income taxes are levied in 44 states.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.Ten states-Arizona, Colorado, Florida, Kentucky, Mississippi, Missouri, North Carolina, North Dakota, 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 12 percent in Iowa. Forty-four states levy a corporate income tax.
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