A total of 44 states have a levy when it comes to corporate income tax. Majority of businesses think that corporate income tax is a major type of tax but the fact is that it is just around 5 per cent of the total taxes collected by the state and it only accounts for 2.6 per cent of the general revenue of an entire state. This is why new businesses in North Carolina are advised to obtain a NC Tax ID and the same is true for other states.
The state with the highest levy when it comes to corporate tax rate is Iowa which is set at 12 per cent. Pennsylvania took the second spot at 9.99 per cent while Minnesota is on the third spot at 9.8 per cent. Aside from these states, three others have a levy rate that is higher than 9 per cent namely New Jersey, Illinois and Alaska.
At the other end of the spectrum, the state with the lowest levy for corporate income tax is North Carolina at only 3 per cent. The second is North Dakota at 4.31 per cent while 4.63 per cent is imposed by Colorado. Aside from those three, there are four states with a levy below 5 per cent including Arizona, Mississippi, Utah and South Carolina.
There are no corporate income taxes in states of Washington, Texas, Nevada and Ohio but businesses are required to pay the taxes for gross receipt. Many view this tax as harmful to the economy because of risk of not being transparent with transactions and possibility of tax pyramiding. On the other hand, the states of Virginia and Delaware have both corporate income tax as well as gross receipts tax. The only two states that do not impose a levy on either tax are Wyoming and South Dakota.
Single rate systems for corporate tax are imposed by 27 states along with the District of Columbia.
There are many changes in the tax system for 2018 but all businesses and entities in North Carolina are urged to obtain a NC Tax ID in order for their business to operate legally.