U.S. Corporate Tax Rate History

The top federal corporate income tax rate from 1909 to 2026, with every major tax act annotated.

Last updated: April 28, 2026 · Sources: IRS Statistics of Income, Tax Foundation, Joint Committee on Taxation

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Top marginal federal corporate income tax rate, 1909-2026
0% 12% 24% 36% 48% 60% 1909 1930 1950 1970 1990 2010 2026 Top marginal rate 1909 1913 1917 1932 1942 1950 1964 1969 1981 1986 1993 2017 1909: 1% 1913: 1% 1916: 2% 1917: 6% 1918: 12% 1919: 10% 1922: 12.5% 1925: 13% 1926: 13.5% 1929: 11% 1932: 13.75% 1936: 15% 1938: 19% 1940: 24% 1941: 31% 1942: 40% 1946: 38% 1950: 42% 1951: 50.75% 1952: 52% 1964: 50% 1965: 48% 1968: 52.8% 1971: 48% 1979: 46% 1987: 40% 1988: 34% 1993: 35% 2017: 35% 2018: 21% 2026: 21% 2026: 21%
Tap or hover an event marker at the top of the chart to read the legislation summary. Data points show the top marginal rate for each year shown.
52.8%
Modern peak
1968 Vietnam-era surcharge briefly pushed the headline to 52.8%. Without the surcharge, the 52% rate held from 1952-1963.
21%
Current rate
TCJA cut the corporate rate from 35% to 21% effective January 2018. Made permanent — unlike individual provisions.
24 yrs
Stable 35% era
From OBRA 1993 to TCJA 2017, the U.S. corporate rate stayed at 35% — the longest unchanged top rate in modern history.
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The major corporate tax acts

Six legislative milestones drove the line on the chart above.

1909

Corporation Excise Tax Act of 1909 — the federal corporate tax begins

Four years before the personal income tax, Congress passed the Corporation Excise Tax — a 1% levy on corporate net income above $5,000. It was structured as an "excise tax on the privilege of doing business as a corporation" specifically to dodge the constitutional issues that had killed the personal income tax in 1895. The Supreme Court upheld it in Flint v. Stone Tracy Co. (1911), and the modern corporate tax was born.

1942

WWII transforms the corporate tax — and adds the excess-profits tax

The Revenue Act of 1942 raised the regular corporate rate to 40% and layered a separate excess-profits tax on top — peaking at 95% on profits above a "normal" return. Combined effective rates for war contractors regularly exceeded 80%. The excess-profits tax was repealed in 1946 but reinstated for the Korean War (1950-1953), then permanently retired.

1951-1986

The high-rate era — 48-52% as the norm for three decades

From 1951 through 1986, the top federal corporate rate hovered between 46 and 52 percent. State corporate taxes added another 5-10 points on average. Combined statutory rates of 50-60 percent were normal for that entire generation of US corporate executives — yet effective rates were dragged well below the headline by depreciation rules, investment tax credits, and the foreign tax credit.

1986

TRA86 — the great corporate base-broadening

The Tax Reform Act of 1986 cut the corporate rate from 46% to 34% in stages, but financed the cut by killing the investment tax credit, lengthening depreciation schedules, and tightening the foreign tax credit. The combined effect was that corporate tax revenue actually rose in the years following TRA86 even though the headline rate fell. It remains one of the cleanest examples of base-broadening rate-lowering reform in U.S. history.

1993

OBRA 1993 — the bump to 35%

Clinton-era OBRA raised the top corporate rate from 34% to 35% and added a new top bracket structure. The 35% headline persisted for 24 straight years (1993-2017) — the longest unchanged corporate top rate in modern U.S. history.

2017

TCJA — the slash to 21% (and made permanent)

The Tax Cuts and Jobs Act of 2017 cut the corporate rate from 35% to a flat 21% effective January 1, 2018 — the largest single corporate rate cut in U.S. history. Unlike the individual provisions of TCJA, which were scheduled to sunset, the 21% corporate rate was made permanent. The cut also moved the U.S. from a worldwide to a quasi-territorial system via the new GILTI and FDII regimes.

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Headline vs. effective: why the line tells half the story

The headline corporate rate is the rate on taxable income at the top bracket. The effective rate is total tax paid divided by book income — and it has consistently run lower than the headline:

  • 1950s peak: 52% headline, ~30% effective for the largest firms (investment tax credits, depreciation, foreign income deferral)
  • Late 1980s: 34% headline, ~30% effective (TRA86 closed many shelters; the gap narrowed)
  • 2010s: 35% headline, ~22% effective for the S&P 500 (foreign income deferral, R&D credit, NOL carryforwards)
  • Post-TCJA: 21% headline, ~18% effective for the S&P 500 (FDII, GILTI, R&D credit, depreciation)

The shrinking headline-to-effective gap is itself a TRA86 legacy: every major reform since has been "lower the rate, broaden the base," which compresses the difference between statutory and economic.

Frequently Asked Questions

What was the highest U.S. corporate tax rate ever?
Combined with the WWII excess-profits tax, effective top federal corporate rates exceeded 80% in 1942-1945. The headline regular corporate rate alone peaked at 52.8% in 1968-1969 (a one-year Vietnam-era surcharge), with 52% standing as the multi-year peak from 1952-1963.
When was the corporate tax rate at its lowest?
The original 1909 Corporation Excise Tax was 1%. In modern times, the lowest top rate is today's 21%, set by the 2017 Tax Cuts and Jobs Act and effective January 2018. Before TCJA, the lowest modern rate was 34% (1988-1992 under the post-TRA86 structure).
Did corporations actually pay the 50%+ rates in the 1950s-1980s?
Most large corporations paid effective rates well below the headline, often in the 25-35% range, due to the investment tax credit, accelerated depreciation, and the foreign tax credit. TRA86's base-broadening reforms eliminated many of these shelters, which is why the effective rate barely moved when the headline fell from 46% to 34%.
How does the 21% U.S. corporate rate compare internationally?
As of 2026, the U.S. federal rate of 21% is roughly in line with the OECD average (~23%). Adding state corporate taxes (typically 4-9%), the U.S. combined rate sits near 25-26%. Several countries — Ireland (12.5%), Hungary (9%), and the UAE (9%) — undercut the U.S. significantly. The 15% global minimum tax (Pillar Two) adopted by most OECD countries puts a floor under tax competition for multinationals with revenue above €750M.
What's the difference between the corporate rate and what corporations actually pay?
The headline rate is the statutory rate on taxable income. Effective corporate tax rate (federal income tax paid / book income) is consistently lower because of: (1) accelerated depreciation, (2) the R&D credit, (3) the foreign-derived intangible income (FDII) deduction, (4) net operating loss carryforwards, and (5) tax-advantaged income types like municipal bond interest. Effective rates for the S&P 500 averaged about 18% in recent years.
Why didn't TCJA's corporate cut sunset like the individual cuts did?
Reconciliation rules required TCJA to limit its long-term deficit impact. The bill's authors made the corporate cut permanent because corporate-tax revenue is more sensitive to investment behavior (lower rates → more US investment → more eventual taxable income) than individual rates are. Individual provisions sunset after 2025, but most were extended for 2026 in subsequent legislation.

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Personal Tax Brackets History (1913-2026)

Top marginal personal income tax rate chart with every major tax act annotated.

Capital Gains Tax Rate History

Top long-term capital gains rate from 1922 through ATRA + ACA NIIT.

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SE tax, estimated quarterly payments for freelancers and S-corp owners.

Educational content only. Historical rates apply only to the years shown. State corporate taxes add 0-12% on top of federal depending on jurisdiction. Consult a qualified CPA or tax attorney for entity-specific planning.