If you operate your business as a C corporation, you need to make sure the IRS won’t hit you with the 20 percent accumulated earnings tax penalty, because that penalty is

not tax-deductible, and

on top of the 21 percent corporate rate (think 41 percent tax on those earnings).

How the C Corporation Taxes Work

One of the most significant changes brought about by the Tax Cuts and Jobs Act (TCJA) was establishing a single 21 percent tax rate for C corporations—a reduction of 14 percentage points (54 percent) from the former top corporate rate.

Unlike many TCJA changes, which are scheduled to sunset in 2025, the 21 percent corporate rate is permanent.

The 21 percent corporate rate is 16 percentage points lower than the 37 percent top personal income tax rate in effect through 2025. It’s 18.6 percentage points lower than the 39.6 percent top personal rate scheduled to ... Log in to view full article.