Ranking Property Taxes on the 2022 State Business Tax Climate Index

May 10, 2022

Today’s map shows states’ rankings on the property tax component of our 2022 State Business Tax Climate Index. The Index’s property tax component evaluates state and local taxes on real and personal property, net worth, and asset transfers. The property tax component accounts for 14.4 percent of each state’s overall Index score.

Property taxes matter to businesses for several reasons. First, businesses own a significant amount of real property, and tax rates on commercial property are often higher than the rates on comparable residential property. Many states and localities also levy taxes not only on the land and buildings a business owns but also on tangible property, such as machinery, equipment, and office furniture, as well as intangible property like patents and trademarks. Across the nation, property taxes impose one of the most substantial state and local tax burdens most businesses face. In fiscal year 2020, taxes on real, personal, and utility property accounted for almost 38 percent of all taxes paid by businesses to state and local governments, according to the Council on State Taxation.

Although taxes on real property tend to be unpopular with the public, a well-structured real property tax generally conforms to the benefit principle (the idea in public finance that taxes paid should relate to benefits received) and is more transparent than most other taxes.

Taxes on intangible property, wealth, and asset transfers, on the other hand, are harmful and distortive. States that levy such taxes—including capital stock taxes, inventory and intangible property taxes, and estate, inheritance, gift, and real estate transfer taxes—are less economically attractive, as they create disincentives for investment and encourage businesses to make choices based on the tax code that they would not make otherwise. Businesses with valuable trademarks may seek to avoid headquartering in states with intangible property taxes, and shipping and distribution networks might be shaped by the presence or absence of inventory taxes.

States are in a better position to attract business investment when they maintain competitive real property tax rates and avoid harmful taxes on tangible personal property, intangible property, wealth, and asset transfers. This year, the states with the best scores on the property tax component are Indiana, New Mexico, Idaho, Delaware, Nevada, and Ohio. States with the worst scores on this component are Connecticut, Vermont, Illinois, New York, New Hampshire, Massachusetts, New Jersey, plus the District of Columbia.

Ranking property taxes by state property tax ranking on intangible property wealth and asset on 2022 State Business Tax Climate Index

To gauge whether your state’s property tax structure has become more or less competitive in recent years, see the following table. (Methodological changes are backcast to prior years to facilitate comparability.)

Property Tax Component of the State Business Tax Climate Index (2019–2022)
State 2019 Rank 2020 Rank 2021 Rank 2022 Rank Change from 2021 to 2022
Alabama 19 18 19 19 0
Alaska 22 23 23 24 -1
Arizona 11 11 10 11 -1
Arkansas 26 25 26 27 -1
California 13 15 14 14 0
Colorado 33 33 33 34 -1
Connecticut 50 50 50 50 0
Delaware 4 4 4 4 0
Florida 12 12 12 12 0
Georgia 29 30 25 25 0
Hawaii 21 26 29 30 -1
Idaho 3 3 3 3 0
Illinois 48 48 48 48 0
Indiana 2 2 2 1 1
Iowa 38 38 38 39 -1
Kansas 31 31 31 31 0
Kentucky 23 21 22 22 0
Louisiana 27 27 24 23 1
Maine 40 40 40 41 -1
Maryland 41 41 43 43 0
Massachusetts 45 44 45 45 0
Michigan 25 24 20 21 -1
Minnesota 32 32 32 32 0
Mississippi 37 37 37 38 -1
Missouri 9 9 8 8 0
Montana 30 28 28 29 -1
Nebraska 39 39 41 40 1
Nevada 5 6 5 5 0
New Hampshire 46 45 47 46 1
New Jersey 44 46 44 44 0
New Mexico 1 1 1 2 -1
New York 47 47 46 47 -1
North Carolina 14 13 13 13 0
North Dakota 6 7 11 10 1
Ohio 7 5 6 6 0
Oklahoma 28 29 30 28 2
Oregon 16 19 16 17 -1
Pennsylvania 17 16 15 15 0
Rhode Island 42 42 42 42 0
South Carolina 36 35 35 36 -1
South Dakota 15 14 21 18 3
Tennessee 35 34 34 33 1
Texas 34 36 36 37 -1
Utah 8 8 7 7 0
Vermont 49 49 49 49 0
Virginia 24 22 27 26 1
Washington 18 17 18 20 -2
West Virginia 10 10 9 9 0
Wisconsin 20 20 17 16 1
Wyoming 43 43 39 35 4
District of Columbia 49 49 50 50 0

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.

To learn more about how we determined these rankings, read our full methodology.


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A property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services.