Corporate Tax by State — 2026 Rates for All 50 States

State Corporate Income Tax Rates Overview

In addition to the federal corporate tax rate of 21%, most states impose their own corporate income tax on businesses operating within their borders. Rates range from 0% to 11.5%, and the rules for determining nexus (when a business owes tax in a state) vary significantly.

Forty-four states and the District of Columbia levy a corporate income tax. Six states have no corporate income tax, though several of those impose alternative business taxes that serve a similar purpose.

All 50 States: Corporate Tax Rates

Combined Rate = Federal 21% + top state rate. Actual combined rate may differ due to deductibility rules, graduated brackets, and alternative taxes.

States With No Corporate Income Tax

Highest Corporate Tax States

1. New Jersey — 11.5% top rate (income over $1M). Highest in the nation
2. Minnesota — 9.8% flat rate
3. Illinois — 9.50% effective rate (7.0% corporate rate + 2.5% Personal Property Replacement Tax)
4. Alaska — 9.4% top rate (graduated brackets)
5. Pennsylvania — 8.99% flat rate (being reduced annually)

Lowest Corporate Tax States (With a Corporate Tax)

1. North Carolina — 2.50% flat (lowest in the nation among states with a corporate tax)
2. Missouri — 4.00% flat
3. Oklahoma — 4.00% flat
4. Colorado — 4.40% flat
5. Arizona — 4.90% flat

Understanding Corporate Tax Nexus

A business must have "nexus" (a sufficient connection) with a state before that state can tax its income. Nexus can be established through:

• Physical presence — Having an office, employees, warehouse, or inventory in the state
• Economic nexus — Exceeding revenue or transaction thresholds in the state (varies by state, typically $100,000-$500,000 in sales)
• Factor presence — Having a certain percentage of payroll, property, or sales in the state

Most states use a single sales factor apportionment formula, meaning the portion of your income taxed is based on the percentage of your total sales made to customers in that state. Some states still use a three-factor formula (sales, payroll, property).

Corporate Tax vs. Pass-Through Entity Tax

Only C corporations pay corporate income tax. S corporations, partnerships, and most LLCs are "pass-through" entities where business income flows to the owners' personal tax returns and is taxed at individual income tax rates.

However, many states now offer a pass-through entity tax (PTET) election that allows pass-through entities to pay state tax at the entity level. This workaround, adopted by over 30 states, helps business owners avoid the $10,000 federal SALT deduction cap by shifting the state tax liability from the individual to the entity level.

For a comparison of individual income tax rates, see our income tax by state page. To compare the full tax burden of different states, use our state comparison tool.