Business Income Tax Calculator: Tax on Business Profit
Work out the income tax owed on business profit, and what's left after tax — for C corporations, pass-through entities, or any business structure once you have the effective rate.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Business income tax | After-tax profit |
|---|---|---|
| 21% of $500k (C-corp federal) | 105,000 | 395,000 |
| 27% of $500k (with state) | 135,000 | 365,000 |
| 32% of $200k (pass-through) | 64,000 | 136,000 |
| 21% of $5M (large C-corp) | 1,050,000 | 3,950,000 |
How This Calculator Works
Enter the taxable profit (after all deductible expenses) and the applicable tax rate. The calculator multiplies the two to give the tax owed and shows the after-tax profit. C corporations use the flat 21% US federal rate; pass-throughs use the owner's individual rate plus any state tax.
The Formula
Percentage of an Amount
Amount is the base value, Percentage is the rate applied to it
Worked Example
A C corporation with $500,000 of taxable profit at the 21% federal rate owes $105,000, leaving $395,000 after federal tax. Add state corporate tax (say 6%) and the effective rate becomes 27%, raising the bill to $135,000. Pass-through entities (LLC, S corp) instead pass the $500,000 to owners taxed at individual rates, often higher but eligible for the 20% QBI deduction.
Key Insight
Business structure dominates the tax outcome. C corporations face a flat 21% federal rate but suffer double taxation (corporate tax + dividend tax when profits are distributed). Pass-throughs (LLC, S corp, sole proprietor) avoid the entity-level tax — profit flows to owners taxed once at individual rates, with a potential 20% Qualified Business Income deduction. The right structure depends on profit level, distribution plans, and state — a CPA consultation typically pays for itself many times over at the $500k profit level.
Frequently Asked Questions
How is business income tax calculated?
Multiply taxable profit by the applicable tax rate. A 21% rate on $500,000 of C-corp profit is $105,000 in federal tax.
What's the US corporate tax rate?
C corporations pay a flat 21% federal rate (since the 2017 TCJA). State corporate tax adds 0% (no-corporate-tax states like Texas, Nevada, Wyoming) to roughly 12% (top-rate states). Effective combined rates typically run 21% to 30%.
How are pass-through entities taxed?
LLCs, S corporations, partnerships, and sole proprietors pass profit to owners, taxed at individual rates (10% to 37% federal) plus self-employment tax in some cases. The 20% Qualified Business Income (QBI) deduction can reduce the effective rate substantially for qualifying businesses.
C corp or pass-through?
Pass-through avoids double taxation and suits most small businesses, especially those distributing profits to owners. C corp can win when retaining profits for reinvestment (21% flat beats high individual rates) or seeking outside investment. The decision is structure-and-state specific — consult a CPA.
What about the QBI deduction?
Qualified Business Income deduction lets eligible pass-through owners deduct up to 20% of qualified business income, lowering the effective rate. Subject to income thresholds and business-type limits (specified service businesses phase out at higher incomes). It's a major reason pass-throughs often beat C corps for service businesses.
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Methodology & Review
Business income tax is taxable profit multiplied by the applicable rate. C corporations pay a flat 21% US federal rate; pass-through entities (LLC, S corp, sole proprietor) pass profit to owners taxed at individual rates. State corporate tax (0% to 12%) stacks on top. The calculator models a single effective rate.
Written by Ugo Candido · Last updated May 17, 2026.