What Is a Corporate or Business Tax in USA?

A corporate or business tax is charged on the profits of a company. Federal taxes for partnerships and S-corporations are due on March 15. They may be able to file for a six-month grace period, extending the deadline to September 15. Individual taxes and C-corporation taxes are due on April 15, with a potential extension to October 15. Payments can be made by installments every quarter beginning in April, with the final payment due in December.

Small Business Tax Rate

When you think of business taxes, the first things that comes to mind are probably federal and state business income tax rate. But the National Federation of Independent Business says most small businesses don’t pay income tax at a business rate. That’s because about 75% of small businesses are not corporations. This large percentage of small businesses are considered “pass-through” entities, which means they pay tax at the personal tax rate of the owner.

Since small business, or non-corporate, tax rates are tied to the total income of the business owner, we need to look at the income tax rates that went into effect as of 2018 and will continue for eight years.

What is the Corporate Tax Rate?

Larger businesses and those taxed as corporations have the biggest tax cut under the new tax law. The corporate tax rate was cut from a table with the highest corporate taxes to a flat 21%. This change has no expiration date.

What Other Taxes Does a Business Pay?

In addition to income taxes, the largest tax bill small businesses pay is for payroll taxes. These taxes are based on employee pay at the rate of 7.65% on employee gross payroll. Other payroll taxes, like unemployment taxes and workers compensation taxes, increase the amount of tax an employer must pay.

Other taxes your business will be responsible to pay include:

• Capital gains taxes on business investments and on the sale of business assets. Long-term capital gains (held more than a year) are taxed at different levels, depending on the income of the business, Short-term capital gains are taxed as ordinary income.
• Businesses must pay property tax on real property (land and buildings) owned by the business.
• Your business must also pay tax on dividends from business investments. [1]

 

 

[1] Information of Business Law & Taxes Deductions & Credits: https://www.thebalancesmb.com/how-much-tax-do-small-businesses-pay-3974568

An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.