PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

“Small Business Tax Index 2017” Ranks the States from Best to Worst

By at 21 June, 2017, 10:00 am

FOR IMMEDIATE RELEASE 

Contact: Raymond J. Keating

631-909-1122 or rkeating@sbecouncil.org

How Small Business Friendly is Your State?

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 2017: 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.

Raymond J. Keating, chief economist for SBE Council and author of the report, said: “While there is much discussion in Congress and the Trump administration about making the federal tax system more competitive, these issues obviously reach down to state and local levels as well. That’s the focus of SBE Council’s ‘Small Business Tax Index 2017.’ Specifically, which states are among the least burdensome in terms of taxes, and which inflict the weightiest burdens on small businesses?”

For an interactive U.S. map of “Small Business Tax Index 2017” results, please click here.

SBE Council’s “Small Business Tax Index 2017” pulls together 26 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 2017,” the 10 best state tax systems are: 1) Nevada, 2) Texas, 3) South Dakota, 4) Wyoming, 5) Washington, 6) Florida, 7) Alabama, 8) Ohio, 9) North Carolina, and 10) Colorado.

The bottom 10 include: 41) Connecticut, 42) Oregon, 43) New York, 44) Vermont, 45) Hawaii, 46) Iowa, 47) Minnesota, 48) Maine, 49) New Jersey, and 50) California.

Since last year’s report, several states have made significant tax changes.

States that have improved their tax environments

Five states – Arizona, Indiana, New Hampshire, New Mexico, and North Carolina – have improved their tax climates by reducing their personal or corporate income tax rates. Other states – such as New Mexico and Tennessee – have scheduled changes that will improve their tax climates for entrepreneurship, business and investment in coming years. Unfortunately, all of the news is not good. Kansas, Maine and New York have made tax changes that are negatives.

Keating explained: “In the end, if the state’s tax burden is light on economic risk taking, then that will be good news for entrepreneurship, businesses, investment, economic and income growth, and job creation in each state.” In fact, this year’s report includes an “Economics of Taxation” section that provides a look at assorted studies on the impact of taxation, and they support the economic foundation upon which this study largely rests.

This year’s full “Small Business Tax Index” rankings are as follows:

Rank State SBTI Score
1 Nevada 12.670
2 Texas 12.745
3 South Dakota 13.626
4 Wyoming 14.068
5 Washington 19.295
6 Florida 23.948
7 Alabama 30.440
8 Ohio 32.199
9 North Carolina 33.817
10 Colorado 33.854
11 Arizona 34.981
12 Alaska 35.386
13 Michigan 36.110
14 Indiana 36.358
15 Utah 39.021
16 North Dakota 40.254
17 Mississippi 40.418
18 South Carolina 40.829
19 Oklahoma 41.597
20 Louisiana 42.727
21 Missouri 42.854
22 Virginia 42.878
23 New Mexico 43.341
24 Tennessee 43.931
25 Illinois 47.292
26 Georgia 47.488
27 West Virginia 48.160
28 Kansas 48.767
29 Pennsylvania 49.005
30 Montana 49.296
31 Massachusetts 49.627
32 New Hampshire 51.297
33 Wisconsin 53.544
34 Rhode Island 53.693
35 Idaho 54.491
36 Delaware 54.877
37 Arkansas 56.608
38 Maryland 57.808
39 Nebraska 58.674
40 Kentucky 60.060
41 Connecticut 65.898
42 Oregon 67.509
43 New York 68.144
44 Vermont 68.528
45 Hawaii 68.621
46 Iowa 72.264
47 Minnesota 77.288
48 Maine 77.349
49 New Jersey 80.901
50 California 85.306

A PDF Copy of Small Business Tax Index 2017 can be accessed here.

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 worked to successfully implement a range of policy and private sector initiatives to strengthen the ecosystem for startups and small business growth. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil

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