Corporate income tax is the third largest source of federal revenue, following individual income tax and payroll taxes. It is a levy on a company’s profits designed to fund government operations.

Corporate taxes are calculated by subtracting expenses—such as the cost of goods sold and depreciation—from revenue to determine operating earnings. Enacted tax rates are then applied to these earnings to calculate the legal tax obligation owed to the government.

Business owners of sole proprietorships, partnerships, and LLCs are taxed differently. They must pay taxes on all business profits at their individual income tax rates, regardless of whether the profits are withdrawn from the business. Most corporate income, however, is taxed at the maximum rate, though corporations can take advantage of special deductions.

Allowable deductions include costs such as goods sold, wages and employee compensation, interest, nonfederal taxes, depreciation, and advertising expenses. Understanding these deductions and the complexities of corporate tax law is essential for minimizing your tax liability.

For this reason, working with experts is crucial. At **JT Tax Services, INC.**, we bring years of experience and expertise in corporate taxes, helping businesses navigate these complexities with confidence. Let us handle your corporate taxes so you can focus on growing your business.