What Are The Tax Rates For Corporations?

Tax Rate Schedule

Most corporations figure their tax by using the following tax rate schedule. This section discusses an exception to that rule for qualified personal service corporations. Other exceptions are discussed in the instructions for Schedule J (Form 1120) or Part I (Form 1120-A).

If taxable income (line 30, Form 1120, or line 26, Form 1120-A) is:  
         
Over-- But not over--   Tax is:   Of the
amount over--
$0 50,000   15%   -0-
$50,000 75,000   $ 7,500 + 25%   $50,000
75,000 100,000   13,750 + 34%   75,000
100,000 335,000   22,250 + 39%   100,000
335,000 10,000,000   113,900 + 34%   335,000
10,000,000 15,000,000   3,400,000 + 35%   10,000,000
15,000,000 18,333,333   5,150,000 + 38%   15,000,000
18,333,333 --   35%   -0-

Qualified personal service corporation. A qualified personal service corporation is taxed at a flat rate of 35% on taxable income. A corporation is a qualified personal service corporation if it meets both of the following tests.

  1. Substantially all the corporation's activities involve the performance of personal services and,

  2. At least 95% of the corporation's stock, by value, is owned, directly or indirectly, by any of the following:
    1. Employees performing the personal services.
    2. Retired employees who had performed the personal services.
    3. An estate of the employee or retiree described above.
    4. Any person who acquired the stock of the corporation as a result of the death of an employee or retiree (but only for the 2-year period beginning on the date of the employee's or retiree's death).

See section 1.448-1T(e) of the regulations for details.



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