Which State Taxes are Best for Business?

February 27, 2006

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.

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