ID 114398236 © Saruepee Che Ngoh | Dreamstime.com

How Does Your State Measure Up Taxwise?

ID 114398236 © Saruepee Che Ngoh | Dreamstime.comThe Tax Foundation released its 2019 State Business Tax Climate Index. The index explores these state-level taxes: state income tax, unemployment insurance taxes, property taxes, sales tax, and corporate income tax. If you are thinking of relocating or are considering expansion of your business into another state, you need to check out the impact that taxes have on your business as well as your employees.

Best and worst states

The 10 best states are:

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

In contrast, the 10 worst states taxwise are:

  1. Vermont
  2. Ohio
  3. Minnesota
  4. Louisiana
  5. Iowa
  6. Arkansas
  7. Connecticut
  8. New York
  9. California
  10. New Jersey

Changes in rank

From year to year, states may move up or down in ranking, depending upon changes by their legislatures in tax rates and other rules. Looking ahead, consider that a number of states have proposals under consideration that may change their rankings. Some examples:

  • Arkansas is considering comprehensive tax reform.
  • Georgia and Iowa have enacted cuts in the individual tax rate that will take effect in 2019.

Check out state-by-state rankings

You can use an interactive tool from the Tax Foundation to see the ranking of a particular state. Just click on the state to display the state’s score in each of the 5 tax categories as well as the state’s overall ranking. For example, my state of Florida ranked 4th overall. It was first in individual income tax (there is none), 2nd in unemployment insurance tax (it’s very low), 6th in corporate taxes, 11th in property taxes, and 22nd in sales tax.

Final thought

During this past year, much attention has been focused on federal taxes due to enactment of the Tax Cuts and Jobs Act. But state taxes can have a significant impact on your business and your personal taxes. Don’t ignore this important subject.

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