NEW REPORT: SBE Council’s “Small Business Tax Index 2016” Ranks State Tax Systems

By at 28 June, 2016, 9:00 am

Taxes concept

The New Budget Year Begins: Where Does Your State Rank?

For Immediate Release  

Washington, D.C. – With 46 of the 50 states beginning new fiscal years on July 1, the Small Business & Entrepreneurship Council (SBE Council) today published the “Small Business Tax Index 2016: Best to Worst State Tax Systems for Entrepreneurship and Small Business.” The study ranks the 50 states according to the costs of their tax systems for entrepreneurship and small business.

Access the Small Business Tax Index 2016 interactive map here.

Raymond J. Keating, chief economist for SBE Council and author of the report, said: “With most states kicking off their new budget years on July 1, the biggest question from the perspective of entrepreneurs, small businesses and investors is: How heavy is the tax burden in our state? While assorted services provided by state and local government, such as law enforcement, the courts, education and road maintenance, are very important, let’s face it, the biggest impact in many states that government usually has on small business arguably is a burdensome one. That is, how heavy are the governmental burdens placed on business and investment, especially taxes?”

SBE Council’s “Small Business Tax Index 2016” pulls together 25 different tax measures, and combines those into one tax score that allows the 50 states to be compared and ranked. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

According to the “Small Business Tax Index 2016,” the best ranking state tax systems include: 1) South Dakota, 2) Nevada, 3) Texas, 4) Wyoming, 5) Washington, 6) Florida, 7) Alabama, 8) Ohio, 9) Colorado, 10) Alaska, 11) North Carolina, 12) Indiana, 13) Arizona, 14) Michigan, and 15) Utah.

Meanwhile, those at the bottom include: 40) Nebraska, 41) Connecticut, 42) Maine, 43) Oregon, 44) Vermont, 45) New York, 46) Hawaii, 47) Iowa, 48) Minnesota, 49) New Jersey, and 50) California.

11 States Have Improved Their Tax Climates

According to the report there is some good news: “Consider that compared to last year’s index, 11 states have improved their tax climates by reducing their personal or corporate income tax rates, or eliminating their death tax.”

In the report, Keating writes about the importance of tax policy and the need for states to remain competitive in this regard to encourage investment and entrepreneurship: “When it comes to state and local taxes – as well as levies at the federal level – the direction that policy should be pointed in is clear. Keep the overall tax burden low. Preferably, do no tax income at all. If a state ranks poorly on the ‘Small Business Tax Index,’ then tiny changes will make little difference. While small steps are better than doing nothing and can stoke momentum for additional reform, substantial reforms and reductions will help poor-ranking states make huge leaps in their competitive standing. In the end, if the tax burden is light on economic risk taking, then that will be good news for entrepreneurship, small business growth, investment, economic and income growth and job creation in each state.”

The 2016 “Small Business Tax Index” Rankings:

Rank State SBTI Score
1 South Dakota 12.114
2 Nevada 12.197
3 Texas 12.395
4 Wyoming 14.444
5 Washington 18.846
6 Florida 23.581
7 Alabama 30.279
8 Ohio 32.159
9 Colorado 32.607
10 Alaska 34.622
11 North Carolina 36.099
12 Indiana 36.384
13 Arizona 36.417
14 Michigan 36.704
15 Utah 37.717
16 North Dakota 38.877
17 Oklahoma 39.943
18 Mississippi 40.492
19 Tennessee 40.867
20 South Carolina 41.233
21 Virginia 41.461
22 Louisiana 42.413
23 Missouri 43.038
24 Kansas 45.128
25 New Mexico 45.190
26 Georgia 45.614
27 West Virginia 46.907
28 Pennsylvania 47.346
29 Illinois 47.419
30 Montana 48.762
31 Massachusetts 49.210
32 New Hampshire 51.363
33 Rhode Island 54.442
34 Idaho 54.548
35 Delaware 54.583
36 Wisconsin 54.746
37 Arkansas 55.903
38 Kentucky 57.251
39 Maryland 57.344
40 Nebraska 57.933
41 Connecticut 65.467
42 Maine 65.492
43 Oregon 66.979
44 Vermont 67.359
45 New York 67.613
46 Hawaii 69.335
47 Iowa 70.423
48 Minnesota 77.614
49 New Jersey 79.359
50 California 84.547


To read the SBE Council’s “Small Business Tax Index 2016” report click here.

CONTACT:  Raymond Keating,

631-909-1122 or 703-242-5840

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For nearly 25 years, SBE Council has advanced key policies and initiatives to strengthen the ecosystem for startups and small business success. To learn more, visit SBE Council’s website: Follow us on Twitter: @SBECouncil

# # #

News and Media Releases