In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information
Corporate Income Tax | Federal corporate income tax is applied with a flat rate of 21% to the effectively connected income (ECI). State and local governments may also impose income taxes (generally ranging between 1% and 12%), thus the effective tax rate in each state. Click here for more information about corporate tax rates. |
S Corporations Tax | Corporations with up to 100 eligible shareholders (none of whom may be corporations) that meet certain specific requirements are generally not subject to U.S. federal income tax. |
”Base Erosion and Anti-Abuse Tax” (BEAT) Applies only if the U.S. corporation or branch has (I) a “base erosion percentage” of 3% or more (2% for certain banks and securities dealers), and (II) average annual gross receipts of at least USD 500 million for the three-year period ending with the preceding taxable year. |
equal to the excess of (I) a fixed percentage of modified taxable income (5% for taxable years beginning in 2018, increased to 10% as from taxable years beginning in 2019), over (II) the regular tax liability reduced by certain tax credits. From tax years after December 31, 2025, the percentage of modified taxable income compared to the regular tax liability increases to 12.5% (13.5% for certain banks and securities dealers). This allows all credits to be used in calculating the U.S. corporation's regular tax liability. Specific regulations apply to banks, insurance companies, and "expatriated entities." |
Minimum tax (effective for taxable years beginning after 31 December 2022) |
15% minimum tax on adjusted financial statement income (AFSI) of C corporations. The book minimum tax increases a taxpayer’s tax to the extent that the tentative minimum tax exceeds regular tax plus base erosion and anti-abuse tax (BEAT). Click here for further info. |
Foreign companies are however subject to a branch profits tax at 30% of ECI that is not invested in U.S. trade or business and a 30% withholding tax on non-ECI U.S.-source income (e.g. dividends, interests, rents and royalties). Other arrangements can be made through tax treaties. A 30% branch profits tax also will be imposed on interest payments by the U.S. branch to foreign lenders.
In general, foreign corporations are not subject to taxation on capital gains, except when the gains arise from selling U.S. real estate assets or are related to conducting business activities in the US.
Certain companies are subject to an accumulated earnings tax equal to 20% of "accumulated taxable income" if they are deemed to be accumulating earnings and profits for the purpose of avoiding shareholder personal income tax.
U.S. corporations and foreign corporations meeting specific criteria of receiving significant "passive income" and being "closely held" may be liable for the personal holding company tax, levied at 20% of undistributed personal holding company income, which is imposed in addition to the regular tax.
Importers, manufacturers, and sellers of ozone-depleting chemicals, or imported products manufactured using such chemicals, are subject to environmental taxes calculated per weight of the ODC.
In addition to federal taxes, state and municipal taxes vary from one state or community to another, including property taxes on real property, stamp duties, franchise taxes and taxes on the capital of a corporation. For more details, consult the Tax Foundation website.
United States | OECD | Germany | |
---|---|---|---|
Number of Payments of Taxes per Year | 10.6 | 10.1 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 175.0 | 163.6 | 218.0 |
Total Share of Taxes (% of Profit) | 36.6 | 41.6 | 48.8 |
Source: The World Bank - Doing Business, Latest data available.
The five states with the highest average combined state and local sales tax rates are Louisiana (9.55%), Tennessee (9.548%), Arkansas (9.46%), Alabama (9.25%), and Oklahoma (8.98%). For the full list of applicable rates, click here.
Excise duties are levied at federal and state levels on a wide range of goods and activities, including gasoline and diesel fuel used for transportation, air transportation, wagering, foreign insurance, certain sporting goods, firearms and ammunition, alcohol, tobacco, and selling certain goods at retail (e.g. heavy vehicles, trailers, bodies, and chassis).
Individuals who meet a “substantial presence test” are considered residents for taxation purposes. Such a test requires either physical presence in the country for 183 days or more during a calendar year, or presence of at least 31 days during a calendar year and a cumulative presence of 183 days or more based on a weighted number of days during the calendar year (taken at whole value) and the two immediately preceding calendar years (taken at one-third value for the first preceding calendar year and at one-sixth for the second).
Different scales depending on the family status (married couples under a joint system, married couples under a separate assets system, single and head of the family), limited to seven rates. | 2023 Federal Income Tax Rates: 10%, 12%, 22%, 24%, 32%, 35% and 37% |
Single payers (USD) | Tax Rate |
0 to 11,000 | 10% |
11,001 to 44,725 | 12% |
44,726 to 95,375 | 22% |
95,3776 to 182,100 | 24% |
182,101 to 231,250 | 32% |
231,251 to 578,125 | 35% |
578,125 or more | 37% |
Married Filing Jointly (USD) | Tax Rate |
0 to 22,000 | 10% |
22,001 to 89,450 | 12% |
89,451 to 190,750 | 22% |
190,751 to 364,200 | 24% |
364,201 to 462,500 | 32% |
462,501 to 693,750 | 35% |
693,750 or more | 37% |
Head of Household (USD) | Tax Rate |
0 to 15,700 | 10% |
15,701 to 59,850 | 12% |
59,851 to 95,350 | 22% |
95,351 to 182,100 | 24% |
182,101 to 231,250 | 32% |
231,251 to 578,100 | 35% |
578,100 or more | 37% |
Alternative Minimum Tax (AMT) (applies if an individual’s tentative AMT liability exceeds that individual’s regular income tax liability.) |
26% up to a taxable income of USD 220,700 28% on the amount in excess The AMT exemption amount for 2023 is USD 81,300 for singles and USD 126,500 for married couples filing jointly. AMT exemptions phase out at 25 cents per dollar earned once AMT income reaches USD 578,150 for single filers and USD 1,156,300 for married taxpayers filing jointly |
State and local income taxes | Most states, and a number of municipal authorities, impose income taxes on individuals working or residing within their jurisdictions. For more information, visit the IRS website. |
Citizens and resident aliens may also claim a standard deduction (instead of itemising deductions). The basic standard deduction for 2023 is USD 13,850 for individuals, USD 27,700 for married couples filing a joint return, and USD 20,800 for heads of households. Individuals, including resident aliens, who are blind or age 65 or over are entitled to an extra standard deduction of USD 1,850.
Visit the IRS site for more detailed information.
For employees, in 2023 social security tax (old-age, survivors, and disability) is levied at a rate of 6.2% on the first USD 160,200 of wages paid, whereas the Medicare hospital insurance tax is levied at 1.45% (not subject to an earnings cap).
A federal estate tax is levied on the fair market value of assets that an individual owns at death. For non-resident non-citizens, estate taxes are imposed only on property situated in the U.S. in excess of USD 60,000. Furthermore, for U.S. citizens and residents, a gift tax is imposed on gifts made during a person’s life, and it is unified with the estate tax. In 2023, the federal estate tax ranges from rates of 18% to 40% and generally only applies to assets over USD 12.92 million.
Individuals must pay a 3.8% tax on net investment income over a threshold amount (USD 250,000 as of 2023 for married filing jointly or USD 200,000 for singles) and a 0.9% Medicare tax on wages, compensation, or self-employment income that exceeds a threshold amount (USD 250,000 if married filing jointly, USD 125,000 if married filing separately, and USD 200,000 if single).
Documentary stamp taxes may be imposed at the state level, but there are no stamp duties at the federal level.
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Latest Update: November 2023