Certified Financial Management Specialist Practice Exam

What is the federal corporate tax rate currently set at?

1. 15%

2. 21%

3. 25%

4. 35%

The correct answer is: 21%

The federal corporate tax rate is currently set at 21%. This rate was established by the Tax Cuts and Jobs Act, which went into effect on January 1, 2018, and reduced the corporate tax rate from a maximum of 35% to a flat rate of 21%. This change aimed to make the U.S. corporate tax system more competitive on a global scale, encouraging investment and growth within the country. The decision to set the rate at 21% was influenced by the desire to simplify the tax structure and to provide more predictable tax liabilities for corporations, allowing for better long-term financial planning. The other rates mentioned do not reflect the current federal corporate tax rate. For example, the 15% and 25% corporate rates are lower than the flat rate instituted in 2018, and the 35% rate was the previous standard before the tax reform. Thus, the most accurate and relevant information regarding the current federal corporate tax rate is indeed 21%.