Special Taxes

Accumulated Earnings Tax (AET)

  • Designed to encourage corporations to pay dividends
  • Corporations can accumulate $250,000 without establishing a business need
  • Tax is in addition to normal corporate tax
  • If the corporation retains earnings and profits to avoid income tax to its shareholders and increase share price, it is subject to an annual AET penalty equal to 15% of its accumulated taxable income for the year

Dividend Received Deduction

  • "Corporate shareholders" are allowed an income exclusion for dividends received from another corporation
  • 100% exclusion if ownership in the dividend paying firm is 80% or greater
  • 80% exclusion if ownership in the dividend paying firm is between 20 to 80%
  • 70% exclusion if ownership in the dividend paying is 20% or less

Corporate Tax Rates


If Taxable Income Is The Tax Is:
Not over $50,000 15% of the taxable income
Over $50,000 but not over $75,000 $7,500 plus 25% of the amount over $50,000
Over $75,000 but not over $100,000 $13,750 plus 34% of the amount over $75,000
Over $100,000 but not over $335,000 $22,250 plus 39% of the amount over $100,000
Over $335,000 but not over $10,000,000 $113,900 plus 34% of the amount over $335,000
Over $10,000,000 but not over $15,000,000 $3,400,000 plus 35% of the amount over $10,000,000
Over $15,000,000 but not over $18,333,333 $5,150,000 plus 38% of the amount over $15,000,000
Over 18,333,333   35% of the taxable income  
Qualified personal service corporations are taxed at a flat rate of 35% of taxable income



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