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Your business will need to meet its federal, state, and local tax obligations to stay in good legal standing. Your business structure and location will influence which taxes your business has to pay.

The corporate income tax is levied on business profits of C-corporations (named after the relevant subchapter of the IRS code). Most US businesses, including sole proprietorships, partnerships, and certain eligible corporations, do not pay federal or state corporate income taxes.

Corporate income taxes are the third-largest source of revenues for the federal government. However, as a share of total federal tax collections, the corporate income tax accounts for a relatively small amount.

Corporations in the United States pay federal corporate income taxes levied at a 21 percent rate. Forty-four states and D.C. also levy taxes on corporate income, with top marginal rates ranging from 2.5 percent in North Carolina to 11.5 percent in New Jersey. Fifteen of the states levy graduated corporate income tax.

If capital is internationally mobile, an individual country might indeed choose a low corporate tax rate to restrict the outflow of capital while personal income is taxed at relatively high rates if the factors generating personal income like, e.g., labor are less mobile than capital.

Although most federal revenue comes from income taxes, state and local revenues may come from transaction taxes, which are on the sale of goods and services; income taxes, which come from taxes on earned and unearned income; and property taxes, which come from taxes on property.

Corporate income tax is imposed at the federal level on all entities treated as corporations (see Entity classification below), and by 47 states and the District of Columbia. Certain localities also impose corporate income tax.

At all levels the government relies on tax revenue to fund most of the services it provides and to purchase goods and services from others. Tax revenue is dependent on what individuals and businesses earn, spend, and own.