Taxes Blog

Finance Blogs » Taxes Blog » Best, worst business tax climates

Best, worst business tax climates

By Kay Bell ·
Thursday, October 30, 2014
Posted: 12 pm ET

Nevada voters will decide Nov. 4 whether their state should impose a 2 percent margin tax on businesses beginning next year.

The latest business climate analysis by the Tax Foundation might make some Silver State voters think twice about that ballot initiative.

The Washington, D.C.-based tax policy nonprofit says that the absence of a major tax is one thing that the most business-welcoming states share.

No, low taxes are good for business

The top states in the 2015 version of the Foundation's State Business Tax Climate Index are:

1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. Montana
7. New Hampshire
8. Indiana
9. Utah
10. Texas

Property taxes and unemployment insurance taxes are collected in every state, notes the Tax Foundation. Several states, however, make do without one or more of the major taxes, including a corporate tax, individual income tax or sales tax.

The lack of those taxes is apparent among this year's top 10 business states.

Wyoming, the best state for businesses, has no corporate or individual income tax. It's the same no-tax situation in number two South Dakota and number three Nevada.

Alaska has no individual income or state-level sales tax. Florida and Texas have no individual income tax. New Hampshire and Montana have no sales tax.

Still, taxes aren't necessarily a make-or-break component. Indiana and Utah have all the major tax types and still are good places to do business. The difference, says the Tax Foundation, is that the taxes in those states have low rates spread across broad bases.

Worst states for business

At the other end of the business tax scale, according to the Tax Foundation, are states that share many of the same tax troubles. They include complex tax systems with comparatively high rates.

The states that the business climate survey found are worst for companies are:

41. Iowa
42. Connecticut
43. Wisconsin
44. Ohio
45. Rhode Island
46. Vermont
47. Minnesota
48. California
49. New York
50. New Jersey

New Jersey is the worst place for business. The reasons the Garden State comes in dead last, according to the Tax Foundation, include some of the highest property tax burdens in the country, both an inheritance and an estate tax, and some of the worst structured individual income taxes in the country.

More tax info from Bankrate

Want the latest news on taxes, money-saving tax tips, tax scams and myriad other tax matters? Subscribe to Bankrate's free Weekly Tax Tip newsletter.

You also can follow me on Twitter: @taxtweet.

Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and co-author of the e-book "Future Millionaires' Guidebook."

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.