A new study from BusinessFinancing.co.uk breaks down how much corporate tax a small business pays in every U.S. state, and the differences are bigger than you might expect, including how much Arizona taxes small business compared with rest of the U.S.

The research models a hypothetical tech company earning $100,000 in annual profit and applies the latest federal and state tax rates to calculate the total tax burden. While the federal corporate tax rate is fixed at 21%, state taxes vary dramatically, affecting what small business owners actually owe from state to state.

The study found that small businesses in Arizona are taxed an additional 4.9% on top of the mandatory 21% federal tax, bringing the total to 25.9% for Arizona small business taxes. The model company would be taxed $25,900 on their $100,000 profit.

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 Corporate or corporation tax is a percentage of a company’s profits that it pays to the government. It is a major source of the cash that states and countries use to fund education, social services, defense, emergency units and much more. 

However, corporate tax rates vary widely around the world and even within countries. For example, most American states charge a different local corporation tax on top of the federal rate of 21%. In the UK, the main rate is set at 25%, but small businesses with profits under $38,550 pay just 19%. 

To find out how much corporate tax a small business will likely pay in every country and U.S. state, BusinessFinancing.co.uk designed a hypothetical company with fixed attributes and applied every location’s tax rules to an imaginary profit margin of $100,000. 

 Key Findings 

● Guyana is the country with the highest tax rate for small businesses — with our model firm paying $40,000 on profits of $100,000. 

● In the Bahamas, Bahrain, and the United Arab Emirates, our model company would owe zero corporate tax on profits of $100,000. 

● Small businesses in Minnesota pay more corporate tax than in any other state — facing a bill of $30,800 on $100,000 profit in our model scenario. 

● Small businesses in six states face no state corporation tax on profits of $100,000: Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming.