"S Corp State Tax Rules: A Quick Guide"

The article provides an overview of state tax obligations for S Corporations, highlighting varying tax structures across states such as franchise taxes, gross receipts taxes, and personal income taxes for shareholders. It emphasizes the importance of understanding state-specific requirements and consulting tax professionals to ensure compliance and avoid penalties.


State Taxes for S Corporations: What You Need to Know

S Corporations are subject to varying state tax requirements across the United States. It is important for business owners to understand these obligations to ensure compliance and avoid penalties.

State State Tax Requirements
California S Corporations are subject to a 1.5% franchise tax (minimum $800) on net income and shareholders pay individual state income tax on their share of the corporation’s income.
New York New York requires S Corporations to pay a fixed-dollar minimum tax based on gross receipts, while shareholders pay personal income tax on their portion of income.
Texas Texas does not impose a corporate income tax but requires S Corporations to pay a franchise tax based on gross receipts.
Florida Florida does not have a personal income tax, and S Corporations are not subject to state corporate income tax.
Illinois Illinois imposes a replacement tax of 1.5% on the net income of S Corporations, along with additional state taxes for shareholders.
Nevada Nevada does not impose a corporate income tax or personal income tax, making it a favorable state for S Corporations.
Pennsylvania Pennsylvania imposes a corporate net income tax and shareholders pay personal income tax on their share of income.
Massachusetts Massachusetts requires S Corporations to pay a corporate excise tax based on either income or assets, depending on specific thresholds.
Washington Washington imposes a Business & Occupation (B&O) tax, a gross receipts tax, but does not have a corporate income tax.
Ohio Ohio imposes a Commercial Activity Tax (CAT) on gross receipts for S Corporations but does not have a corporate income tax.

Note: Tax requirements can vary depending on the specific circumstances of the S Corporation and changes in state tax laws. Consult a tax professional or state tax authority for the most accurate and up-to-date information.

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