2018 Corporate Tax Rate
The 2018 Corporate Tax Rate is 21%.
Effective 2018-01-01Source: 2018 Instructions for Form 1120 (IRS)Verified 2026-08-29
Who it applies to
C corporations filing Form 1120, including qualified personal service corporations
What changed this year, and why
The Tax Cuts and Jobs Act replaced the graduated corporate income tax structure with a flat 21% rate for tax years beginning after 2017.
Common questions
- What changed from prior years?
- The Tax Cuts and Jobs Act replaced the prior graduated corporate tax structure with a flat 21% rate, effective for tax years beginning after 2017.
- Does the rate apply to all corporations?
- Yes. Qualified personal service corporations are also taxed at 21%.
- What about the alternative minimum tax?
- The corporate alternative minimum tax does not apply for tax years beginning after December 31, 2017.
Which entities pay this rate, including an LLC that elects it
Most LLCs do not automatically pay the corporate tax rate. An LLC with more than one owner is typically treated as a partnership and files Form 1065. A single-member LLC is usually disregarded and reports on its owner's return. However, an LLC can choose to be taxed as a corporation by filing Form 8832, Entity Classification Election. Once that election is made, the LLC files Form 1120 and its taxable income is subject to the 21% corporate rate. The election also requires attaching a copy of Form 8832 to the return for the year of the election. LLCs that do not make this election remain outside the corporate tax system.
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.
2018 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
The filing deadline, and the extension
A corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year. For example, a corporation using the calendar year must file by April 15. There is a special rule for corporations with a fiscal tax year ending June 30: they must file by the 15th day of the 3rd month after the end of the tax year. If the due date falls on a Saturday, Sunday, or legal holiday, the return can be filed on the next business day. A corporation that cannot meet the deadline may request an automatic extension by filing Form 7004 on or before the regular due date of the return.
Generally, a corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year.
2018 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Corporations pay the tax in four installments
A 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. The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any of those dates falls on a Saturday, Sunday, or legal holiday, the installment is due on the next regular business day. The corporation must use electronic funds transfer to make the payments. Form 1120-W is provided as a worksheet to compute the estimated tax. Penalties may apply if required estimated tax payment deposits are not made.
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.
2018 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Personal service corporations pay at the same rate
Personal service corporations are subject to the same 21% corporate tax rate as other C corporations. A personal service corporation is defined as a corporation whose principal activity during the testing period is the performance of personal services. The testing period is generally the prior tax year unless the corporation has just been formed. Personal services include activities in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, and the performing arts. These services must be substantially performed by employee-owners. Personal service corporations must check Item A, box 3 on Form 1120 to indicate their status. They are also subject to special rules requiring them to use a calendar tax year unless they qualify for specific exceptions or make certain elections.
Personal Service Corporation 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.
2018 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What filing late costs
Corporations that fail to file their tax return by the due date, including any extensions granted, face a late filing penalty of 5% of the unpaid tax for each month or part of a month the return is late. This penalty accumulates monthly but is capped at a maximum of 25% of the unpaid tax. For returns that are more than 60 days late, there is a minimum penalty equal to the smaller of the tax due or $210. However, the penalty will not be imposed if the corporation can demonstrate that the failure to file on time was due to reasonable cause. Interest is also charged on penalties imposed for failure to file, calculated from the due date (including extensions) to the date of payment, at a rate determined under section 6621.
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 return that is over 60 days late is the smaller of the tax due or $210. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause.
2018 Instructions for Form 1120, U.S. Corporation Income Tax Return (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.
2018 Instructions for Form 1120 (IRS)
- Rate
For tax years beginning in 2018, corporations (including qualified personal service corporations) multiply taxable income by 21%. Enter this amount on line 2.