Wyoming tops first State Tax Competitiveness Index

November 11, 2024
Wyoming_Cattle_Drive_near_Pinedale_WY_USFWS_14963962303_WikipediaCC

Wyoming is not just wide open for these cowboys driving cattle in the state's Upper Green River Valley. It also is the most tax competitive state in the country. (Photo Credit: Theo Stein/U.S. Fish & Wildlife Service)

The Tax Foundation’s annual State Business Tax Climate Index is no more. But if you’re a fan of the tax policy nonprofit’s assessment of the country’s various tax structures, don’t fret.

The Tax Foundation has released its State Tax Competitiveness Index, which is the same analysis with a new name. The rebranding, according to the Washington, D.C.-based group, better reflects the original index’s focus on states’ overall tax competitiveness, not just the business tax climate.

Best state tax environments: So which state is atop the inaugural State Tax Competitiveness Index?

Yippee-ki-yay Cowboy State! Wyoming is again the winner. It was Number 1 in last year’s final State Business Tax Climate Index.

Joining Wyoming in the top 10, in order from 2 to 10, are South Dakota, Alaska, Florida, Montana, New Hampshire, Texas, Tennessee, North Dakota, Indiana.

The Tax Foundation notes that each of the 10 top states manage to operate without a major tax.

South Dakota and Wyoming have no corporate or individual income tax. Alaska has no individual income or state-level sales tax. Florida and Texas have no individual income tax. New Hampshire and Montana have no sales tax.

New Hampshire does impose a tax on interest and dividend income, but that has been phasing out for the last few years. The 2024 tax rate is 4 percent, and that tax will be eliminated on Jan. 1, 2025.

And, as the Tax Foundation notes, a state still can rank in the top 10 even with major taxes on their books. Number 10 Indiana, for example, levies all the major tax types. So do Idaho, North Carolina, Missouri, Arizona, Michigan, and Utah, which ranked 11 to 16 in the new list.

Bringing up the back: As for the less-than-tax-competitive states, the Tax Foundation says they tend to share a number of tax afflictions, notably complex, nonneutral taxes with comparatively high rates.

The 10 lowest-ranked, or worst, states in this year’s Tax Competitive Index also share 10 tend to have a number of issues in common, such as complex, nonneutral taxes with comparatively high rates.

So which states rank 41 to 50? They are Massachusetts, Hawaii, Vermont, Minnesota, Washington, Maryland, Connecticut, California, New Jersey, and New York.

The Tax Foundation map below gives you a visual overview of where all U.S. states rank in the new Index. When you move your cursor over the map, details on each state’s tax ranking appears.


   
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