Forty-four states levy a 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.. Top rates range from a 2.0 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income 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. rates effective January 1, 2026, while no states increased their corporate income tax rates.
Among states that impose a corporate income tax, the average top marginal rate is approximately 6.57 percent, while the median top marginal rate is 6.5 percent.
Four states—Alaska, Illinois, Minnesota, and New Jersey—levy top marginal corporate income tax rates of 9 percent or higher. Maine (8.93 percent) and California (8.84 percent) are not far behind.
Thirteen states—Arizona, Arkansas, Colorado, Indiana, Kentucky, Mississippi, Missouri, North Carolina, North Dakota, Oklahoma, South Carolina, Nebraska, and Utah—have top rates at or below 5 percent.
Nevada, Ohio, Texas, and Washington impose gross receipts taxes instead of corporate income taxes. Delaware, Oregon, and Tennessee impose gross receipts taxes in addition to their corporate income taxes. Some localities in Pennsylvania, Virginia, and West Virginia likewise impose gross receipts taxes at the local, but not state, level. Gross receipts taxes are generally considered more economically harmful than corporate income taxes.
South Dakota and Wyoming are the only states that levy neither a corporate income tax nor a gross receipts taxGross receipts taxes are applied to a company’s gross sales, without deductions for a firm’s business expenses, like compensation, costs of goods sold, and overhead costs. Unlike a sales tax, a gross receipts tax is assessed on businesses and applies to transactions at every stage of the production process, leading to tax pyramiding..
