What businesses need to now about US State Taxes…
Although we are US lawyers and not specialist US tax advisors, we are frequently asked about the landscape for Corporate and Business Taxes in the USA, so we thought we would put together a helpful guide for those who need to know.
You should know that business taxation in the United States varies significantly across states, encompassing Corporate Income taxes, Gross Receipts taxes, Franchise taxes, and US Sales taxes (which anyone who has ever bought anything in the USA should be familiar with!)…. To explain:
- Corporate Income Tax Rate: A tax imposed on the profits (net income) of corporations, represents the top marginal rate applicable to corporate income as of 2025.
- Gross Receipts Tax: Indicates whether the state imposes a tax on the gross revenues of businesses.
- Franchise Tax: Denotes the presence of a tax levied for the privilege of doing business in the state, which may be based on net worth, capital stock, or other measures.
- Sales Tax Rate: Reflects the statewide base sales tax rate; local jurisdictions may impose additional sales taxes.
Below is our comprehensive overview of all these taxes, state by state, including their respective percentage rates as of 2025. It is based on our open source research and is up to date as of the date of publication:
| State | Corporate Income Tax Rate | Gross Receipts Tax | Franchise Tax | Sales Tax Rate |
|---|---|---|---|---|
| Alabama | 6.5% | No | Yes | 4.0% |
| Alaska | 9.4% | No | No | No state sales tax |
| Arizona | 4.9% | No | No | 5.6% |
| Arkansas | 4.8% | No | Yes | 6.5% |
| California | 8.84% | No | Yes | 7.25% |
| Colorado | 4.4% | No | No | 2.9% |
| Connecticut | 7.5% | No | Yes | 6.35% |
| Delaware | 8.7% | Yes | Yes | No state sales tax |
| Florida | 5.5% | No | No | 6.0% |
| Georgia | 5.75% | No | Yes | 4.0% |
| Hawaii | 6.4% | No | No | 4.0% |
| Idaho | 5.8% | No | No | 6.0% |
| Illinois | 9.5% | No | Yes | 6.25% |
| Indiana | 4.9% | No | No | 7.0% |
| Iowa | 7.1% | No | Yes | 6.0% |
| Kansas | 6.5% | No | Yes | 6.5% |
| Kentucky | 5.0% | No | Yes | 6.0% |
| Louisiana | 5.5% | No | No | 5.0% |
| Maine | 8.93% | No | No | 5.5% |
| Maryland | 8.25% | No | No | 6.0% |
| Massachusetts | 8.0% | No | Yes | 6.25% |
| Michigan | 6.0% | No | No | 6.0% |
| Minnesota | 9.8% | No | No | 6.875% |
| Mississippi | 5.0% | No | Yes | 7.0% |
| Missouri | 4.0% | No | Yes | 4.225% |
| Montana | 6.75% | No | No | No state sales tax |
| Nebraska | 5.84% | No | Yes | 5.5% |
| Nevada | No | Yes | No | 6.85% |
| New Hampshire | 7.5% | No | Yes | No state sales tax |
| New Jersey | 9.0% | No | Yes | 6.625% |
| New Mexico | 5.9% | No | No | 5.125% |
| New York | 7.25% | No | Yes | 4.0% |
| North Carolina | 2.25% | No | Yes | 4.75% |
| North Dakota | 4.31% | No | Yes | 5.0% |
| Ohio | No | Yes | No | 5.75% |
| Oklahoma | 4.0% | No | Yes | 4.5% |
| Oregon | 7.6% | Yes | No | No state sales tax |
| Pennsylvania | 8.49% | No | Yes | 6.0% |
| Rhode Island | 7.0% | No | Yes | 7.0% |
| South Carolina | 5.0% | No | Yes | 6.0% |
| South Dakota | No | No | No | 4.2% |
| Tennessee | 6.5% | Yes | Yes | 7.0% |
| Texas | No | Yes | No | 6.25% |
| Utah | 4.65% | No | Yes | 4.85% |
| Vermont | 8.5% | No | Yes | 6.0% |
| Virginia | 6.0% | No | Yes | 5.3% |
| Washington | No | Yes | No | 6.5% |
| West Virginia | 6.5% | No | Yes | 6.0% |
| Wisconsin | 7.9% | No | No | 5.0% |
| Wyoming | No | No | No | 4.0% |
Additional Considerations:
- States Without Corporate Income Tax: Nevada, Ohio, Texas, and Washington do not levy a corporate income tax but impose gross receipts taxes instead. South Dakota and Wyoming do not impose either a corporate income tax or a gross receipts tax.
- Recent Tax Reforms: Louisiana has enacted significant tax reforms, reducing the corporate income tax rate from 7.5% to 5.5% and eliminating the corporate franchise tax.
- Local Variations: Sales tax rates can vary significantly within states due to additional local taxes.
This overview provides a general framework of state-level business taxes.
However, please note that tax laws are subject to change, and additional nuances may apply based on specific business activities and local jurisdictions.
We woud always suggest that our clients take tax advice before taking any major commercial or strategic decisions into the USA.
Contact Us to discuss your US expansion or if you would like introductions into our network of trusted and experienced Tax Lawyers or US-UK accountants and tax advisors.