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2021 State Business
Tax Climate Index
By Jared Walczak
TAX FOUNDATION | 1
EXECUTIVE SUMMARYEXECUTIVE SUMMARY
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 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. Nevada, South Dakota, and Wyoming 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 and
Montana have no sales tax.
The 10 best states in this year’s
2. South Dakota
6. New Hampshire
10. North Carolina
The 10 lowest-ranked, or worst,
states in this year’s Index are:
48. New York
50. New Jersey
Note: A rank of 1 is best, 50 is worst. D.C.’s score and rank do
not affect other states. The report shows tax systems as of July
1, 2020 (the beginning of Fiscal Year 2021).
Source: Tax Foundation
10 Worst Business Tax Climates
2021 State Business Tax Climate Index
10 Best Business Tax Climates