Since the passage of the Tax Cuts and Jobs Act of 2017, corporation tax in the United States has been reduced to a flat rate of 21%. This is a significant decrease from the previous rate of 35%. While this may remain beneficial for businesses in some respects, corporate taxes still remain a much-needed source of income for the government.

Corporate taxes are levied on taxable income after all allowable expenses and deductions have been taken. Expenses may include business travel costs, employee salary, and benefits. Once taxable income has been established, the appropriate rate of tax is applied. In the United States, the rate is currently 21%. Expenses which are considered a legitimate business cost, such as research and development, can be used to reduce the amount of taxable income, and thereby the amount of tax to be paid.

The option of registering as an S corporation can be used to avoid double taxation of corporate income. This is the primary benefit of registering as an S corporation, as the income from the business is not subject to corporate tax, but instead passes directly through to business owners and is taxed on their individual tax returns.

It is important to note that since 2017, C-corporations and S-corporations gain virtually the same benefits from Trump’s tax reforms. This is primarily due to the lower flat rate of 21%. Nevertheless, companies should still consider their own individual circumstances and objectives when making decisions on tax matters.

Overall, corporate taxes remain an important source of income for the government, and regular review of allowable expenses and tax rates is essential in order to optimize the business’s tax position and gain the best possible outcome. Registered S corporations can also benefit significantly in terms of avoiding double taxation. It is therefore essential to get advice on the most suitable taxation structure when setting up a business.