What it is
The corporate tax rate is the statutory percentage applied to the taxable income of corporations. In the United States, this rate is set by federal law, with states often imposing their own additional corporate income taxes. The rate determines how much of a company's profits, after deductions for expenses, are remitted to the government, influencing business investment decisions and international competitiveness.
Changes to the corporate tax rate are significant policy levers that affect corporate earnings, stock valuations, and the attractiveness of a country for business investment. For instance, the Tax Cuts and Jobs Act of 2017 lowered the federal corporate tax rate from 35% to 21%. Investors monitor proposals for rate changes closely, as they can directly impact a company's net income and, consequently, its share price and dividend payouts.
Why it matters
Changes to this rate directly impact corporate profits and stock valuations, affecting your investments in publicly traded companies.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice