PrintCorporate and Individual Federal Income Tax Rates
U.S. federal tax rates for corporations and individuals is an increasing function of taxable income, meaning that the higher taxable income you have, the higher federal tax rate you will have as a corporation or individual. U.S. federal income tax rate varies each year, depending on the monetary policies. The following tables include the rates and calculations.
| Taxable Income ($) | Tax |
|---|---|
| $0 to $9,700 | 10% of the taxable income |
|
$9,701 to $39,475
|
$970 plus 12% of the excess over $9,700 |
| $39,476 to $84,200 | $4,543 plus 22% of the excess over $39,476 |
| $84,201 to $160,725 | $14,382 plus 24% of the excess over $84,201 |
| $160,726 to $204,100 | $32,748 plus 32% of the excess over $160,726 |
| $204,101 to $510,300 | $46,628 plus 35% of the excess over $204,101 |
| $510,301 or more |
$153,797 plus 37% of the excess over $510,301
|
| Taxable Income ($) | Tax |
|---|---|
| $0 to $19,400 | 10% of the taxable income |
| $19,401 to $78,950 | $1,940 plus 12% of the excess over $19,401 |
| $78,951 to $168,400 | $9,086 plus 22% of the excess over $78,951 |
| $168,401 to $321,450 | $28,765 plus 24% of the excess over $168,401 |
| $321,451 to $408,200 | $65,497 plus 32% of the excess over $321,451 |
| $408,201 to $612,350 | $93,257 plus 35% of the excess over $408,201 |
| $612,351 or more | $164,710 plus 37% of the excess over $612,351 |
Corporate and Individual Capital Gains Tax Treatment
Current tax law continues to make a distinction between capital and ordinary gains and losses. Corporations and individuals alike must compute the appropriate long-term and short-term gains and losses for taxes, however, all corporate net capital gain continues to be treated as ordinary income subject to the appropriate corporate income tax. However, corporate capital losses can only be used against corporate capital gains and further can only be carried forward five years or back three years.
Please read the brief explanation of Ten Facts about Capital Gains and Losses provided by IRS. More detailed information can be found at Reporting Gains and Losses by IRS.
Tax Treatment of Investment Terminal (Salvage) Value
Whenever an asset such as land, common stock, buildings, or equipment is sold by individuals or corporations, the sale value (terminal value) is compared to original cost, or remaining tax book value of depreciable, depletable, amortizable, or non-deductible asset costs to determine gain or loss. If the sale results in a gain, tax must be paid on the gain. If the sale results in a loss, the loss is deductible under the tax rules governing the handling of ordinary deductions and capital loss deductions. All long-term capital gains are taxed at the ordinary income tax rates for corporations and at applicable long-term capital gains tax rate for individuals, so it is still necessary to compare whether ordinary gain or loss, or long-term capital gain or loss is realized.
State Tax
For individuals and corporations, state income tax calculations vary greatly with some states using fixed rates, while others impose incremental rates which may be based on the equivalent of federal taxable income before state income taxes or adjusted measures of value. For corporations, Colorado, Illinois, Indiana, Massachusetts, Michigan, and Pennsylvania employ a flat tax rate on applicable state taxable income while other states have no state income tax at all, including Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. The following link displays a comparison for State Corporate Income Tax Rates in 2020.