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2025 State Tax
Competitiveness Index

The Tax Foundation’s State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.

Overall Rankings

The State Tax Competitiveness Index compares each state on more than 150 variables in the five major areas of taxation (corporate taxes, individual income taxes, sales and excise taxes, property and wealth taxes, and unemployment insurance taxes and then adds the results to yield a final, overall ranking. This approach rewards states on particularly strong aspects of their tax systems (or penalizes them on particularly weak aspects), while measuring the general competitiveness of their overall tax systems. The result is a score that can be compared to other states’ scores.

Top States Overall

Bottom States Overall

Corporate Taxes

This component measures the impact of each state’s principal tax on business activities and accounts for 21.3 percent of each state’s total score. It includes corporate income taxes and gross receipts taxes. It is well established that the extent of business taxation can affect a business’s level of economic activity within a state.

Top States, Corporate Taxes

Bottom States, Corporate Taxes

Individual Income Taxes

The individual income tax component, which accounts for 30.5 percent of each state’s total Index score, is important to both individuals and businesses because a significant number of businesses, including sole proprietorships, partnerships, and S corporations, report their income through the individual income tax code.

Top States, Individual Taxes

Bottom States, Individual Taxes

Sales Taxes

Sales tax makes up 22.8 percent of each state’s Index score. The type of sales tax familiar to taxpayers is a tax levied on the purchase price of a good at the point of sale. Due to the inclusion of some business inputs in most states’ sales tax bases, the rate and structure of the sales tax is an important consideration for many businesses. The sales tax can also hurt the business tax climate and tax competitiveness because as the sales tax rate climbs, customers make fewer purchases or seek low-tax alternatives. As a result, business is lost to lower-tax locations, causing lost profits, lost jobs, and lost tax revenue. The effect of differential sales tax rates among states or localities is apparent when a traveler crosses from a high-tax state to a neighboring low-tax state. Typically, a vast expanse of shopping malls springs up along the border in the low-tax jurisdiction.

Top States, Sales Taxes

Bottom States, Sales Taxes

Property Taxes

The property tax component, which includes taxes on real and personal property, net worth, and the transfer of assets, accounts for 14.9 percent of each state’s Index score. When properly structured, real property taxes exceed most other taxes in comporting with the benefit principle and can be fairly economically efficient. In the realm of public finance, they are often also prized for their comparative transparency among taxes, though that transparency may contribute to the public’s generally low view of property taxes.

Top States, Property Taxes

Bottom States, Property Taxes

Unemployment Insurance Taxes

Unemployment insurance (UI) is a social insurance program jointly operated by the federal and state governments. Taxes are paid by employers into the UI program to finance benefits for workers recently unemployed. Compared to the other major taxes assessed in the State Tax Competitiveness Index, UI taxes are much less well-known. Every state has one, and all 50 of them are complex, variable-rate systems that impose different rates on different industries and different bases depending upon such factors as the health of the state’s UI trust fund.

Top States, UI Taxes

Bottom States, UI Taxes

2025 State Tax Competitiveness Index Ranks and Component Tax Ranks

StateOverall RankCorporate Tax RankIndividual Income Tax RankSales Tax RankProperty Tax RankUnemployment Insurance Tax Rank
Alabama381434491418
Alaska334153045
Arizona1513845132
Arkansas361539441911
California484149462325
Colorado321018373639
Connecticut473147215040
Delaware185042211
Florida4161142110
Georgia261231233424
Hawaii422546282449
Idaho1121119335
Illinois374213384143
Indiana1081617513
Iowa202319113233
Kansas25272730294
Kentucky221823182734
Louisiana40293348169
Maine29402284819
Maryland463745393520
Massachusetts413341204647
Michigan14914122826
Minnesota444344342642
Mississippi27632253815
Missouri1342024115
Montana5191031821
Nebraska24202613453
Nevada1739740746
New Hampshire6321213927
New Jersey494448354350
New Mexico31223741216
New York502850424737
North Carolina1232116207
North Dakota971715412
Ohio35452543614
Oklahoma2152832156
Oregon30494043141
Pennsylvania34383822936
Rhode Island393530263748
South Carolina331124334228
South Dakota211311022
Tennessee8481473317
Texas7461364030
Utah16179271229
Vermont43364329498
Virginia282436102238
Washington454715502544
West Virginia232629191723
Wisconsin1930356832
Wyoming11174431
District of Columbia483247414825
Note: A rank of 1 is best, 50 is worst. Rankings do not average to the total. States without a tax rank equally as 1. DC's score and rank do not affect other states. The report shows tax systems as of July 1, 2024 (the beginning of Fiscal Year 2025).

Notable Changes

2025 State Tax Competitiveness Index (2020-2025)

State20202021202220232024 Rank2024 Score2025 Rank2025 Score2024-2025 Rank Change2024-2025 Score Change
Alabama39404041394.73384.77-10.03
Alaska333337.1737.050-0.12
Arizona19191816165.48155.46-1-0.02
Arkansas45464238384.74364.85-20.11
California48484848483.89483.880-0.01
Colorado22222527315.06325.021-0.04
Connecticut47474747474.15474.130-0.02
Delaware18181918185.37185.350-0.02
Florida444446.8146.780-0.03
Georgia30292829325.03265.10-60.07
Hawaii38414343444.49424.52-20.03
Idaho17171413105.61115.601-0.01
Illinois33343534364.82374.771-0.05
Indiana13131311125.57105.63-20.07
Iowa44393837225.19205.30-20.11
Kansas31312623255.13255.1300.00
Kentucky20202121235.19225.18-1-0.01
Louisiana42444539404.69404.7400.04
Maine27262328275.13295.062-0.07
Maryland41434646464.33464.3500.02
Massachusetts34333433414.55414.5600.01
Michigan12111212145.55145.490-0.06
Minnesota46454444424.54444.482-0.06
Mississippi29303031295.09275.09-20.00
Missouri159109135.56135.540-0.02
Montana555556.1856.3200.13
Nebraska28282424285.09245.16-40.07
Nevada16151717175.42175.370-0.05
New Hampshire777766.0366.0500.02
New Jersey50504949493.64493.6900.06
New Mexico24273326305.07315.021-0.04
New York49495050503.61503.6200.01
North Carolina11101110115.60125.571-0.03
North Dakota1016151495.6395.6700.04
Ohio36373736354.84354.8700.04
Oklahoma26233122195.30215.272-0.04
Oregon9122930265.13305.054-0.08
Pennsylvania37363635344.91344.9300.02
Rhode Island40383940374.80394.752-0.05
South Carolina32323232335.01334.990-0.03
South Dakota222227.5827.6500.06
Tennessee35358885.8685.9400.08
Texas666676.0076.000-0.01
Utah14141615155.48165.431-0.05
Vermont43424142434.54434.500-0.03
Virginia23252725245.16285.094-0.07
Washington88945454.47454.440-0.03
West Virginia25242219215.19235.172-0.02
Wisconsin21212020205.28195.32-10.04
Wyoming111117.7317.650-0.08
District of Columbia47474748484.01484.0700.06
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. The report shows tax systems as of July 1, 2024 (the beginning of Fiscal Year 2025).

Meet the Authors

  • Jared Walczak Tax Foundation
    Expert

    Jared Walczak

    Vice President of State Projects

    Jared Walczak is Vice President of State Projects at the Tax Foundation. He previously served as legislative director to a member of the Senate of Virginia and as political director for a statewide campaign, and consulted on research and policy development for a number of candidates and elected officials.

  • Andrey Yushkov Tax Foundation
    Expert

    Andrey Yushkov

    Senior Policy Analyst

    Andrey Yushkov is a Senior Policy Analyst with the Center for State Tax Policy at the Tax Foundation. He holds a PhD in public policy from Indiana University, an MS in economics from the University of Bonn, and a BS from St. Petersburg University.

  • Katherine Loughead Tax Foundation
    Expert

    Katherine Loughead

    Senior Policy Analyst & Research Manager

    Katherine Loughead is a Senior Policy Analyst & Research Manager with the Center for State Tax Policy at the Tax Foundation. She was a lead author of “Wisconsin Tax Options: A Guide to Fair, Simple, Pro-Growth Reform” and “Kansas Tax Modernization: A Framework for Stable, Fair, Pro-Growth Reform.”

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