Which State Taxes are Best for Business? February 27, 2006 Andrew Chamberlain Andrew Chamberlain The Tax Foundation released the much-anticipated third edition of our State Business Tax Climate Index this morning, which ranks the “business-friendliness” of the 50 state tax systems. Here’s the bottom line: Major Components of the State Business Tax Climate Index, 2006 State Overall Rank Business Tax Index Rank Individual Income Tax Index Rank Sales and Gross Receipts Tax Index Rank Unemploy-ment Insurance Tax Index Rank Wealth Index Rank Alabama 14 14 17 11 4 6 Alaska 3 48 4 1 43 18 Arizona 25 29 20 40 12 12 Arkansas 41 44 32 37 41 13 California 40 39 47 38 20 7 Colorado 12 6 14 26 21 14 Connecticut 39 16 19 33 26 50 Delaware 8 25 26 3 11 10 Florida 4 13 4 20 1 16 Georgia 21 8 27 7 32 27 Hawaii 33 26 44 43 22 3 Idaho 24 21 37 17 46 2 Illinois 23 15 13 41 37 44 Indiana 11 20 10 14 7 19 Iowa 42 46 45 13 28 29 Kansas 34 45 23 28 15 33 Kentucky 44 40 30 23 48 30 Louisiana 36 34 22 49 9 28 Maine 45 47 38 10 42 39 Maryland 22 7 39 8 17 37 Massachusetts 27 36 15 9 49 41 Michigan 26 49 11 32 40 20 Minnesota 38 41 36 34 35 15 Mississippi 29 33 16 46 2 26 Missouri 20 4 25 29 8 17 Montana 9 17 21 5 24 23 Nebraska 43 42 34 36 14 42 Nevada 5 1 7 47 38 11 New Hampshire 6 38 8 2 44 31 New Jersey 49 50 46 27 27 46 New Mexico 28 31 24 48 18 1 New York 50 30 50 39 47 43 North Carolina 37 22 43 35 5 40 North Dakota 31 35 42 18 36 4 Ohio 47 37 48 45 13 48 Oklahoma 17 8 28 15 3 21 Oregon 10 24 33 4 30 8 Pennsylvania 16 32 12 19 16 45 Rhode Island 48 27 40 30 50 49 South Carolina 30 12 29 12 45 32 South Dakota 2 1 1 42 31 9 Tennessee 15 11 9 44 33 38 Texas 7 18 4 21 6 34 Utah 18 5 31 24 23 5 Vermont 46 43 49 16 10 47 Virginia 19 8 18 6 25 36 Washington 13 19 2 50 39 24 West Virginia 35 28 41 31 34 22 Wisconsin 32 23 35 25 29 25 Wyoming 1 1 2 22 19 35 Note: Rankings do not average across to total. States without a given tax rank equally as number 1. Click here for the full study. Click here for a response to recent criticisms of the Index. Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Center for State Tax Policy State Business Tax Climate Index