Some states have tax climates that are designed to attract and keep new businesses, other states rest on their laurels and/or count on the benefits of history and geography to keep their economies booming.
The Tax Foundation’s 2016 State Business Tax Climate Index was published on November 17th, 2015, and it highlights Wyoming as the most tax friendly state for businesses, and New Jersey as the least tax friendly state.
The authors of the 2016 Tax Foundation report, Jared Walczak, Scott Drenkard and Joseph Henchman, point out that the absence of one of the major categories of taxes is a common factor among most of the top ten states on the list. While property taxes and unemployment insurance taxes are levied in every state in the union, there are several states that do not have a corporate income tax, an individual income tax or a sales tax.
Of note, Wyoming, Nevada, South Dakota, and Texas have no corporate or individual income tax (though Nevada and Texas both impose gross receipts (sales) taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana do not have a sales tax.
That said, it is still possible for a state to rank in the top ten while still levying all major state business tax types. Walczal et al. highlight that Indiana and Utah have all of the major tax types, but d have low tax rates across broad bases.
Top 10 states on the 2016 State Business Tax Index
As mentioned above, the number one state on the Tax Foundation’s list for business tax friendly states in 2016 is Wyoming. See the rest of the list below:
2. South Dakota
7. New Hampshire
Bottom 10 states on the 2016 State Business Tax Index
New Jersey has the least business tax friendly climate of any state in the union, putting it at 50th place on the Tax Foundation’s 2016 list. The remaining positions in the bottom 10 include:
45. Rhode Island
49. New York.