2020 Corporate Tax Rate
The 2020 Corporate Tax Rate is 21%.
Effective 2020-01-01Source: 2020 Instructions for Form 1120 (IRS)Verified 2026-09-01
Compared with 2019
Every figure on this page is unchanged from 2019.
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Rate | 21% | 21% | +0% (+0.0%) |
Who it applies to
C corporations filing Form 1120
What changed this year, and why
For 2020, the federal corporate income tax rate is 21% of taxable income.
Common questions
- How is the 2020 corporate tax calculated?
- Corporations calculate their 2020 federal income tax by multiplying taxable income by 21%.
Which entities pay this rate, including an LLC that elects it
A limited liability company (LLC) does not automatically file Form 1120 or pay the corporate tax rate. By default, a multi-member LLC is treated as a partnership and files Form 1065, while a single-member LLC is 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 in place, the LLC files Form 1120 and is subject to the 21% corporate tax rate on its taxable income. The election must be attached to the Form 1120 for the year it takes effect. Additional guidance is available in Publication 3402.
Limited liability companies (LLC). If an entity with more than one owner was formed as an LLC under state law, it is generally treated as a partnership for federal income tax purposes and files Form 1065, U.S. Return of Partnership Income. Generally, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner's federal income tax return. 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.
2020 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
The filing deadline, and the extension
By default, 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 with a calendar year ending December 31 must file by April 15. A corporation with a fiscal year ending June 30 has an earlier deadline: the 15th day of the 3rd month after its tax year ends, which is September 15. Short-period and dissolved corporations follow similar rules based on when their period ends or dissolution occurs. If the due date falls on a Saturday, Sunday, or legal holiday, the return is timely if filed on the next business day. A corporation that needs more time can file Form 7004 to request an automatic extension of time to file, generally by the regular due date of the return. The extension postpones the filing deadline but does not extend the time to pay any tax owed; interest accrues on unpaid balances from the original due date.
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.
2020 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Corporations pay the tax in four installments
Corporations subject to the 21% tax rate must pay their tax in installments through the year if they expect their total tax liability (after credits) to be $500 or more. The estimated tax is split into four installments, due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If a due date falls on a Saturday, Sunday, or legal holiday, the payment is due the next regular business day. All estimated tax payments must be made by electronic funds transfer. Corporations can use Form 1120-W as a worksheet to figure how much estimated tax to pay each quarter. A corporation that does not pay enough estimated tax on time may owe an underpayment penalty for the period of underpayment, generally if its current-year tax liability is $500 or more and it did not timely pay at least the smaller of its current-year tax or its prior year's tax.
• 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. • The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any date 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 installment payments of estimated tax. • Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to compute estimated tax.
2020 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Personal service corporations pay at the same rate
A personal service corporation is one whose main activity is performing personal services in fields such as health, law, engineering, accounting, architecture, consulting, actuarial science, or the performing arts. The services must be substantially performed by employee-owners. Even though personal service corporations once faced a special graduated rate, they are now subject to the same flat corporate tax rate that applies to all other corporations filing Form 1120. The corporation indicates its personal service corporation status by checking Item A, box 3 on the return. A personal service corporation generally must use a calendar tax year, though it may elect a different year under certain conditions by filing Form 8716 or obtaining IRS approval for a business purpose.
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.
2020 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What filing late costs
Under federal rules, a corporation that misses its tax return deadline—including any approved extension—faces a late-filing penalty of 5% of the unpaid tax for each month, or part of a month, the return remains unfiled. This monthly penalty accumulates but is capped at 25% of the total unpaid tax, so once five full months have passed the penalty stops growing. When a return is more than 60 days late, a floor applies: the penalty is at least the smaller of the total tax due or $435, ensuring there is a minimum charge even when the tax owed is small. The penalty is waived if the corporation demonstrates that the late filing resulted from reasonable cause rather than willful neglect. Because the federal corporate tax rate is 21%, that is the rate applied to the corporation's taxable income before these penalties are added on top.
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 orCAUTION ! 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 more than 60 days late is the smaller of the tax due or $435. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause.
2020 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.
2020 Instructions for Form 1120 (IRS)
- Rate
Multiply taxable income (page 1, line 30) by 21%. Enter this amount on line 2.