Corporate Income Tax

When it came to Corporation Tax, the Trump administration announced with great fanfare a reduction of the highest rate of Corporation Tax from 39 percent to 21 percent. Very, very, very few US companies pay the highest rate and, according to the Tax Foundation, an independent, non-profit research organization, the average US company pays 12.5 percent.

Tax treaties align tax laws between the UK and US. You should never be taxed twice on the same profit or income. You can achieve optimum tax efficiency (legally!) by having an Inter-Company Transfer Pricing Agreement (a draft is available on request at no charge for clients of ExportAction) between your UK and US companies.

Federal corporate income tax is a tax on the profits of companies. As at 2021, 44 US States also levy a corporate income tax, ranging from 2.5 percent in North Carolina to 12 percent in Iowa. Four states (Nevada, Ohio, Texas, and Washington) impose a “gross receipts tax” on sales and receipts instead of a corporate income tax. Delaware, Pennsylvania, Virginia, and West Virginia levy a gross receipts tax in addition to a corporate income tax. 34 States and the District of Columbia have single-rate corporate tax systems, while the remainder have rates that vary by income bracket. Iowa has the highest top statutory corporate tax rate at 12 percent, followed by New Jersey (11.5 percent), Pennsylvania (9.99 percent), and Minnesota (9.8 percent). California has a corporate tax rate of 8.84 percent and Delaware of 8.70 percent – two of the “Top Ten Highest” rates. New York has a rate of 6.5 percent and Florida of 4.46 percent.