2021 Corporate Tax Rate
The 2021 Corporate Tax Rate is 21%.
Effective 2021-01-01Source: 2021 Instructions for Form 1120 (IRS)Verified 2026-09-04
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Rate | 21% | 21% | +0% (+0.0%) |
Who it applies to
C corporations filing U.S. Corporation Income Tax Returns (Form 1120) for tax year 2021
What changed this year, and why
The corporate tax rate for tax year 2021 is 21% of taxable income, as reported on Form 1120.
Common questions
- What was the corporate tax rate before 2021?
- The corporate tax rate for 2021 was 21%. It is also 21% for 2020.
- How is the corporate tax calculated?
- Corporations compute their tax by multiplying taxable income by 21%.
Which entities pay this rate, including an LLC that elects it
An LLC with more than one owner is generally treated as a partnership and files Form 1065. A single-member LLC is typically disregarded and reports on its owner's return. However, an LLC can elect to be treated as an association taxable as a corporation by filing Form 8832. Once that election is made, the LLC files Form 1120 and is subject to the corporate tax rate of 21% on its taxable income. The election is not automatic - the LLC must affirmatively file the entity classification election form and attach a copy to its corporate return for the year the election takes effect. For more details, see Pub. 3402.
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.
2021 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
The filing deadline, and the extension
A corporation must generally file its income tax return by the 15th day of the 4th 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. A corporation can request an automatic extension of time to file by submitting Form 7004 by the regular due date of the return. However, any tax owed must still be paid by the original deadline - even with an extension, interest and penalties on unpaid amounts continue to accrue.
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.
2021 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Corporations pay the tax in four installments
Corporations must pay estimated tax in four installments if they expect their total tax for the year, after credits, to be $500 or more. The installments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If a due date falls on a weekend or legal holiday, the payment is due the next business day. Corporations must use electronic funds transfer for these payments and should use Form 1120-W as a worksheet to figure the amount owed.
Estimated Tax Payments Generally, the following rules apply to the corporation's payments of estimated 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.
2021 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Personal service corporations pay at the same rate
A personal service corporation is a corporation whose principal activity during 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 activities in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, and the performing arts, and these services must be substantially performed by employee-owners. A personal service corporation is subject to the same corporate tax rate of 21% that applies to all other C corporations filing Form 1120. The corporation must indicate its status as a personal service corporation by checking the appropriate box on its return.
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.
2021 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What filing late costs
A corporation that misses its filing deadline, including any granted extension, faces a penalty of 5% of the unpaid tax for each month - or part of a month - the return remains late. This monthly penalty accumulates but is capped at a maximum of 25% of the unpaid tax. For returns that are more than 60 days late, a minimum penalty applies: the smaller of the total tax due or $435. The penalty may be waived if the corporation demonstrates that the late filing was due to reasonable cause rather than willful neglect. This penalty is separate from any late-payment penalty or interest charges that may also accrue on unpaid amounts.
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 more than 60 days late is the smaller of the tax due or $435.
2021 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What the 21% actually multiplies
For a regular U.S. corporation filing Form 1120, the 21% rate is applied to the corporation's taxable income, not to its gross receipts, total revenue, or any other top-line figure. Taxable income is the amount that remains on page 1, line 30 of the return after the corporation has included all items of gross income and then subtracted all allowable deductions. In other words, the rate multiplies the corporation's net income as computed under the Internal Revenue Code, using the accounting method (cash, accrual, or another permissible method) regularly kept in its books and records. Because the 21% is applied only to that bottom-line figure, two corporations with the same gross receipts can owe very different amounts of tax if their deductions differ, and a corporation with large deductions may have little or no taxable income even though its gross receipts are substantial. The line-item instruction on the return makes this explicit: the rate is applied to the taxable income figure already computed on page 1, and the resulting amount is entered on line 2 as the corporation's regular income tax before any other taxes or credits.
Multiply taxable income (page 1, line 30) by 21%. Enter this amount on line 2.
2021 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)
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.
2021 Instructions for Form 1120 (IRS)
- Rate
Multiply taxable income (page 1, line 30) by 21%. Enter this amount on line 2.