Ranking the States

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The Tax Foundation’s 2019 State Business Tax Climate Index aims to compare state tax systems in the United States. The Index ranks each state based on its findings and the provisions of each state’s unique code.

The graphic below shows the best ten and worst ten states, as outlined in the Index’s executive summary. Although some states such as Wyoming, Nevada, and South Dakota do not impose corporate income tax, giving them an advantage in the rankings, other states such as Indiana and Utah rank high on the list despite levying all major tax types—corporate income tax, individual income tax, and sales tax.

On the other side of the coin, many of the lower-ranked states have what the Index identifies as common “afflictions,” such as “complex nonneutral taxes with comparatively high rates.” The Index ranks New Jersey last, noting that the state “is hampered by some of the highest property tax burdens in the country, recently implemented the second highest-rate corporate income tax in the country, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.”

To see how your state’s tax system compares, you can view the full 2019 State Business Tax Climate Index at https://files.taxfoundation.org/20180925174436/2019-State-Business-Tax-Climate-Index.pdf.

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