Americas · Tax guide
United States
The United States taxes corporations federally at 21%, with state income taxes on top, and pass-through businesses through their owners' individual returns. There is no federal VAT: sales tax is set by each state. Foreign-owned businesses face strict reporting rules, and payments abroad carry 30% withholding unless a treaty applies. Federal taxes are administered by the Internal Revenue Service (IRS).
At a glance
- Federal corporate tax
- 21%
- Top individual rate
- 37%
- Self-employment tax
- 15.3%
- Withholding on payments abroad
- 30%
- Form 5472 penalty
- $25,000
- Corporate minimum tax
- 15%
Plus state income tax in most states
For owners of pass-through businesses
Social Security and Medicare
Before treaty relief
Minimum, per missing form
Corporations with income above $1 billion
Corporations and pass-through businesses
A C corporation pays federal income tax at 21% on its profits and files Form 1120; corporations expecting to owe $500 or more pay quarterly estimated tax. Most states add their own corporate income or franchise tax.
LLCs, partnerships and S corporations are usually pass-through entities: profits are taxed on the owners' returns at individual rates up to 37%, and owners can deduct up to 20% of qualified business income. Self-employed owners also pay self-employment tax of 15.3%.
- Very large corporations, with average financial statement income above $1 billion, pay at least 15% under the corporate alternative minimum tax.
- Delaware LLCs pay an annual tax of $400, due June 1.
Foreign-owned businesses
A US corporation that is at least one-quarter foreign-owned, and a foreign-owned single-member LLC, must report transactions with related parties on Form 5472. The penalty is at least $25,000 for each missing or late form, even when no tax is due — a common and costly trap for overseas founders.
Foreign corporations doing business in the US through a branch pay the branch profits tax of 30% on profits not reinvested, unless a treaty reduces it.
Sales tax
There is no federal VAT or sales tax. Most states and many cities charge sales tax on goods and some services, at their own rates. A business must register and collect a state's tax once it has a physical presence there or exceeds the state's economic nexus threshold, typically $100,000 of annual sales into the state.
Employers and contractors
Employers withhold income tax and employee FICA from wages and pay employer FICA of 7.65%: Social Security at 6.2% on wages up to $184,500 and Medicare at 1.45%. Federal unemployment tax is 0.6% on the first $7,000 of each employee's wages after the state credit, and states add their own unemployment taxes.
Payments of $2,000 or more in a year to an independent contractor are reported on Form 1099-NEC.
Payments to foreign persons
Dividends, interest, royalties and other fixed or periodic income paid to foreign persons carry 30% withholding, reduced by treaty when the recipient provides a W-8BEN or W-8BEN-E form. When a foreign person sells US real estate, the buyer withholds 15% of the price under FIRPTA.
Transfer pricing
Related-party transactions must be at arm's length. Adjustments can carry penalties of 20% or 40% unless contemporaneous documentation exists. US-parented groups with revenue of $850 million or more file a country-by-country report (Form 8975). The US has not adopted the global minimum tax rules.
Key dates
- 15 April, June, September and DecemberQuarterly estimated tax payments for calendar-year corporations
- 15 MarchPartnership and S corporation returns (Forms 1065 and 1120-S)
- 15 AprilC corporation return (Form 1120) with Form 5472, and individual returns
- 31 JanuaryForms W-2 and 1099-NEC to workers and the IRS
- 1 JuneDelaware LLC annual tax
Figures and sources
23 figures- Federal corporate income tax rate21%Checked against the official source
- Statutory withholding on US-source investment income paid to foreign persons30%Checked against the official source
- Top federal individual income tax rate (made permanent in 2025)37%Checked against the official source
- Self-employment tax rate (Social Security plus Medicare)15.3%Checked against the official source
- Minimum penalty for each missing or late Form 5472$25,000Checked against the official source
- Corporate alternative minimum tax rate15%Checked against the official source
- Average annual financial statement income that brings a corporation into CAMT$1 billionChecked against the official source
- Expected tax at which a corporation must pay quarterly estimated tax$500Checked against the official source
- Qualified business income deduction for pass-through owners (made permanent in 2025)20%Checked against the official source
- Delaware LLC annual tax (due June 1)$400Checked against the official source
- Branch profits tax on a foreign corporation's US branch (before treaty relief)30%Checked against the official source
- Annual sales into a state that creates sales tax nexus in most states$100,000Under professional review
- Total employer FICA rate7.65%Checked against the official source
- Employer Social Security tax rate6.2%Checked against the official source
- 2026 Social Security wage base$184,500Checked against the official source
- Employer Medicare tax rate1.45%Checked against the official source
- Federal unemployment tax after the standard state credit0.6%Checked against the official source
- Wages per employee subject to federal unemployment tax$7,000Checked against the official source
- Annual payments to a contractor that require a Form 1099-NEC (from 2026)$2,000Checked against the official source
- FIRPTA withholding on the price of US property sold by a foreign person15%Checked against the official source
- Substantial transfer pricing misstatement penalty20%Checked against the official source
- Gross transfer pricing misstatement penalty40%Checked against the official source
- Group revenue at which a US parent files a Country-by-Country Report$850 millionChecked against the official source
Indicative only. This assessment is a high-level overview of US federal tax obligations with pointers to state taxes, based on the information you provided and rules in force for 2026. It is not tax or legal advice. Consult a qualified US tax adviser (CPA or EA) before making compliance decisions.