page_title: Corporate tax in the United States
section_title: History
hierarchical_section_title: Corporate tax in the United States / History
caption_attribution_description: English: U.S. effective corporate tax rates, 1947–2012
context_page_description: Corporate tax is imposed in the United States at the federal, most state, and some local levels on the income of entities treated for tax purposes as corporations. Since January 1, 2018, the nominal federal corporate tax rate in the United States of America is a flat 21% due to the passage of the Tax Cuts and Jobs Act of 2017. State and local taxes and rules vary by jurisdiction, though many are based on federal concepts and definitions. Taxable income may differ from book income both as to timing of income and tax deductions and as to what is taxable. The corporate Alternative Minimum Tax was also eliminated by the 2017 reform, but some states have alternative taxes. Like individuals, corporations must file tax returns every year. They must make quarterly estimated tax payments. Groups of corporations controlled by the same owners may file a consolidated return.
  Some corporate transactions are not taxable. These include most formations and some types of mergers, acquisitions, and liquidations. Shareholders of a corporation are taxed on dividends distributed by the corporation.
context_section_description: The first federal income tax was enacted in 1861, and expired in 1872, amid constitutional challenges. A corporate income tax was enacted in 1894, but a key aspect of it was shortly held unconstitutional. In 1909, Congress enacted an excise tax on corporations based on income. After ratification of the Sixteenth amendment to the U.S. Constitution, this became the corporate provisions of the federal income tax.  Amendments to various provisions affecting corporations have been in most or all revenue acts since. Corporate tax provisions are incorporated in Title 26 of the United States Code, known as the Internal Revenue Code.  The present rate of tax on corporate income was adopted in the Tax Reform Act of 1986.
  In 2010, corporate tax revenue constituted about 9% of all federal revenues or 1.3% of GDP.
  The corporate income tax raised $230.2 billion in fiscal 2019 which accounted for 6.6 percent of total federal revenue and had seen a change from 9 percent in 2017.
caption: The U.S. federal effective corporate tax rate has become much lower than the nominal rate because of tax shelters such as tax havens.
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