In fiscal 2021, the state collected $13.9 billion, with the state’s corporate income tax accounting for 6.97% of that figure ($973 million). In fiscal 2020, the state collected $12.2 billion in revenue, with corporate income tax representing only 4.9% of that figure ($604 million). When the Tax Cuts and Jobs Act of 2017 was signed into law by then-President Donald Trump, corporate taxes were reduced, and this resulted in Alabama companies paying an effective rate of 5.2% since they didn’t have as much federal tax to deduct.Īlabama’s corporate tax collections are only a small part of the state’s revenues. The Alabama Policy Institute, in its Conservative Platform for Alabama, recommends that lawmakers lower the rate to 4.75% and end the ability of corporations to deduct federal corporate tax paid.Īccording to the platform, this ability to deduct federal tax made the state tax dependent on the federal rate. North Carolina had the lowest corporate tax rate at 2.5%, followed by Missouri and Oklahoma (both at 4%) and North Dakota (4.31%). The highest corporate tax rates are New Jersey at 11.5%, followed by Minnesota (9.8%) and Illinois (9.50%). In the ranking by highest rates, Alabama and Tennessee each have a rate of 6.5% and tied for 23rd.

An analysis by the nonpartisan Tax Foundation says Alabama’s corporate tax rate is as high or higher than all of its neighboring states.

Alabama gambling winnings tax