The Tax Cuts and Jobs Act makes significant changes in the tax rates applicable to corporations that pay tax (those that are not pass-through entities).
Through December 31, 2017
Tax rate brackets of C corporations is as follows:
|Taxable Revenue||Tax Rate|
|$50,001 to $75,000||25%|
|$75,001 to $100,000||34%|
|$100,001 to $335,000||39%|
|$335,001 to $10,000,000||34%|
|$10,000,001 to $15,000,000||35%|
|$15,000,001 to $18,333,333||38%|
The 38% and 39% were phase-outs to raise the effective rates to a flat 34% or 35%, eliminating the benefit of the lower rate brackets and creating a flat rate.
Effective for tax years beginning after December 31, 2017
The C corporation tax rate is 21% for all income levels.
For large, profitable corporations this can be a significant tax cut. Changes in other credits and deductions will need to be factored in to determine how much actual tax will change. For small corporations that have taxable income under $50,000, federal tax may increase by 40% due to the tax rate increasing from 15% to 21%.