2023 Corporate Tax Rate
The 2023 Corporate Tax Rate is 21%.
Effective 2023-01-01Source: 2023 Instructions for Form 1120 (IRS)Verified 2026-09-04
Compared with 2022
Every figure on this page is unchanged from 2022.
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Rate | 21% | 21% | +0% (+0.0%) |
Who it applies to
All domestic C corporations filing Form 1120, U.S. Corporation Income Tax Return, for the 2023 tax year.
What changed this year, and why
The 2023 federal corporate income tax rate is set at a flat 21% of taxable income, as reported on Schedule J of IRS Form 1120.
Common questions
- What is the corporate tax rate for 2023?
- The federal corporate income tax rate for 2023 is a flat 21% of taxable income. There are no graduated brackets.
- How is the tax calculated on Form 1120?
- On Schedule J (Tax Computation), a corporation multiplies its taxable income by 21% to determine its tax liability.
Which entities pay this rate, including an LLC that elects it
An LLC with two or more owners is treated as a partnership by default and files Form 1065. A single-member LLC is disregarded and reports on its owner's return. However, either type of LLC can choose to be taxed as a corporation by filing Form 8832 (Entity Classification Election) and then filing Form 1120. Once that election is in place, the LLC pays corporate tax at the 21% rate and follows all other corporate filing rules for the year of the election and beyond.
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.
2023 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
The filing deadline, and the extension
A corporation’s income tax return is due by the 15th day of the fourth month after its tax year ends - April 15 for a calendar-year filer. A fiscal year ending June 30 moves the deadline to the 15th day of the third month. If the due date falls on a Saturday, Sunday, or legal holiday, the return can be filed the next business day. A corporation that needs more time files Form 7004 by the regular due date to receive an automatic extension of time to file. The extension gives more time to submit the return but not more time to pay; any tax owed is still due by the original deadline and interest accrues on unpaid amounts.
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 Instructions for Form 1120 3 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.
2023 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
Corporations pay the tax in four installments
A corporation that expects to owe $500 or more in total tax for the year, after subtracting applicable credits, must make installment payments of estimated tax. The IRS requires these installments 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 payment shifts to the next regular business day. The corporation must use electronic funds transfer for each installment. If the corporation later finds that its actual liability will be higher or lower than originally estimated, it may need to refigure the remaining installments, and underpaid earlier installments can trigger an underpayment penalty. A corporation that overpaid may request a quick refund by filing Form 4466. These estimated payments are the mechanism through which the 21% corporate tax rate is collected throughout the year rather than in a single lump sum when the return is filed.
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.
2023 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 for the testing period is the performance of personal services in fields such as accounting, actuarial science, architecture, consulting, engineering, health, law, and the performing arts. The services must be substantially performed by employee-owners. While personal service corporations have special rules regarding their tax year (generally requiring a calendar year), they pay tax at the same corporate rate as other corporations. On Schedule J, line 1, taxable income is multiplied by 21% to compute the tax. This flat rate applies to all corporations filing Form 1120, including personal service corporations.
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.
2023 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What filing late costs
A corporation that does not file its federal income tax return by the due date, including any extension of time to file, faces a penalty calculated as 5% of the unpaid tax for each month or part of a month the return is late. This penalty cannot exceed 25% of the unpaid tax. For returns required to be filed in 2024, if the return is more than 60 days late, the minimum penalty is the smaller of the tax due or $485. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause. The penalty is calculated on the 21% corporate tax liability that remains unpaid as of the filing deadline, so timely filing is important even if the full payment cannot be made by the due date.
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 2024 that is more than 60 days late is the smaller of the tax due or $485.
2023 Instructions for Form 1120, U.S. Corporation Income Tax Return (IRS)
What the 21% actually multiplies
The federal corporate tax rate is 21%, but it does not apply to a corporation's total revenue or gross receipts. The IRS instructions for Form 1120 direct taxpayers to multiply taxable income by 21% (0.21) and enter the result on Schedule J, line 1. Taxable income is the amount that remains after all allowable deductions, exemptions, and adjustments have been taken into account. This means the actual tax burden depends on how much of the gross income is reduced by deductible expenses before the rate is applied.
Multiply taxable income (page 1, line 30) by 21% (0.21). Enter this amount on line 1.
2023 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
For 2023, the flat 21% corporate tax rate is only one part of a corporation's federal tax liability. Under the Inflation Reduction Act, certain large corporations are also subject to a new Corporate Alternative Minimum Tax (CAMT) for tax years beginning after 2022. The IRS instructions for Form 1120 direct these corporations to determine whether they owe CAMT and, if so, to calculate it on Schedule J, line 3, of their return. CAMT operates as an additional minimum tax that sits on top of the regular 21% computation. At the same time, corporations may claim various tax credits - such as the research credit, the investment credit, or the new clean energy credits - that reduce their tax dollar for dollar. The result is that a corporation's final payment is the regular 21% tax on taxable income, plus any CAMT liability it cannot avoid, minus any credits it is entitled to claim.
Corporate alternative minimum tax (CAMT). For tax years beginning after 2022, certain corporations must determine whether they are subject to the new CAMT and calculate CAMT if applicable. See the instructions for Schedule J, line 3.
2023 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.
2023 Instructions for Form 1120 (IRS)
- Rate
Multiply taxable income (page 1, line 30) by 21% (0.21).