Corporate Tax Rate 2026
Current year
The 2026 Corporate Tax Rate is 21%.
Effective 2026-01-01Source: Publication 542 (Rev. January 2024), Corporations (IRS)Verified 2026-09-03
Compared with 2025
Every figure on this page is unchanged from 2025.
| Item | 2025 | 2026 | Change |
|---|---|---|---|
| Rate | 21% | 21% | +0% (+0.0%) |
Who it applies to
The 21% is the corporation's own tax on its own taxable income, charged before anything the corporation then distributes is taxed again on a shareholder's return. Publication 542 applies it to ordinary domestic corporations and, in the same sentence, to qualified personal service corporations, which are corporations whose work is substantially the performance of personal services in fields such as accounting, actuarial science, architecture, consulting, engineering, health, law and the performing arts, and whose employee-owners hold most of the stock. It is not what an S corporation pays, since an S corporation generally passes its income through to its shareholders, and a partnership or a limited liability company reaches this rate only if it is classified as a corporation for tax purposes. A corporation that is a member of a controlled group multiplies by the same 21% but must also complete Schedule O (Form 1120) to report how certain tax benefits are apportioned among the members.
What changed this year, and why
Nothing changed for 2026. The federal corporate income tax is a single flat rate of 21%, and Publication 542, the IRS's guide for ordinary domestic corporations, states it as a standing rule rather than as a figure for one year: corporations, including qualified personal service corporations, figure their tax by multiplying taxable income by 21%. The rate is written into the statute at that figure and carries no inflation adjustment, so it does not move from year to year the way the individual brackets, the standard deduction and the payroll wage bases do. There is no bracket schedule behind it either, so a corporation with small taxable income is charged the same rate on it as one with large taxable income.
Common questions
- What is the corporate tax rate for 2026?
- 21%. Publication 542 says corporations, including qualified personal service corporations, figure their tax by multiplying taxable income by 21%. It is a flat rate rather than a bracket schedule, so there is no lower band on the first slice of taxable income.
- Did the corporate rate change from 2025?
- No. It was 21% for 2025 and it is 21% for 2026. The rate is set in the statute and is not one of the figures the IRS adjusts for inflation each autumn, so it stays where it is until Congress moves it.
- Do personal service corporations pay more than 21%?
- No. Publication 542 names qualified personal service corporations in the same sentence as every other corporation: they figure their tax by multiplying taxable income by 21%. Personal service corporations do face separate rules elsewhere, including on accounting periods and on the at-risk and passive activity limits, but not a different rate.
- Is 21% the whole of a corporation's federal tax?
- Not always. Publication 542 describes a base erosion minimum tax that may apply to a corporation with large gross receipts in the preceding tax years, reported on Form 8991, and a corporate alternative minimum tax on the adjusted financial statement income of an applicable corporation, determined on Form 4626. A corporation that lets earnings accumulate beyond the reasonable needs of the business may also owe an accumulated earnings tax; see this page's section on that tax for its rate and safe-harbor amounts. Running the other way, allowable credits such as the foreign tax credit and the general business credit reduce what is owed.
- Does the 21% apply to an S corporation or an LLC?
- Only to a business that is taxed as a corporation. An S corporation generally passes its income through to its shareholders, who report it on their own returns, and a limited liability company or a partnership is taxed as a corporation only if it is classified as one. Publication 542 is written for ordinary domestic corporations that file a corporate income tax return.
- Where does the rate get applied on the return?
- On Form 1120, where the corporation multiplies its taxable income by 21% and enters the result as its income tax before credits. Publication 542 points to the Instructions for Form 1120, or to the instructions for the applicable corporation's return, for changes that may affect the current tax year.
Every amount on this page is a published figure rather than yours. The Corporate income tax calculator takes the number you enter and works it out against them, showing which published figure it used.
Which entities pay this rate, including an LLC that elects it
An LLC with more than one owner is generally treated as a partnership for federal income tax purposes and files Form 1065. A single-member LLC is generally disregarded as an entity separate from its owner and reports its income and deductions on the owner's federal income tax return. Once an LLC makes this election to be taxed as a corporation, it is subject to the corporate tax rate of 21% for 2026. For more information about LLCs, see Pub. 3402, Taxation of Limited Liability Companies.
The LLC can file a Form 1120 only if it has filed Form 8832 to elect to be treated as an association taxable as a corporation.
2025 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
The filing deadline, and the extension
The date is not on the calendar until you know when the corporation's own tax year ends. Count from that end: the 15th day of the 4th month afterwards is the filing date, so the deadline moves with the year-end instead of sitting on one fixed spring date. Three situations start the same clock from a different event. A new corporation filing for a short first period counts from the end of that period, and a corporation that has dissolved counts from the date it dissolved - winding up does not postpone the return, it brings it forward. The one real exception shortens the count rather than lengthening it: a fiscal year ending June 30 gets the 15th day of the 3rd month, a month less than everyone else, and a short year that ends at any point during June is treated as though it had run to June 30 and loses the same month. A due date landing on a Saturday, Sunday or legal holiday moves to the next business day. If the return will not be ready in time, Form 7004 asks for an automatic extension of time to file, and it generally has to be filed by the regular due date - an extension is something you request before the deadline, not an explanation offered after it.
When To File Generally, a corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year. A new corporation filing a short-period return must generally file by the 15th day of the 4th month after the short period ends. A corporation that has dissolved must generally file by the 15th day of the 4th month after the date it dissolved. However, a corporation with a fiscal tax year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year. A corporation with a short tax year ending anytime in June will be treated as if the short year ended on June 30, and must file by the 15th day of the 3rd month after the end of its tax year. If the due date falls on a Saturday, Sunday, or legal holiday, the corporation can file on the next business day.
2025 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Corporations pay the tax in four installments
Corporations must make installment payments of estimated tax if they expect their total tax for the year (less applicable credits) to be $500 or more. The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. This means corporations typically make four estimated tax payments throughout the year, spreading their tax liability across quarterly deadlines rather than paying everything at once when filing their return. If any installment due date falls on a Saturday, Sunday, or legal holiday, the payment is due on the next business day. Corporations must carefully estimate their tax liability to determine if they meet the $500 threshold and calculate appropriate installment amounts. Failure to pay sufficient estimated tax during the year may result in penalties, even if the corporation receives a refund when filing its annual return. Corporations can use Form 2220 to determine if they owe an estimated tax penalty and to figure the amount.
The corporation must make installment payments of estimated tax if it expects its total tax for the year (less applicable credits) to be $500 or more.
2025 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Personal service corporations pay at the same rate
The box is ticked one return at a time. Because the testing period is generally the year before the tax year, a corporation can answer this question one way for one year and the other way for the next: a practice whose main line of business shifts, or that hires its way out of having the work done by its owners, changes status without deciding to. Two conditions carry the weight. Principal activity means the corporation's main activity over that period, not merely something it does, so a firm that bills a little consulting alongside another business is not caught by it. Substantially performed by employee-owners then asks who delivered the service, so the work and the ownership have to sit in the same hands. A corporation that has only just been formed is not outside the test - having no prior year, it is measured over the period it has existed. None of this reaches the rate: whatever the answer, taxable income is taxed at 21%. What the answer decides is which box is checked on the return, and the rules that follow from that.
If the corporation is a personal service corporation, check Item A, box 3. A personal service corporation is a corporation whose principal activity for the testing period is the performance of personal services. The testing period for a tax year is generally the prior tax year unless the corporation has just been formed. Personal services include any activity performed in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, and the performing arts. The services must be substantially performed by employee-owners.
2025 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What filing late costs
A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. This penalty accumulates quickly - a return that is five months or more late will hit the maximum penalty of 25% of the unpaid tax. For tax returns required to be filed in 2026, if the return is more than 60 days late, there is a minimum penalty of the smaller of the tax due or $525. This means that even if the 5% per month calculation would result in a smaller amount, the corporation will owe at least $525 (or the full tax due if that is less than $525) when the return is filed more than 60 days after the deadline. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause. Interest is also charged on any unpaid tax and penalties from the due date (including extensions) to the date of payment.
Late filing of return. A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a tax return required to be filed in 2026 that is more than 60 days late is the smaller of the tax due or $525. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause.
2025 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What the 21% actually multiplies
The IRS instructions for Schedule J of Form 1120 tell a corporation to multiply its taxable income by 21% (0.21) to work out its regular federal income tax. The rate is applied to taxable income - the figure carried from page 1, line 30 of the return - not to gross receipts, total revenue, or any other top-line number. Gross receipts include amounts that are not subject to tax, such as cost of goods sold and certain exclusions, so applying the 21% to them would overstate the tax. Taxable income is what remains after all allowable deductions, including ordinary and necessary business expenses, depreciation, and any net operating loss deduction, have been subtracted from gross income. The product is entered on Schedule J, line 1a, as the corporation's chapter 1 income tax before any other additions or subtractions on that schedule.
Line 1a. Income tax. Multiply taxable income (page 1, line 30) by 21% (0.21). Enter this amount on line 1a.
2025 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
The 21% is not the whole bill: CAMT can add to it, credits can reduce it
On Schedule J of Form 1120, the 21% regular tax is only one part of a corporation's federal bill. After the regular income tax is computed on line 1a, the form adds a separate line for the Corporate Alternative Minimum Tax (CAMT), which is reported from Form 4626, Part II, line 13. The CAMT is an additional tax that can apply on top of the regular 21% rate if a corporation's adjusted financial statement income exceeds a statutory threshold. Credits, such as the foreign tax credit, the general business credit, qualified electric vehicle passive activity credits, bond credits, and the credit for prior year minimum tax, are then subtracted on lines 5a through 5f. The result is that the flat 21% rate is the starting point, not the final figure: the CAMT can increase the total liability, and allowable credits can reduce it.
Line 3. Corporate Alternative Minimum Tax Enter on line 3 the amount from Form 4626, Alternative Minimum Tax—Corporations, Part II, line 13, if applicable.
2025 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
The accumulated earnings tax rate, and the general safe harbor
A corporation that lets its earnings accumulate beyond the reasonable needs of the business may owe an accumulated earnings tax of 20% on the amount accumulated, on top of the regular 21% corporate rate. If the tax applies, interest runs on it from the date the corporate return was originally due, without regard to any extension. Publication 542 sets a general safe harbor: an accumulation of $250,000 or less is generally treated as within the reasonable needs of most businesses, so the tax reaches accumulations above that amount.
if a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of 20%. If the accumulated earnings tax applies, interest applies to the tax from the date the corporate return was originally due, without ex- tensions. To determine if the corporation is subject to this tax, first treat an accumulation of $250,000 or less generally as
Publication 542 (Rev. January 2024), Corporations (IRS)
A lower safe harbor for service businesses
Not every business gets the same cushion before the accumulated earnings tax can reach it. A company mainly in the business of accounting, actuarial work, architecture, consulting, engineering, health care (veterinary practices included), law, or the performing arts is held to a smaller cumulative buffer of $150,000 rather than the larger amount that applies to businesses generally, on the theory that these fields need less capital tied up to operate.
within the reasonable needs of most businesses. Treat an accumulation of $150,000 or less as within the reasonable needs of a business whose principal function is perform- ing services in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law, and the performing arts.
Publication 542 (Rev. January 2024), Corporations (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 542 (Rev. January 2024), Corporations (IRS)
- Rate
Corporations, including qualified personal service corpo- rations, figure their tax by multiplying taxable income by 21% (0.21).
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