The corporate income tax — a tax levied on the profits of corporations — is a key part of America’s overall fiscal picture, representing the third-largest category of revenues for the federal government.
The Tax Cuts and Jobs Act, enacted in December 2017, reduced the federal tax rate on corporations to 21 percent, a decrease of 14 percentage points from its previous level of 35 percent. However, many corporations pay far less than the statutory tax rate due to a range of tax expenditures, which include exclusions, exemptions, deductions, and credits that reduce total tax liability. Also known as loopholes or tax breaks, these expenditures add up to billions of dollars every year.
Revenues from corporate taxes have been declining as a share of the economy, in part as a result of lower tax rates but also tax avoidance generally. The United States collects fewer revenues from corporations, relative to the size of the economy, than many other advanced countries. Corporate taxation must be part of the consideration for how to shore up the nation’s fiscal outlook.
Below is a selection of key charts on corporate income taxes in the United States and how they fit within the federal budget.
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Further Reading
Six Charts That Show Why Corporate Tax Revenues are Low in the U.S. Right Now
Compared to historical trends and other advanced economies, corporate tax revenues in the United States are low.
The U.S. Corporate Tax System Explained
Revenues raised by the corporate income tax represent the third-largest category of federal revenues in the United States.
Quiz: How Much Do You Know About the U.S. Tax System?
The lengthy and complex United States tax code can be difficult to understand. Take our quiz to see how much you really know.