Corporate Income Tax (C-Corp vs S-Corp

Corporate Taxation: C-Corp vs. S-Corp Double Taxation Comparison

• C-Corporation (Form 1120): Taxes net profits at a flat federal 21.0% corporate rate. However, when profits are distributed to owners as dividends, they face double taxation at qualified dividend rates (15% - 20%).

• S-Corporation (Form 1120-S): Pass-through entity where profits flow directly to owners' individual tax returns, avoiding double taxation and qualifying for the 20% Section 199A QBI deduction.

How to Use This Calculator

Enter your Business Legal Entity Structure — choose from C-Corporation (Form 1120 -- Flat 21% US Federal Corporate Tax), S-Corporation (Form 1120-S Pass-Through with QBI Deduction), Single-Member LLC / Sole Proprietorship (Schedule C Pass-Through), Gross Annual Business Revenue () (e.g. 850000), Tax-Deductible Business Expenses ( - COGS, Payroll, Rent, Marketing) (e.g. 550000), Section 179 / Bonus Depreciation ( - Equipment & Software write-offs) (e.g. 25000 (or 0)), and State Corporate / Franchise Income Tax Rate (%) (e.g. 6.5 (or 0% for TX, NV, WY, SD, WA)). Results update instantly as you type — adjust any value to compare scenarios.

The Formula

Corporate federal income tax & Section 179 depreciation formulas: Taxable Corporate Income = Gross Revenue - Deductible Expenses - Section 179 / Bonus Depreciation-Corporation Federal Income Tax = Taxable Income × 21.0\% (Flat TCJA Rate) Corporate Income Tax = Taxable Income × State Tax Rate Corporate Tax Liability = Federal Tax + State Tax Effective Tax Rate (\%) = ((Total Corporate Tax) / (Taxable Income)) × 100\%-Tax Retained Profit = Taxable Income - Total Taxes

Worked Example

For example, a C-Corporation generating 850,000 in gross revenue with 550,000 in deductible expenses and a 25,000 Section 179 equipment write-off (275,000 Net Taxable Income) in a state with a 6.5% corporate income tax rate: Federal tax at 21% is . State corporate tax is . Total Corporate Tax is leaving 199,375.00 in after-tax net profit.

Understanding Your Result

Compare your result against industry benchmarks for your specific sector — significant variation exists across industries, business stages, and geographic markets. Use this calculation as one data point alongside your unit economics, cash flow, and competitive positioning. For decisions involving significant capital allocation, validate your model assumptions with historical actuals from at least 6–12 months of operating data before projecting forward.