Enter your company's earnings before tax (EBT) and income tax paid to calculate your effective corporate tax rate. You can also input revenue, expenses, and depreciation to derive EBT automatically. Results include your effective tax rate, net income, and a breakdown of taxable earnings vs. tax paid.
Effective Corporate Tax Rate
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Earnings Before Tax (EBT)
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Net Income (After Tax)
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Statutory / Marginal Rate
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Tax Difference vs. Statutory Rate
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The effective corporate tax rate is the ratio of income tax paid to earnings before tax (EBT). It reflects the actual percentage of pre-tax profit a corporation pays in taxes, accounting for all deductions and credits. It is often lower than the statutory marginal rate.
The formula is: Effective Tax Rate = Income Tax Paid ÷ Earnings Before Tax (EBT). For example, if a company pays $275,000 in taxes on $1,500,000 of EBT, the effective rate is 18.33%. This calculator computes EBT automatically from your revenue, expenses, depreciation, and deductions.
The marginal (statutory) corporate tax rate is the rate applied to the last dollar of taxable income — currently 21% at the federal level in the U.S. The effective tax rate is what the company actually pays as a percentage of its total pre-tax earnings, which is often lower due to deductions, credits, and tax planning strategies.
The current flat federal corporate income tax rate is 21%, established by the Tax Cuts and Jobs Act (TCJA) of 2017. When combined with state corporate income taxes, the average combined rate is approximately 25–26% depending on the state.
Earnings Before Tax (EBT) is a company's profit after subtracting all operating expenses, depreciation, and other deductions from total revenue, but before deducting income taxes. It represents the taxable income base used to calculate corporate tax liability.
Deductions such as depreciation, operating expenses, and other allowable costs reduce your taxable income (EBT), which in turn lowers the amount of tax you owe. This is why a company's effective tax rate is often significantly lower than the statutory 21% federal rate.
According to various studies, the average effective federal corporate tax rate in the U.S. ranges from about 12% to 18%, well below the statutory 21% rate. This is because large corporations in particular take advantage of numerous deductions, credits, and deferrals that reduce their actual tax burden.
Corporate income tax applies to a C-corporation's profits at the entity level (21% federally). Self-employment tax is paid by sole proprietors and partners on their net earnings to cover Social Security and Medicare (15.3% up to a threshold). S-corporations and pass-through entities avoid corporate-level tax, passing income to owners who pay personal income tax instead.