Ranking Corporate Income Taxes on the 2019 State Business Tax Climate Index

October 3, 2018

In the coming weeks, we will break down our recently released 2019 State Business Tax Climate Index with maps illustrating each of the five major components of the Index: corporate, individual, sales, property, and unemployment insurance taxes. Today we look at states’ rankings on the corporate tax component, which accounts for 19.5 percent of each state’s overall rank.

The corporate tax component of our Index measures each state’s principal tax on business activities. Most states levy a corporate income tax on a company’s profits (receipts minus most business expenses, including compensation and the cost of goods sold), while some states levy gross receipts taxes, which allow few or no deductions for a company’s expenses.

Unlike other studies that look solely at tax burdens, the Index measures how well or poorly each state structures its tax system. It is concerned with the how, not the how much, of state revenue, because there are better and worse ways to levy taxes. Our corporate tax component, for example, scores states not just on their corporate tax rates and brackets, but also on how they handle net operating losses, whether they levy gross receipts-style taxes (which are more economically harmful than corporate income taxes), whether businesses can fully expense purchases of machinery and equipment, and whether states index their brackets for inflation, among other factors.

Click the map below to see an interactive version of states’ corporate tax rankings, and then click on your state for more information about how its tax system compares both regionally and nationally.

Corporate Income Tax Rankings on the 2019 State Business Tax Climate Index

To see whether your state’s corporate tax rank has improved in recent years, check out the table below. To learn more about how we determined these rankings, read our full methodology here.

Corporate Tax Component of the State Business Tax Climate Index (2016–2019)

Note: A rank of 1 is best, 50 is worst. All scores are for fiscal years. DC’s score and rank do not affect other states. Source: Tax Foundation.

  2016 Rank 2017 Rank 2018 Rank 2019 Rank Change from 2018 to 2019
Alabama 22 13 18 20 -2
Alaska 25 26 26 25 +1
Arizona 21 18 15 17 -2
Arkansas 39 41 41 40 +1
California 34 32 31 31 0
Colorado 13 15 13 16 -3
Connecticut 35 34 33 29 +4
Delaware 50 50 50 50 0
Florida 17 18 19 6 +13
Georgia 6 7 7 8 -1
Hawaii 11 12 14 14 0
Idaho 23 25 25 26 -1
Illinois 30 27 34 39 -5
Indiana 26 24 24 18 +6
Iowa 48 48 48 48 0
Kansas 36 35 35 34 +1
Kentucky 28 29 28 27 +1
Louisiana 32 36 36 36 0
Maine 41 39 39 41 -2
Maryland 19 20 21 22 -1
Massachusetts 37 38 38 37 +1
Michigan 10 10 10 11 -1
Minnesota 43 43 43 42 +1
Mississippi 12 14 12 15 -3
Missouri 3 5 5 4 +1
Montana 15 11 11 12 -1
Nebraska 27 28 27 28 -1
Nevada 38 37 37 33 +4
New Hampshire 47 46 46 45 +1
New Jersey 40 42 42 47 -5
New Mexico 24 23 20 21 -1
New York 8 6 6 7 -1
North Carolina 5 3 3 3 0
North Dakota 16 17 17 23 -6
Ohio 46 47 47 46 +1
Oklahoma 9 9 9 9 0
Oregon 29 30 29 30 -1
Pennsylvania 45 44 44 43 +1
Rhode Island 33 33 32 32 0
South Carolina 14 16 16 19 -3
South Dakota 1 1 1 1 0
Tennessee 18 21 22 24 -2
Texas 49 49 49 49 0
Utah 4 4 4 5 -1
Vermont 42 40 40 38 +2
Virginia 6 7 7 10 -3
Washington 44 45 45 44 +1
West Virginia 20 22 23 13 +10
Wisconsin 31 31 30 35 -5
Wyoming 1 1 1 1 0
District of Columbia 37 31 28 27 +1

Note: This is part of a map series in which we will examine each of the five major components of our 2019 State Business Tax Climate Index

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