Finding the best place to start a business isn’t as easy as it used to be. Some markets are simply too hard to thrive in, as high taxes may hit small businesses too hard to survive. This is why we were glad to see the Tax Foundation put together the State Business Tax Climate Index report.
The top states for small businesses, as far as taxes are concerned, are:
- Wyoming
- South Dakota
- Nevada
- Alaska
- Florida
Meanwhile, the bottom states include New York, New Jersey, California, Minnesota and Rhode Island.
The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.
While not reflected in this year’s edition, a great testament to the Index’s value is its use as a success metric for comprehensive reforms passed this year in North Carolina. While the state remains ranked 44th for this edition, it will move to as high as 17th as these reforms take effect in coming years.
Minnesota, by contrast, enacted a package of tax changes that reduce the state’s competitiveness, including a retroactive hike in the individual income tax rate. Since last year, they have dropped from 45th to 47th place. New York and New Jersey are in a virtual tie for last place, and any change next year could change their positions. Other major changes are noted in the blue boxes throughout this report.
Read more from the report here or take a look at NFIB’s post about the Tax Foundation’s report here.