Each year, the Tax Foundation ranks states based on their business tax climate. The full report is available here.
The 10 best states in this year’s Index are:
- Wyoming
- South Dakota
- Nevada
- Alaska
- Florida
- Washington
- New Hampshire
- Montana
- Texas
- Utah
Why are these the top-ranked states? “Wyoming, Nevada, and South Dakota have no corporate or individual income tax; 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.”
Which states bottom-out the Tax Foundation’s list?
- Maryland
- Iowa
- Wisconsin
- North Carolina
- Minnesota
- Rhode Island
- Vermont
- California
- New Jersey
- New York
New York scores at the bottom this year by having the worst individual income tax, the sixth-worst unemployment insurance taxes, and the sixth-worst property taxes. The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.
The rankings compare states on 118 different variables in the five important areas of taxation: major business taxes, individual income taxes, sales taxes, unemployment insurance taxes, and property taxes. Each state is ranked along each dimension on a relative scale from 0 to 10, with zero meaning not “worst possible” but rather worst among the fifty states. To create the overall score, the Tax Foundation methodology weights these five components are as follows:
- 33.1% — Individual Income Tax
- 21.5% — Sales Tax
- 20.1% — Corporate Tax
- 14.0% — Property Tax
- 11.4% — Unemployment Insurance Tax