Last Updated: April 2026
Corporate taxes matter differently depending on your business structure. C-corporations pay federal corporate tax (21%) plus state corporate tax. S-corporations, LLCs, and partnerships are pass-through entities — profits flow to owners' personal income tax returns. This guide covers both C-corp state rates and the pass-through implications for small business owners in all 50 states in 2026.
These states have no traditional corporate income tax (though some have alternative taxes):
| State | State Corporate Rate | Combined (+ 21% Federal) |
|---|---|---|
| New Jersey | 11.5% (above $1M) | ~32.5% |
| Pennsylvania | 8.99% | ~29.99% |
| Minnesota | 9.8% | ~30.8% |
| Iowa | 8.4% | ~29.4% |
| Alaska | 9.4% (top bracket) | ~30.4% |
| Massachusetts | 8% | ~29% |
| Illinois | 9.5% (inc. personal property replacement tax) | ~30.5% |
| New Hampshire | 7.5% (Business Profits Tax) | ~28.5% |
| California | 8.84% | ~29.84% |
| New York | 6.5–7.25% | ~27.5–28.25% |
| Wisconsin | 7.9% | ~28.9% |
| Montana | 6.75% | ~27.75% |
| Rhode Island | 7% | ~28% |
| Maryland | 8.25% | ~29.25% |
| Louisiana | 7.5% | ~28.5% |
| Florida | 5.5% | ~26.5% |
| Georgia | 5.75% | ~26.75% |
| Colorado | 4.4% | ~25.4% |
| Arizona | 4.9% | ~25.9% |
| Utah | 4.65% | ~25.65% |
| North Carolina | 2.5% | ~23.5% |
| Oklahoma | 4% | ~25% |
| Wyoming | 0% | 21% |
| Nevada | 0% | 21% |
| South Dakota | 0% | 21% |
| Ohio | 0% (CAT gross receipts) | ~21% |
| Texas | 0% (margin tax) | ~21% |
Most small businesses are structured as LLCs, S-corps, or partnerships — not C-corps. Pass-through taxation means corporate-level tax doesn't apply; income flows to owners' personal returns. Key state considerations:
Many states now allow pass-through businesses to elect to pay state income tax at the entity level — creating a federal deduction for the state tax (bypassing the $10,000 SALT cap on personal returns). Available in: California, New York, New Jersey, Maryland, Georgia, and 30+ other states.
S-corp elections allow business owners to split income between salary (subject to 15.3% self-employment/FICA tax) and distributions (not subject to SE tax). In high-revenue businesses, S-corp election can save $5,000–$30,000+/year in SE tax — at the cost of more complex payroll administration.
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Business entity selection (LLC, S-corp, C-corp), state incorporation strategy, S-corp salary vs distribution splits, and multi-state tax nexus all require specialist guidance. Get matched with a business CPA who understands your situation.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
Get Matched With a Business CPA →Delaware has a well-developed corporate law system — the Court of Chancery is a sophisticated business court with deep precedent. Delaware charges no income tax on out-of-state income for Delaware-incorporated entities. Combined with the Delaware franchise tax (which can be calculated by an alternative minimum tax method that minimises costs for small companies), Delaware's legal infrastructure is why over 60% of Fortune 500 companies and most venture-backed startups incorporate there. However, for operating small businesses in a single state, incorporating in Delaware adds complexity (registered agent fees, dual state filings) that may not be worth it.
Wyoming is popular for several reasons: (1) No state corporate income tax; (2) No personal income tax; (3) Strong charging order protection (creditors cannot easily reach LLC assets); (4) No operating agreement required; (5) Anonymous LLC ownership (members not listed in public state records); (6) Low filing fees (~$100/year). It's particularly popular for holding companies, real estate LLCs, and privacy-conscious business owners. However, if your business actively operates in another state, you typically need to register as a foreign LLC there regardless — triggering that state's taxes and fees. Wyoming incorporation is most beneficial for truly state-agnostic businesses.
For a small S-corp with active operations in a specific state, you generally can't avoid that state's taxes by incorporating elsewhere — states tax income from in-state activities regardless of incorporation state. The most business-friendly states for S-corps combining low personal income rates (since S-corp income flows to personal return) and low corporate formality: Florida (no income tax on owner distributions); Texas (no income tax; franchise tax only on entity); Arizona (2.5% flat personal income tax — very competitive for S-corp income); Colorado (4.40% flat); Nevada (no income tax). For S-corp owners in California, the California S-corp franchise tax (1.5% of California income, min $800) adds a corporate-level cost even on pass-throughs.