Sunday, February 25, 2024

Best (and Worst) States for Business Taxes Revealed

America’s least populated state currently has the nation’s most attractive business tax environment, according to new rankings that the Washington, D.C.-based Tax Foundation published this week.

The Tax Foundation staff members ranked the other 50 states in their 2023 State Business Tax Climate Index. They published the report Wednesday. In a statement, Tax Foundation staff said the report helps business leaders, policymakers, and taxpayers gauge how their own state’s tax systems compare and provides a road map for improvement.

The 10 states in this year’s Index with the best business tax climate (in order from number one to number 10) are:

• Wyoming

• South Dakota

• Alaska

• Florida

• Montana

• New Hampshire

• Nevada

• Utah

• Indiana 

• North Carolina 

“The absence of a major tax is a common factor among many of the top 10 states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax,” according to the Tax Foundation report.

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“Nevada, South Dakota, and Wyoming have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax. This does not mean, however, that a state cannot rank in the top 10 while still levying all the major taxes. Indiana and Utah, for example, levy all the major tax types but do so with low rates on broad bases.”

The 2020 Census reported that Wyoming had a population of only 576,851.

The 10 worst states, with the final state as the very worst, are:

• Alabama

• Rhode Island

• Hawaii

• Vermont

• Minnesota

• Maryland

• Connecticut

• California

• New York

• New Jersey

“The states in the bottom 10 tend to have a number of afflictions in common: complex, nonneutral taxes with comparatively high rates. New Jersey, for example, is hampered by some of the highest property tax burdens in the country, has the highest-rate corporate income taxes in the county, and has one of the highest-rate individual income taxes,” the Tax Foundation reported.

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“Additionally, the state has a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.”

According to its website, the Tax Foundation “uses research to foster competition among the states and advises policymakers on how to improve their tax systems.” 

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