• Natalie C. Papagni, CPA

The Tax Foundation’s 2020 State Business Tax Climate

Updated: Jul 12



The Tax Foundation’s State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems and provides a road map for improvement.


The 10 best states in this year’s Index are:

  1. Wyoming

  2. South Dakota

  3. Alaska

  4. Florida

  5. Montana

  6. New Hampshire

  7. Nevada

  8. Oregon

  9. Utah

  10. Indiana

The absence of a major tax is a common factor among many of the top 10 states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax. Wyoming, Nevada, and South Dakota have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire, Montana, and Oregon have no sales tax.

This does not mean, however, that a state cannot rank in the top 10 while still levying all the major taxes. Indiana and Utah, for example, levy all of the major tax types, but do so with low rates on broad bases.


The 10 lowest-ranked, or worst, states in this year’s Index are:

  1. Louisiana

  2. Iowa

  3. Maryland

  4. Vermont

  5. Minnesota

  6. Arkansas

  7. Connecticut

  8. California

  9. New York

  10. New Jersey

The states in the bottom 10 tend to have a number of afflictions in common: complex, nonneutral taxes with comparatively high rates. New Jersey, for example, is hampered by some of the highest property tax burdens in the country, has the second highest-rate corporate income tax in the country and a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.


The Tax Foundation’s State Business Tax Climate Index






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