2019 State Business Tax Climate Index
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October 1, 2018

The Tax Foundation eleased its findings on the 2019 Business Tax Climate . Once again, New Jersey ranked overall number 50 indicating that it is the most heavily taxed state. The Garden State has had some of the highest property tax burdens in the country, recently implemented the second highest-rate corporate income tax in the country, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes. By category, New Jersey ranked number 47 for its corporate tax rate, 50 for its individual income tax rate, 45 for its sales tax rate, 48 for its property tax rate, and 32 for its unemployment tax rate. 

Pennsylvania’s overall rank was number 34. By category, Pennsylvania ranked number 43 for its corporate tax rate, 18 for its individual income tax rate, 21 for its sales tax rate, 34 for its property tax rate and 46 for its unemployment tax rate.

The Tax Foundation’s State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems and provides a road map for improvement.

The 10 best states in this year’s Index are:
  1. Wyoming
  2. Alaska
  3. South Dakota
  4. Florida
  5. Montana
  6. New Hampshire
  7. Oregon
  8. Utah
  9. Nevada
  10. Indiana

As per the Tax Foundation, the absence of a major tax is a common factor among many of the top 10 states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax. Wyoming, Nevada, and South Dakota have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire, Montana, and Oregon have no sales tax.

This does not mean, however, that a state cannot rank in the top 10 while still levying all the major taxes. Indiana and Utah, for example, levy all of the major tax types, but do so with low rates on broad bases.

The 10 lowest-ranked, or worst, states in this year’s Index are:
  1. Vermont
  2. Ohio
  3. Minnesota
  4. Louisiana
  5. Iowa
  6. Arkansas
  7. Connecticut
  8. New York
  9. California
  10. New Jersey

The states in the bottom 10 tend to have a number of afflictions in common: complex, nonneutral taxes with comparatively high rates. 

Although many taxpayers should realize savings at the federal level due to the Tax Cuts and Jobs Act (TCJA), state taxes generally remain the same. 

Feel free to call any member of our team at 610-828-1900 with questions. You can also contact me at Marty.McCarthy@MCC-CPAs.com . We are always happy to help.
Martin C. McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company, PC

Disclaimer This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).