The federal small business tax rate for C-corporations is 21%. This rate is identical to every other C-corporation regardless of size. Specifically, Congress eliminated the prior graduated small business rate structure under TCJA in 2018. That structure applied 15% to the first $50,000 of income.It applied 25% to income between $50,000 and $75,000. Consequently, every C-corporation now pays the same flat federal corporate tax rate from the first dollar.Furthermore, many small businesses achieve lower total tax burdens through S-corporation or LLC structures. The income tax rate on business income flows to the owner’s individual return through these structures.This makes entity selection the most important rate-related decision most small business owners face in 2026.