A chemical manufacturer and a movie studio can face the same 21% statutory tax rate on paper, yet end up with completely different tax bills once deductions, credits and industry norms come into play.
The U.S. statutory rate, currently 21%, is set by law and applies at the federal level. But the effective rate is what a company actually pays on its income after all deductions and credits are applied.
Those deductions and credits come from depreciation schedules, research spending and tax breaks tied to specific industries, as well as factors such as company location, since state corporate tax rules vary widely from one state to the next.
Below, we'll compare effective tax rates vs. the statutory tax rate, industry by industry.
The data we analyzed for this study are drawn from NYU Stern's 2026 tax rate research and the Institute on Taxation and Economic Policy's 2024 review of corporate filings, with 2025 Tax Foundation data later included for a quick international comparison. To keep the comparison reliable, we limited our review to industries with enough companies and consistent reporting to produce a meaningful average.
Based on the most current data, the highest-taxed industry is basic chemical, a category of bulk chemical and plastics makers, averaging 35.2%. That's about two-thirds above the federal statutory rate.
This study rounds out the list of industries that pay the highest and lowest effective tax rates, compares the U.S. with other countries, and examines how the rate has evolved over time.
We'll also look at how finance teams can produce financial statements faster to make tax planning easier with comprehensive financial consolidation software.
Basic chemical sits at the top of the list of industries, averaging 35.2%, nearly 14 points above the 21% statutory rate. The metals and mining industry lands not far behind, averaging 34.5%.
Both the basic chemical and metals and mining industries invest heavily in plants, equipment, and physical infrastructure, and the tax code only allows them to recover those costs gradually through depreciation schedules rather than all at once.
A handful of other industries also land well above the statutory rate. Auto parts averages 31.7%, education comes in at 30.4%, and furniture and home furnishings rounds out the top five at 29.1%.
These higher effective rates leave less after-tax cash for reinvestment, debt paydown, or shareholder returns, so companies in these industries often build that extra cost into pricing and long-term capital budgeting decisions.
REITs, companies that own and lease out real estate, pay the lowest average rate at 3.5%. That’s because tax law requires REITs to distribute at least 90% of their taxable income to shareholders, who pay tax on it themselves. A narrower slice of the industry, retail REITs, averages an even lower rate at 1.53%.
Entertainment companies came in second, averaging 12.6%. Three more industries round out the five lowest effective rates:
A lower effective rate leaves companies with more after-tax cash to protect profit margins, reinvest in growth, or pass along to shareholders, which is part of why REITs are structured the way they are.
Industry breakdowns only tell part of the story. Stepping back to weigh the market as a whole against the 21% federal baseline provides more context.
Industries split almost evenly around that number, with 42 of the tracked industries landing above 21% and 43 below it. Zoom out further to the nearly 6,000 companies NYU Stern tracks overall, and the combined average corporate tax rate settles at 19.38%, just under the statutory line, even though individual sectors swing from under 2% to over 35%.
The 21% rate works fine as a shorthand for the market at large. It says far less about where any single company will land once its own deductions, credits, and industry norms get applied, plus whatever that company's home state adds to or subtracts from the federal number.
Most states levy their own corporate tax on top of the federal rate, and the amount varies significantly depending on where a company operates or is headquartered. Once state taxes are factored in, the Tax Foundation puts the combined U.S. rate at roughly 25.6%.
Comparing corporate tax rates by country puts that figure in the middle of the pack globally, ranking 82nd out of 226 countries and territories tracked by the Tax Foundation.
The statutory rate is the number written into law, currently 21% at the federal level. The effective rate is the rate a company actually pays after all deductions, credits and adjustments are applied to its taxable income. Two companies can share the same statutory rate and still post very different effective rates once their financial details are worked out.
The formula divides total income tax expense by pre-tax income, then converts the result to a percentage. For example, a company that reports $100 million in pre-tax income and pays $15 million in tax has an effective rate of 15%, regardless of what the statutory rate happens to be.
Large deductions for items such as research spending, accelerated depreciation, and prior-year losses can offset a company's taxable income entirely in a given year. A company that invests heavily in new equipment or carries forward losses from a rough previous year can end up owing little to nothing in taxes, even during a strong year for revenue.
Averaged across all 5,994 publicly traded companies that NYU Stern tracks, the combined effective rate comes out to 19.38%, just under the 21% statutory rate. But that number hides considerable variation, since individual industries range from under 2% to over 35%.
Unlike several individual tax provisions from the 2017 Tax Cuts and Jobs Act that were set to expire, the corporate rate cut to 21% didn't include a sunset date, so the current corporate tax rate structure will remain in place unless there is a change to tax law.
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This piece draws on NYU Stern's sector-level effective tax rate data, ITEP's review of five years of SEC filings, and Tax Foundation data for the international comparison. A few notes on how we worked with that data: