The Great Divide

All the attention on corporate income taxes at the federal level means state corporate income taxes in the United States rarely get discussed. While some states are raising taxes to address budgetary crises, others are lowering tax rates to lure businesses to operate within their borders. The result? Corporations pay no income tax in some states and as much as 12% of income in others. How much do you know about state income taxes? Test your knowledge with our quiz.

1. Which state imposes the highest corporate tax flat rate, at 9.99%?
A. Iowa
B. Pennsylvania
C. District of Columbia
D. New Jersey

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2. Which of the following states levies a top marginal corporate income tax rate of more than 9%?
A. California
B. New York
C. Oregon
D. Minnesota

3. Which of the following states did not reduce its corporate income tax rate in 2017?
A. North Carolina
B. New Mexico
C. Arizona
D. Nevada

4. Corporate income taxes generally account for what percentage of state tax collections?
A. 5.4%
B. 10.9%
C. 16.0%
D. 8.2%

5. Which states impose a gross receipts tax, which taxes the gross revenues of a company regardless of their source?
A. New York, Michigan, and Colorado
B. Texas, Virginia, and Washington
C. Nevada, Illinois, and California
D. All of the above

6. Which are the only two states that do not levy a corporate income or gross receipts tax?
A. South Dakota and New Hampshire
B. New Hampshire and Oregon
C. South Dakota and Wyoming
D. Wyoming and Nevada

Source: The Tax Foundation

Answers: 1–B; 2–D; 3–D; 4–A; 5–B; 6–C