The Best (and Worst) States to Incorporate In (2019)

1. Wyoming

As the highest-rated state in the nation for business tax friendliness yet again, Wyoming is one of a handful of states with no income or corporate tax whatsoever. But while other states that don’t tax income choose instead to tax sales heavily, Wyoming does not.

2. Alaska

Alaska’s high total revenue per capita (mostly taken from oil and gas companies) is offset by no income taxes and no sales tax (the only state to do this), as well as a strong state economy. The downside is that America’s Last Frontier has a higher than average unemployment rate.

3. South Dakota

South Dakota has no corporate or individual income tax, enabling them to more than offset for comparatively high taxes for sales, property and unemployment insurance. South Dakota has ranked in the top three nationally each year since 2015.

4. Florida

The Sunshine State has no individual income tax, a relatively low flat corporate tax rate, and a number of tax deductions that allow nearly half of the Sunshine State’s businesses to avoid having to pay taxes altogether.

5. Montana

Montana’s strength is built on strong rankings for sales taxes and low property taxes. Combined with a flat corporate income tax rate that helps them rank in the top five, even with a progressive personal income tax structure that can reach nearly 7 percent.

6. New Hampshire

New Hampshire is the only state other than Tennessee that restricts personal income taxes to just interest and dividends, ranking ninth in the nation for individual income policy. The Granite State’s lack of a sales tax also makes it a shoppers’ destination in New England. But business owners will pay the price when they buy their home, thanks to some of the highest property taxes in the country.

7. Oregon

Oregon actually ranks low on the totem pole for its high corporate tax rate, individual income tax rate, and unemployment insurance rate. However, the state’s lack of sales tax just and comparatively low property taxes pushes the Beaver State into the top ten.

8. Utah

Unlike most of the high ranking states for their business climate, Utah does levy taxes in all major tax areas. However, the state received good marks because its taxes were not high in any particular area. Businesses should also consider local taxes in addition to state sale tax, as local tax rates can tack on up to 3.0% extra.

9. Nevada

A sizable chunk of Nevada’s revenue comes from taxes on gambling and high sales tax. In return, the Silver State doesn’t collect any individual income taxes and their property taxes are some of the lowest in the United States.

10. Indiana

Indiana is another state that draws its economic strength from taxes that are consistently low across the board. The Hoosier State is further strengthened by a business climate that a separate study proved to be one of the country’s most hospitable for racial and ethnic minorities.

41. Vermont

The taxes on actual business transactions and hiring are moderate in Vermont, with above-average rankings for sales taxes and unemployment insurance. But the price is paid when profits start coming in, via high rates for individual and corporate income, along with property taxes.

42. Ohio

Despite securing the #6 spot for unemployment insurance tax and having a decent property tax rating, Ohio repeatedly ranks at the low end of the business tax friendliness scale. The Buckeye State ranks near the bottom for it’s combination of individual income tax, state sales tax, county tax, and speciality tax.

43. Minnesota

Minnesota’s corporate and individual income tax rates are higher than all but a few states, and there are no offsetting areas of strength to make up for this.

44. Louisiana

The Pelican State has the highest combined average state and local sales tax rate in the country, coming in at 50th place and dropping it into the bottom ten overall. This high sales tax rate is due to a decrease in revenue and structural shortfalls. The combined state and local sales tax rate is now approaching 10 percent. Louisiana has fallen consistently in the rankings year after year, from 34th in 2015 to 42nd last year and now to 44th.

45. Iowa

The Hawkeye State offers relatively low sales taxes, but the tax costs involved in setting up shop and then on actual profits make it difficult to execute enough sales transactions to make this a healthy business climate.

46. Arkansas

When you tax transactions, along with individual and corporate income at very high rates, it’s tough to become an attractive business climate. Arkansas doesn’t help matters with moderately high property taxes and unemployment insurance taxes on top of it.

47. Connecticut

Connecticut could be an okay place to do business, but you wouldn’t want to live there—at least as defined by the highest-in-the-nation property taxes. The rest of the tax landscape is manageable, if not ideal, but the property tax burden is too much to overcome for many small business entrepreneurs.

48. New York

Although the Empire State actually ranks well in terms of corporate tax policies, New York has the third worst business climate in the nation, according to the Tax Foundation. This is because it retains one of the worst individual income tax policies, burdensome unemployment, and high property taxes (often double the national average in many New York counties outside of NYC).

49. California

While California doesn’t have a problem attracting large employers (Apple, Google, Hewlett-Packard, etc.), it’s continually ranked near the bottom overall. On top of its high individual income tax, the state is rated 31st for its corporate tax policy. The Golden State’s sales tax rank plummeted over the last two years due to a sizable increase in the cigarette tax.

50. New Jersey

New Jersey once again scored at or near the bottom in numerous major types of tax policies, including property taxes, individual income taxes, corporate tax, and state sales tax. The so-called Garden State has taken last place every year since 2015, ironically making it a pretty tough place to grow a small business.