Unexpectedly Intriguing!
10 January 2014

If you do business in the United States, how much can you expect to have to pay in federal businesses taxes?

U.S. Federal Corporate Tax Rate Schedule
Taxable Income 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 Infinity 35% $0

That's the question we'll help you answer today, which is really surprising in that it's taken us over nine years to get around to answering it! Especially since we've focused on the employee-side of that tax math from almost the very beginning!

But we're going to correct that today, applying the tax rate schedule we found published in the IRS' instructions for compleing Form 1120, which is the equivalent of Form 1040 for many U.S. businesses. And that's where we found the following tax rate schedule for corporate income, which is really the business' pretax earnings, or what's left of its total revenues after deducting all its operating expenses.

But that's not the only taxes that businesses pay to the federal government! Assuming that the business has employees, it is also subject to the employer portion of the U.S. federal payroll taxes for both Social Security and Medicare.

Here, a U.S. business has to pay an amount equal to 6.2% of the amount of each of its employees' wages or salaries (up to a maximum of $7,254 each in 2014) for the employer portion of Social Security taxes, as well an additional amount equal to 1.45% of each of its employees' pay, with no maximum amount per employee, for the employer portion of Medicare's payroll taxes.

For the sake of keeping things as simple as possible, that's as complicated as we're going to make it. Our default data is consistent with values that might be typical for a small business, but there's nothing to stop you from changing it to suit your needs to estimate your potential federal business tax burden.

Income or Earnings Subject to U.S. Federal Employer or Corporate Income Taxes
Input Data Values
Combined Annual Wages or Salaries for All Employees
Net Business Earnings (Revenues Minus Expenses Before Paying Corporate Income Taxes)

Estimated Federal Taxes Paid by U.S. Businesses
Calculated Results Values
Federal Payroll Taxes (Employer Portion of Social Security and Medicare Taxes)
Federal Corporate Income Tax on Net Earnings
Combined Corporate Payroll and Income Taxes
Combined Federal Payroll and Corporate Income Taxes on Business
Federal Business Taxes as Percentage of Net Earnings
If you're reading this article on a site that republishes our RSS news feed, click here to access a working version of this tool!

And that's just at the federal level. The state and local governments in all the places where you do business will likely also want to put their greedy hands into your till!

Tax Folder - Source: www.mass.gov/portal/business/taxes

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Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

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