What is the tax rate for my PAC’s taxable income?

The Tax Cuts and Jobs Act, which passed Congress and was approved by the President in late 2017, changed the corporate tax rate to a flat rate of 21%, a departure from the tiered structure in which corporate tax rates ranged from 15% to 35%.

This is significant because the corporate tax rate is incorporated by reference into IRS Code provisions concerning political activity and political organizations. In fact, the tax rate for political organizations’ non-exempt income was historically the highest rate in the tiered structure — 35% — regardless of the amount of income involved.

Now, in the aftermath of the major tax reform of 2017, the 21% rate, applies to political organizations’ taxable income.