Corporate tax rate by state research summary: Corporate tax rates can play a huge role in where companies form, and where they end up moving. For example, the wave of tech companies shifting from California to Texas and other southern states in recent years shows just how important of a role corporate taxes can play.
So, if you’re an employer or curious entrepreneur who wants to know more about the corporate tax rates in each state, stay tuned. We’ve investigated the corporate tax rates in all 50 states, and according to our research:
| State | Corporate tax rate | Capital gains tax rate | Property tax rate | State-local tax burden |
|---|---|---|---|---|
| Alabama | 6.5% | 5.0% | 0.37% | 9.8% |
| Alaska | 9.4% | 0.0% | 0.98% | 4.6% |
| Arizona | 4.9% | 4.5% | 0.6% | 9.5% |
| Arkansas | 5.3% | 5.5% | 0.61% | 10.2% |
| California | 8.8% | 13.3% | 0.7% | 13.5% |
| Colorado | 4.6% | 4.55% | 0.52 | 9.7% |
| Connecticut | 7.5% | 6.99% | 1.73% | 15.4% |
| Delaware | 8.7% | 6.6% | 0.59% | 12.4% |
| Florida | 5.5% | 0.0% | 0.86% | 9.1% |
| Georgia | 5.8% | 5.75% | 0.87% | 8.9% |
| Hawaii | 6.4% | 7.25% | 0.31% | 14.1% |
| Idaho | 5.8% | 6.93% | 0.65% | 10.7% |
| Illinois | 9.5% | 4.95% | 1.97% | 12.9% |
| Indiana | 4.9% | 3.23% | 0.81% | 9.3% |
| Iowa | 8.4% | 8.53% | 1.43% | 11.2% |
| Kansas | 7.0% | 5.7% | 1.28% | 11.2% |
| Kentucky | 5.0% | 5.0% | 0.78% | 9.6% |
| Louisiana | 7.5% | 4.25% | 0.51% | 9.1% |
| Maine | 8.9% | 7.15% | 1.2% | 12.4% |
| Maryland | 8.3% | 5.75% | 1.01% | 11.3% |
| Massachusetts | 8.0% | 5.0% | 1.08% | 11.5% |
| Michigan | 6.0% | 4.25% | 1.53% | 8.6% |
| Minnesota | 9.8% | 9.85% | 1.05% | 12.1% |
| Mississippi | 5.0% | 5.0% | 0.63% | 9.8% |
| Missouri | 4.0% | 5.4% | 0.96% | 9.3% |
| Montana | 6.8% | 4.9% | 0.74% | 10.5% |
| Nebraska | 7.3% | 6.84% | 1.54% | 11.5% |
| Nevada | 0.0% | 0.0% | 0.56% | 9.6% |
| New Hampshire | 7.5% | 0.0% | 1.89% | 9.6% |
| New Jersey | 11.5% | 10.75% | 2.13% | 13.2% |
| New Mexico | 5.9% | 5.9% | 0.59% | 10.2% |
| New York | 7.3% | 8.82% | 1.3% | 15.9% |
| North Carolina | 2.5% | 4.99% | 0.78% | 9.9% |
| North Dakota | 4.3% | 2.9% | 0.88% | 8.8% |
| Ohio | 0.0% | 4.8% | 1.52% | 10.0% |
| Oklahoma | 4.0% | 4.75% | 0.83% | 9.0% |
| Oregon | 7.6% | 9.9% | 0.91% | 10.8% |
| Pennsylvania | 9.0% | 3.07% | 1.43% | 10.6% |
| Rhode Island | 7.0% | 5.99% | 1.37% | 11.4% |
| South Carolina | 5.0% | 7.0% | 0.53% | 8.9% |
| South Dakota | 0.0% | 0.0% | 1.14% | 8.4% |
| Tennessee | 6.5% | 0.0% | 0.63% | 7.6% |
| Texas | 0.0% | 0.0% | 1.6% | 8.6% |
| Utah | 4.9% | 4.95% | 0.56% | 12.1% |
| Vermont | 8.5% | 8.75% | 1.76% | 13.6% |
| Virginia | 6.0% | 5.75% | 0.84% | 12.5% |
| Washington | 0.0% | 7.0% | 0.84% | 10.7% |
| West Virginia | 6.5% | 6.5% | 0.53% | 9.8% |
| Wisconsin | 7.9% | 7.65% | 1.53% | 10.9% |
| Wyoming | 0.0% | 0.0% | 0.51% | 7.5% |
States with the highest corporate tax rates
There are currently five states where the corporate tax rate is 9% or higher, and twelve states where it’s 8% or higher. To learn more about these expensive states, here is an extensive list of the top five:
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New Jersey: New Jersey’s corporate tax rate is a whopping 11.5%, making it the only state with a rate over 10%. Additionally, New Jersey also falls within the top three most expensive states for capital gains tax, state-local tax, and property tax.
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Minnesota: This state has a corporate tax rate of 9.8%, making it the second most expensive in the US. Minnesota’s other business taxes are also higher than average, but not as extreme as New Jersey and some other states.
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Illinois: This state has the third highest corporate tax rate of 9.5%. Illinois also has extremely high property tax and state-local tax rates, but a modest capital gains tax compared to the other top three.
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Alaska: Alaska is an interesting case, with a high corporate tax rate of 9.4%, but fairly low property and state-local taxes, as well as non-existent capital gains tax (0.0%).
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Pennsylvania: Pennsylvania has the fifth highest corporate tax rate of 9%, with moderately high business taxes in all other categories as well.
States with the lowest corporate tax rates
There are currently six states where the corporate tax rate is 0.0%, however, what these states lack in corporate taxes, they sometimes make up for in other areas. Here are the six ranked by low taxes:
States with no corporate tax rate
| Rank | State | Corporate tax rate | Capital gains tax rate | Property tax rate | State-local tax burden |
|---|---|---|---|---|---|
| 1 | Wyoming | 0.0% | 0.0% | 0.51% | 7.5% |
| 2 | Nevada | 0.0% | 0.0% | 0.56% | 9.6% |
| 3 | South Dakota | 0.0% | 0.0% | 1.14% | 8.4% |
| 4 | Texas | 0.0% | 0.0% | 1.6% | 8.6% |
| 5 | Ohio | 0.0% | 4.8% | 1.52% | 10.0% |
| 6 | Washington | 0.0% | 7.0% | 0.84% | 10.7% |
These states incentive corporate investment by having no corporate taxes, which has resulted in many companies moving to Nevada and Texas, for example. Other states among the top ten with the lowest corporate tax rates include:
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North Carolina: This state has the lowest corporate tax rate that doesn’t hit 0.0%, at a low 2.5%. North Carolina’s capital gains, property, and state-local taxes are all also lower than Washington’s, for example, making it a popular location for corporations.
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Oklahoma: This state has a corporate tax rate of 4%, with all other business taxes being lower than average as well.
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Missouri: This state also has a corporate tax rate of 4%, with all other taxes being slightly higher than Oklahoma
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North Dakota: North Dakota has a corporate tax rate of 4.3%, which is complimented by an incredibly low capital gains tax of 2.9%, as well as other below-average taxes.
Corporate tax rate FAQ
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Is corporate tax different in each state?
Yes, the corporate tax rate can be different in each state, though some do happen to have the same rate. Corporate tax rate varies significantly throughout the fifty states, with a state like New Jersey having a massive rate of 11.5%, while Wyoming has no corporate tax at all.
Because of this, knowing the different corporate tax rates in each state can be a vital part of deciding where to move your company, or where to launch your startup.
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Is corporate tax rate federal or state?
There are federal and state corporate taxes. The federal corporate tax rate is 21% in 2023, while the state with the highest corporate taxes is just over half that at 11.5% (New Jersey).
However, most states have a corporate tax rate somewhere between 4 and 8%, which is an additional amount you’ll have to pay on top of the federal rate.
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Which US states have no corporate tax?
There are six US states that have no corporate tax. It’s worth noting that these states collect taxes from companies in other ways, but here is the list:
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Wyoming
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Nevada
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South Dakota
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Texas
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Ohio
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Washington
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How do you calculate corporate tax rate?
You calculate the corporate tax rate by multipling taxable income by the tax rate to calculate tax owed. Here are some example steps:
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Determine taxable income: $500,000 (revenue) – $200,000 (deductible expenses) = $300,000 (taxable income).
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Identify the applicable corporate tax rate: Let’s say it’s 20%.
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Multiply taxable income by the tax rate: $300,000 (taxable income) x 0.20 (corporate tax rate) = $60,000 (tax owed).
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Conclusion
Though no corporation can avoid the blow of federal income taxes, your state of residence can have a major impact on how much you’re spending. Of the 50 states Wyoming, Nevada, South Dakota, Texas, Ohio, nnd Washington are the only states with no corporate tax, while North Carolina has the lowest rate of 2.5%.
Conversely, New Jersey is the most expensive state for corporations, where the corporate tax rate is 11.5%. Other states with the heaviest corporate tax burden include: Minnesota, Illinois, Alaska, and Pennsylvania.
Overall, it’s important to remember that each state comes with pros and cons. Many states with corporate tax have higher property or state-local taxes to make up lost revenue. In general, it’s best to research your needs as a entrepreneur to see what state best suits your needs.
Author
Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.
