INCOME TAXES ON CORPORATIONS
1. Rates
For taxable years commencing after June 30, 1995, there is a flat 20%
normal tax on net taxable income of a corporation or partnership plus a
progressive surtax on net taxable income in excess of the $25,000
surtax exemption.?The resulting effective rates from 20% to 39% are
applicable to tax years beginning after June 30, 1995, as follows:
Corporate Tax Rate short Method of Computation
(Surtax Exemption Available)
Net Taxable Income
Corporate Tax
Over Not Over (normal tax plus surtax)
$ 0 $ 25,000 20%
25,000 100,000 25% less $ 1,250
100,000 150,000 35% less 11,250
150,000 200,000 36% less 12,750
200,000 250,000 37% less 14,750
250,000 300,000 38% less 17,250
300,000 500,000 39% less 20,250
500,000 905,000 44% less 45,250
905,000 39%
Corporate Tax Liability
(Surtax Exemption Available)
Taxable Income Total Tax Effective Tax Rate
$ 50,000 $ 11,250 22.50%
125,000 32,500 26.00
175,000 50,250 28.71
225,000 68,500 30.44
275,000 87,250 31.73
400,000 135,750 33.94
700,000 262,750 37.54
950,000 370,500 39.00
A controlled or affiliated group of corporations is limited to just one
surtax exemption that may be allocated unevenly among the members of
the group, if so desired. If two or more corporations in a group use up
the $25,000 surtax exemption, the remaining member corporations may not
use any exemption and would calculate their tax liability on the basis
of the following effective rates:
Corporate Tax Rate short Method of Computation
(Surtax Exemption Not Available)
Net Taxable Income
Corporate Tax
Over Not Over (normal tax plus surtax)
$ 0 $ 75,000 25%
75,000 125,000 35% less $ 7,500
125,000 175,000 36% less 8,750
175,000 225,000 37% less 10,500
225,000 275,000 38% less 12,750
275,000 500,000 39% less 15,500
500,000 810,000 44% less 40,500
810,000 39%
Corporate Tax Liability
(Surtax Exemption Not Available)
Taxable Income Total Tax Effective Tax Rate
$ 50,000 $ 12,500 25.00%
125,000 36,250 29.00
175,000 54,250 &nb
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