Texas posts a combined corporate tax rate of 21 percent, tied for lowest in U.S.

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
1 Iowa 29.5%
2 New Jersey 29.3%
3 Pennsylvania 28.9%
4 Minnesota 28.7%
5 Illinois 28.5%
6 Alaska 28.4%
7 Maine 28.1%
8 California 28.0%
9 Delaware 27.9%
10 Vermont 27.7%
11 Maryland 27.5%
11 Washington, D.C. 27.5%
13 Massachusetts 27.3%
14 Wisconsin 27.2%
15 Nebraska 27.2%
16 New Hampshire 27.1%
17 Oregon 27.0%
18 Connecticut 26.9%
19 Kansas 26.5%
19 Rhode Island 26.5%
21 Idaho 26.5%
22 Montana 26.3%
23 Arkansas 25.7%
23 New York 26.1%
23 Tennessee 26.1%
23 West Virginia 26.1%
27 Hawaii 26.1%
28 Louisiana 26.0%
29 Michigan 25.7%
29 Oklahoma 25.7%
29 Virginia 25.7%
32 New Mexico 25.7%
33 Georgia 25.5%
34 Indiana 25.3%
35 Alabama 25.1%
36 Kentucky 25.0%
36 Mississippi 25.0%
36 South Carolina 25.0%
39 Utah 24.9%
40 Arizona 24.9%
41 Colorado 24.7%
42 Florida 24.6%
43 North Dakota 24.4%
44 Missouri 23.8%
45 North Carolina 23.0%
46 Nevada 21.0%
46 Ohio 21.0%
46 South Dakota 21.0%
46 Texas 21.0%
46 Washington 21.0%
46 Wyoming 21.0%

Source: Tax Foundation

This is a revised article first published by The Center Square.



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