Which states have the highest taxes?
March 10, 2015
It’s that time of year again: tax season. It’s natural for small business owners to consider which states are the most small business friendly when it comes to tax rates. If you could operate your business in a lower tax state, while maintaining, or growing revenues, would you move?
The Small Business Tax Index 2014: Best to Worst State Tax Systems for Entrepreneurship and Small Business released in April 2014 has all of the data you need to consider a move and some key trends:
- North Carolina has moved from 38th to 22nd place for lowering its corporate income and capital gains tax rate from 6.9% to 6.0% between 2013 and 2014.
- Arizona’s corporate income and capital gains tax rates declined from 6.968% in 2012 to 6.5% in 2014, and will be phased down to 4.9% by 2016.
- Indiana’s corporate income and capital gains tax rate fell from 8.0% in the first half of 2013 to 7.5% in the second half and is scheduled to fall to 6.5% this year.
The report also gives its recommendations for 15 states with the best and worst tax systems.
Best states for small business taxes: Nevada, South Dakota, Texas, Wyoming, Washington, Florida, Alabama, Ohio, Colorado, Alaska, Indiana, Michigan, Arizona, North Dakota, and Utah.
Worst states for small business taxes: Delaware, Wisconsin, Idaho, Rhode Island, Nebraska, Connecticut, Oregon, Vermont, Maine, New York, Iowa, Hawaii, New Jersey, Minnesota, and California.
While moving an existing business from one state to another is a monumental feat not every business can undertake, it’s helpful to know how your state’s tax rate compares to others. You might even be able to use this information to pressure your state and local governments to ease tax burdens on small businesses in your state. No matter, what it’s always advisable to have a professional help you with your small business taxes.