United States C Corporation tax calculator 2026
A U.S. C corporation pays a flat 21% federal corporate income tax on its profits in 2026. When after-tax profits are paid out, qualified dividends are taxed again at the shareholder level (0%, 15%, or 20%; commonly 15%), creating double taxation and a combined effective rate near 32.85%. State taxes are separate.
This calculator estimates the total tax on a U.S. C corporation's profits, combining the 21% federal corporate tax with the 15% tax on qualified dividends paid to shareholders, so you can see the effect of double taxation.
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Result
United States C Corporation tax rates 2026
| Band or item | Rate |
|---|---|
| Federal corporate tax | 21% |
| Dividend tax (on distribution) | 15% |
Source: taxsummaries.pwc.com
How is a U.S. C corporation taxed in 2026?
A C corporation is a separate taxpayer from its owners. It files Form 1120 and pays a flat 21% federal corporate income tax on its taxable income (revenue minus deductible business expenses, salaries, depreciation, and other allowable costs). Unlike the pre-2018 graduated schedule, there is a single 21% rate regardless of profit size.
The tax does not stop there. When the corporation distributes its remaining after-tax profits to shareholders as dividends, those dividends are taxed a second time on the individual's return. This two-layer structure, corporate tax plus shareholder tax, is what is meant by double taxation. Note that this estimate covers federal tax only; most states levy their own separate corporate income tax, which is not included here.
Dividend taxation and double taxation
Qualified dividends paid to individual shareholders are taxed at long-term capital gains rates of 0%, 15%, or 20%, depending on the shareholder's total taxable income. This calculator applies the common middle rate of 15%.
Because the corporation has already paid 21% before it can distribute anything, only 79% of each dollar of profit is available as a dividend. That remaining amount is then reduced by the 15% dividend tax. Combining both layers on a fully distributed dollar of profit gives an effective rate of 21% + (79% x 15%) = 32.85%. Profits that are retained inside the company and not distributed avoid the second layer until they are eventually paid out.
Worked example: a $500,000 profit
Suppose a C corporation earns $500,000 in taxable profit in 2026 and distributes everything to a single shareholder.
- Federal corporate tax: $500,000 x 21% = $105,000
- After-tax profit available to distribute: $500,000 - $105,000 = $395,000
- Dividend tax at 15%: $395,000 x 15% = $59,250
- Net cash reaching the shareholder: $395,000 - $59,250 = $335,750
Total tax paid across both layers is $105,000 + $59,250 = $164,250, an overall effective rate of 32.85% on the original $500,000. If the shareholder qualified for the 0% dividend rate, only the $105,000 corporate tax would apply; at the top 20% dividend rate the second layer would rise to $79,000.
Frequently asked questions
What is the federal corporate tax rate for a C corp in 2026?
The federal corporate income tax rate is a flat 21% on taxable income, applied regardless of how much profit the C corporation earns.
How does double taxation work for a C corporation?
Profits are taxed once at the corporate level at 21%, then again when distributed as dividends to shareholders at 15% (for qualified dividends at the common rate), producing a combined effective rate of about 32.85%.
How much tax does a C corp pay on $100,000 of profit?
On $100,000 of taxable profit, the federal corporate tax is $100,000 x 21% = $21,000. If the remaining $79,000 is paid out as qualified dividends taxed at 15%, an additional $11,850 is due, for $32,850 total.
What rate applies to C corp dividends?
Qualified dividends are taxed at long-term capital gains rates of 0%, 15%, or 20% based on the shareholder's income. This calculator uses the common 15% rate.
Does this calculator include state corporate taxes?
No. It estimates only the 21% federal corporate tax and the 15% dividend tax. Most states impose their own separate corporate income tax, which is not included in this estimate.
Can a C corp avoid the second layer of tax?
Yes, partly. Profits retained in the company rather than distributed are taxed only at the 21% corporate level; the additional 15% dividend tax applies only when earnings are paid out to shareholders.
Official sources
- Internal Revenue Service (IRS) — Corporate & personal income tax