Corporate Tax Calculator

Corporate Tax Calculator

How to Use the Corporate Tax Calculator

1. 1

   Choose how to enter income

   Pick Revenue and expenses to enter gross receipts and deductible expenses, or Taxable income if you already know the figure before state income tax.

2. 2

   Add a state rate if you want one

   Type your state's corporate income tax rate as a percentage. Leave it blank for a federal-only estimate.

3. 3

   Optionally model dividends

   Turn on Show double taxation on dividends, enter the dividends paid, choose the shareholder rate on qualified dividends and toggle the 3.8% net investment income tax if the shareholder's income is high enough.

4. 4

   Read the results

   Results update as you type: total tax, federal and state tax, after-tax profit, the combined rate and a line-by-line breakdown, plus the double-taxation figures when dividends are on.

How the corporate tax calculation works

Since the Tax Cuts and Jobs Act took effect in 2018, C corporations pay a single flat federal rate of 21% under IRC Section 11(b). There are no brackets, so the first dollar and the millionth dollar of taxable income are taxed alike, and the marginal rate equals the effective rate. That is still the rate for the 2026 tax year.

State corporate income tax is a deductible business expense on the federal return (the individual SALT cap does not apply to C corporations). So the calculator first applies your state rate to taxable income, then subtracts that state tax before applying 21%. As a simplification it uses the same base for state and federal: it ignores state adjustments, multistate apportionment, minimum and franchise taxes, and local taxes.

Taxable income = revenue − deductible expenses
State tax = taxable income × state rate
Federal tax = 21% × (taxable income − state tax)
Combined rate = state rate + 21% × (1 − state rate)
Double-tax rate on dividends = combined rate + (1 − combined rate) × shareholder rate

Worked example: $2 million revenue, 6% state tax, $100,000 dividend

A C corporation has $2,000,000 of revenue and $1,500,000 of deductible expenses, operates in a state with a 6% corporate rate and pays a $100,000 qualified dividend to shareholders taxed at 15%.

• Taxable income before state tax: $2,000,000 − $1,500,000 = $500,000.
• State tax: $500,000 × 6% = $30,000.
• Federal taxable income: $500,000 − $30,000 = $470,000, so federal tax is $470,000 × 21% = $98,700.
• Total corporate tax: $128,700, an effective rate of 25.74%, leaving $371,300 of after-tax profit.
• Dividend: the company needs $134,662 of pre-tax profit to pay $100,000 after its 25.74% tax, so $34,662 of corporate tax sits behind the dividend.
• Shareholders pay $15,000 (15%) and keep $85,000. Total tax on the distributed profit is $49,662, or 36.88%.

Combined corporate rate by state rate

Because state tax is deductible federally, the combined rate is lower than simply adding the two rates. The table uses $1,000,000 of taxable income, computed exactly as the calculator does.

Double taxation and the C corp vs pass-through choice

Dividends are not deductible by the corporation, so distributed profit is taxed at the corporate level and again on the shareholder's return. With no state tax, the total rate on distributed profit is 32.85% at the 15% dividend rate, 36.8% at 20%, and 39.8% when the 3.8% net investment income tax also applies.

S corporations, partnerships and most LLCs are pass-through entities: there is no entity-level federal income tax, and profit is taxed once on the owners' returns at individual rates up to 37% for 2026. Many owners can also take the 20% qualified business income deduction, which brings the top rate on eligible income to 29.6%, although wage, property and service-business limits apply at higher incomes. A C corporation can come out ahead when most profit is reinvested rather than paid out; a pass-through often wins when profit is distributed. The answer depends on your numbers, your state and your exit plans, so model both with a CPA.

Legal ways corporations reduce their tax

These are mainstream, legal planning tools (tax avoidance, not evasion). Each has conditions, so check eligibility and documentation with your tax adviser before relying on one.

• Timing of income and expenses: an accrual-method company can accelerate deductible expenses into the current year or, where rules allow, defer income, which shifts tax between years rather than eliminating it.
• Accelerated depreciation: Section 179 expensing and bonus depreciation let you deduct qualifying equipment and software up front instead of over many years. Use the Section 179 calculator to estimate the deduction.
• Research credit and R&E expensing: the Section 41 credit reduces tax dollar for dollar for qualifying research, and under the One, Big, Beautiful Bill Act domestic research and experimental costs can again be deducted in the year paid for tax years beginning after 2024. Qualified small businesses may be able to use part of the credit against payroll tax.
• Retirement plans: employer contributions to a 401(k), profit-sharing or other qualified plan are deductible within plan limits and help retain staff.
• Charitable contributions: a C corporation's deduction is generally capped at 10% of taxable income, and starting in 2026 only giving above 1% of taxable income counts; excess amounts can carry forward five years.
• State apportionment and credits: multistate companies owe state tax only on the share of income apportioned to each state, and many states offer credits for hiring, investment or research. Correct apportionment is worth a review.
• Choice of entity: comparing C corporation and pass-through treatment, as described above, is one of the biggest decisions. If you run an S corporation, owners who work in the business must take reasonable compensation, an area the IRS scrutinizes closely.

What this estimate leaves out

This is a federal estimate for planning, not tax advice. It does not model tax credits, net operating loss carryforwards, the corporate alternative minimum tax (which applies only to corporations with average annual financial statement income over $1 billion), the accumulated earnings and personal holding company taxes, estimated-tax penalties or state-specific rules. C corporations file Form 1120 and generally make quarterly estimated payments using Form 1120-W. Review your actual figures with a CPA or enrolled agent.

Features

• Revenue minus expenses, or taxable income entered directly
• Flat 21% federal corporate rate for the 2026 tax year
• Optional state rate, deducted before federal tax is figured
• Effective rate, after-tax profit and a line-by-line breakdown
• Double taxation on dividends at 0%, 15% or 20%, plus optional 3.8% NIIT

Frequently Asked Questions