The combined state and federal corporate tax rate in Texas now stands at 21 percent, representing a tie with five other states (Ohio, Nevada, South Dakota, Washington and Wyoming) for the lowest levy among the 50 states and the District of Columbia, according to a new study from the Tax Foundation.
U.S. corporations pay a 21 percent income tax rate to the federal government, the Tax Foundation reported, but they also pay additional corporate taxes in 44 states and Washington, D.C. Fourteen states have imposed graduated income taxes on corporations, according to the study, while other states have a flat-rate tax.
Corporations based in six states – Ohio, Nevada, South Dakota, Texas, Washington and Wyoming – are charged no state income tax, though they have to pay their share to the federal government, the Tax Foundation said.
The businesses are allowed to deduct state income taxes from their federal tax bill, the study said. In Kentucky, for example, corporations pay a 5 percent rate, which allows them to lower their federal levy to 19.95 percent.
Combined Corporate Income Taxes, Highest to Lowest
|Rank||State||Combined Corporate Tax Rate|
Source: Tax Foundation
This is a revised article first published by The Center Square.