The Most Tax-Friendly States For Business

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5. Florida
> Taxes collected per capita: $1,718 (7th lowest)
> Unemployment: 7.0% (tied-22nd lowest)
> Corporate taxes collected per capita: $99 (21st lowest)
> Sales tax rate: 6.00% (tied-16th highest)

Florida also has no individual income tax, and corporate taxes are modest. The state’s corporate income tax rate is a flat 5.5% and is one of the lower rates in the nation. However, the state is partially penalized by its Alternative Minimum Tax on corporations, which just eight other states charge. Partly as a result of this, 12 other states received better grades from the Tax Foundation on their corporate income tax policies. The state also relies on local sales and property taxes more than most other states. As of fiscal 2011, Florida collected just over $1,700 per capita in taxes, one of the lowest totals in the nation. Of this, more than $1,000 was from sales taxes, one of the highest figures in the nation.

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4. Alaska
> Taxes collected per capita: $7,708 (the highest)
> Unemployment: 6.5% (18th lowest)
> Corporate taxes collected per capita: $1,003 (the highest)
> Sales tax rate: 0.00% (tied-the lowest)

Alaska is one of six states with no individual income tax. In fact, the state actually gives each resident an annual payment, which is based on the investment earnings from the state’s energy royalties. Alaska has no statewide sales tax, and local taxes averaged just 1.68%. The corporate income tax is relatively high, however. The top rate a company can be charged is 9.4%, one of the highest in the nation. The state is also penalized for having 10 different corporate income tax brackets.

3. Nevada
> Taxes collected per capita: $2,333 (25th lowest)
> Unemployment: 9.5% (the highest)
> Corporate taxes collected per capita: $0 (tied-the least)
> Sales tax rate: 6.85% (4th highest)

Like several of the other states that are the most tax-friendly for business, Nevada has no individual income tax on earnings, dividends or interest. It is also one of just three states that have no corporate income or gross receipts tax. However, the state does have casinos, which are a nearly as lucrative as oil and gas drilling. In 2011, the state made $865 million just in taxes on gambling from casinos, roughly 5% of the state’s total revenue and far more than any other state. The state’s ability to raise revenue from gambling was threatened during the housing crisis and recession, during which the state’s budget deficit reached more than 54% of spending.

2. South Dakota
> Taxes collected per capita: $1,682 (3rd lowest)
> Unemployment: 3.8% (2nd lowest)
> Corporate taxes collected per capita: $19 (5th least)
> Sales tax rate: 4.00% (tied-7th lowest)

South Dakota has long been a major agricultural producer. In the 1980s, however, it changed its banking and tax laws to attract credit-card operations, with companies like Citigroup having a strong presence there. The state’s economy gets a boost from Federal government spending. Ellsworth Air Force Base, near Rapid City, is one of the state’s largest employers. South Dakota has no individual income tax or corporate income tax. It does, however, levy a franchise tax on financial institutions. The state’s flat sales tax of 4% is one of the lowest the country. Adding average local sales taxes, it it the ninth-lowest effective sales tax in the U.S.

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1. Wyoming
> Taxes collected per capita: $4,347 (3rd highest)
> Unemployment: 4.6% (tied-5th lowest)
> Corporate taxes collected per capita: $0 (tied-the least)
> Sales tax rate: 4.00% (tied-7th lowest)

Wyoming has had the best tax climate in the nation for each of the last three years. The state charges no individual income tax, and as a result is tied with the six other states for individual income tax policy. Additionally, the state is one of just three, alongside Nevada and South Dakota, with no corporate income tax or a gross receipts tax. Oil, gas, coal and other minerals provide much of the state’s total provided close to $1 billion a year in severance tax revenue, charged when nonrenewable resources are extracted, to the state as of 2011.

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