U.S. Business Climates & Taxes by State
Business Climate & Tax Rates
When choosing where to start or expand a business, entrepreneurs must consider a state's business climate and tax environment. Factors such as corporate taxes, regulatory policies, workforce, and economic incentives play a critical role in determining success, from Alabama to Wyoming.
At Mikel Consulting, we believe that success is achievable in any U.S. market or state. With our expert business plans, financial models, and pitch decks, we can help you succeed wherever you currently operate. Not matter whether you are a U.S. small business or startup, or an international company looking to expand, the Mikel team is ready to help!
| State | Overall Rank | Corporate Tax Rank | Individual Income Tax Rank | Sales Tax Rank | Property Tax Rank | Unemployment Insurance Tax Rank |
|---|---|---|---|---|---|---|
| Wyoming | 1 | 1 | 1 | 7 | 34 | 23 |
| South Dakota | 2 | 1 | 1 | 27 | 30 | 35 |
| Alaska | 3 | 26 | 1 | 5 | 27 | 48 |
| Florida | 4 | 11 | 1 | 19 | 13 | 4 |
| Montana | 5 | 23 | 28 | 3 | 19 | 22 |
| New Hampshire | 6 | 44 | 10 | 1 | 43 | 40 |
The Tax Foundation compiles annual rankings for U.S. business taxes by state and is a useful resource for businesses comparing state markets, whether considering whether to enter or expand in a specific U.S. region.
Alabama
Business Climate: Alabama offers a pro-business environment with low labor costs, manufacturing incentives, and a growing technology sector. Key industries include automotive manufacturing, aerospace, and healthcare.
Tax Structure: Alabama has a corporate income tax rate of 6.5% and a state sales tax of 4%, with local governments adding additional rates. Property taxes are among the lowest in the U.S market.
Alaska
Business Climate: With no state income or sales tax, Alaska appeals to businesses, particularly in the oil, tourism, and fishing industries. However, its remote location and reliance on federal funding pose challenges.
Tax Structure: While there is no corporate income tax for most businesses, oil and gas companies face significant production taxes. However, this is not a major consideration for most entrepreneurs.
Arizona
Business Climate: Arizona boasts a rapidly growing economy with strong tech, aerospace, and manufacturing sectors. It is a hub for startups due to its affordable cost of living and streamlined regulations.
Tax Structure: Corporate income tax is 4.9%, and the state sales tax is 5.6%. Property taxes are moderate.
Arkansas
Business Climate: Arkansas is known for its agriculture, retail (home to Walmart headquarters), and logistics industries. The state provides incentives for small businesses and manufacturers.
Tax Structure: Corporate tax rates range from 1% to 5.3%. Sales tax is 6.5%, with additional local taxes.
California
Business Climate: California has the largest economy in the U.S., driven by tech, entertainment, and agriculture. However, the high cost of living and stringent regulations make it challenging for small businesses.
Tax Structure: Corporate income tax is 8.84%, among the highest in the nation. The state sales tax is 7.25%, and additional local taxes can bring it above 10%.
Colorado
Business Climate: A strong entrepreneurial ecosystem with a focus on technology, energy, and tourism. Colorado is also known for its sustainability initiatives and startup culture.
Tax Structure: A flat corporate income tax of 4.4% and a sales tax of 2.9%, with local sales taxes pushing it higher.
Connecticut
Business Climate: Home to a well-educated workforce and strong financial and insurance industries. However, high business costs and taxes can be a barrier for some businesses.
Tax Structure: Corporate income tax is 7.5%, and the sales tax is 6.35%.
Delaware
Business Climate: Delaware is one of the most business-friendly states due to its legal structure, particularly for corporations. Consequently, many Fortune 500 companies choose to incorporate there.
Tax Structure: No state sales tax, but corporate franchise taxes apply. Corporate income tax is 8.7%.
Florida
Business Climate: Florida is known for its tourism, real estate, and aerospace industries. No state income tax makes it attractive for entrepreneurs, while its regulatory environment is generally business-friendly.
Tax Structure: No personal income tax, but corporate income tax is 5.5%. The state sales tax is 6%.
Georgia
Business Climate: Georgia has a robust logistics, manufacturing, and film industry, along with business incentives.
Tax Structure: Corporate income tax is 5.75%, and the sales tax is 4%, with local options increasing it.
Hawaii
Business Climate: Tourism dominates the economy, but high costs of living and geographic isolation create challenges for other industries, depending on the island.
Tax Structure: Corporate income tax ranges from 4.4% to 6.4%. Sales tax (General Excise Tax) is 4%.
Idaho
Business Climate: A growing tech sector and strong agricultural base make Idaho a good state for business, with low regulatory burdens. Its proximity to large West Coast and Canadian markets also benefit firms.
Tax Structure: Corporate income tax is 5.8%, and sales tax is 6%.
Illinois
Business Climate: A diverse economy with a strong financial and logistics hub in Chicago, but high taxes and regulatory hurdles can be challenging for come businesses.
Tax Structure: Corporate income tax is 9.5%, and the state sales tax is 6.25%.
Indiana
Business Climate: Indiana is a manufacturing and logistics powerhouse with business-friendly policies and costs.
Tax Structure: Corporate tax is 4.9%, and the sales tax is 7%.
Iowa
Business Climate: Agriculture, finance, and advanced manufacturing dominate. The state has recently reformed its tax policies to be more competitive.
Tax Structure: Corporate tax ranges from 5.5% to 8.4%. Sales tax is 6%.
Kansas
Business Climate: Kansas has a strong aviation and agriculture sector, but economic growth has been inconsistent.
Tax Structure: Corporate tax is 4% to 7%, and the sales tax is 6.5%.
Kentucky
Business Climate: Kentucky is known for its logistics industry, auto manufacturing, and bourbon production.
Tax Structure: Corporate tax is 5%, and sales tax is 6%.
Louisiana
Business Climate: Energy, shipping, and tourism drive Louisiana’s economy, but natural disasters and tax complexity can pose external challenges for businesses of varying sizes and types.
Tax Structure: Corporate tax ranges from 3.5% to 7.5%. Sales tax is 4.45% but can exceed 10% with local rates.
Maine
Business Climate: Tourism, fishing, and forestry are key industries. The state promotes sustainability and small businesses, but its comparatively small customer base can restrict local business growth.
Tax Structure: Corporate tax ranges from 3.5% to 8.93%. Sales tax is 5.5%.
Maryland
Business Climate: Historically a logistics base, now a growing hub for biotechnology and federal contracting. However, high costs can be a challenge, and growth varies by region.
Tax Structure: Corporate tax is 8.25%, and sales tax is 6%.
Massachusetts
Business Climate: A leader in education, healthcare, and technology, with a strong startup ecosystem and a large number of technical institutions, but comparatively high costs.
Tax Structure: Corporate tax is 8%, and sales tax is 6.25%.
Michigan
Business Climate: A resurgence in manufacturing, especially in the auto industry, with growing tech and startup sectors. Lower real estate prices and a large skilled worker base create opportunities in light manufacturing.
Tax Structure: Corporate tax is 6%, and sales tax is 6%.
Minnesota
Business Climate: Strong in healthcare, finance, and retail, but higher corporate taxes can present a drawback.
Tax Structure: Corporate tax is 9.8%, and sales tax is 6.875%.
Missouri
Business Climate: Affordable cost of living and strong agriculture and manufacturing sectors.
Tax Structure: Corporate tax is 4%, and sales tax is 4.225%.
Montana
Business Climate: Montana offers a strong small business environment, particularly in agriculture, tourism, and mining. It has minimal regulatory burdens and no state sales tax.
Tax Structure: Corporate income tax is 6.75%. There is no statewide sales tax, making it an attractive option.
Nebraska
Business Climate: A central logistics hub with a strong agricultural and insurance industry presence. The state has a stable economy but a higher cost of doing business.
Tax Structure: Corporate income tax ranges from 5.58% to 7.5%. The state sales tax is 5.5%.
Nevada
Business Climate: Known for tourism, entertainment, and gaming, Nevada has no corporate or personal income tax, attracting many businesses in part due to its proximity to other key West Coast markets.
Tax Structure: No corporate or personal income tax, but businesses pay a gross revenue tax. The sales tax is 6.85%.
New Hampshire
Business Climate: New Hampshire has a thriving high-tech and healthcare industry, with no personal income tax and a small but fast-growing entrepreneurial culture.
Tax Structure: No personal income or sales tax. The corporate tax rate is 7.7%.
New Jersey
Business Climate: An established financial and pharmaceutical hub, with strong links to New York and other East Coast states, but high costs and regulatory burdens can pose challenges.
Tax Structure: Corporate tax ranges from 6.5% to 11.5%. Sales tax is 6.625%.
New Mexico
Business Climate: Strong in energy, aerospace, and film production. While a growing number of business incentives exist, economic growth remains somewhat slow.
Tax Structure: Corporate tax is 4.8% to 5.9%. Sales tax (Gross Receipts Tax) is 5.125%.
New York
Business Climate: A global financial and business hub, with international recognition and a broad number of large Fortune 500 and multinational corporate HQs, but with high real estate costs and strict regulations.
Tax Structure: Corporate tax ranges from 6.5% to 7.25%. Sales tax is 4%, with additional local taxes.
North Carolina
Business Climate: A leader in banking, technology, and manufacturing, with a growing economy and business-friendly policies that also benefit small businesses and startups.
Tax Structure: Corporate tax is 2.5%, one of the lowest in the nation. Sales tax is 4.75%.
North Dakota
Business Climate: Energy and agriculture currently dominate the state economy. Business costs are low, but economic dependence on oil is a current risk for some operators.
Tax Structure: Corporate tax is 1.41% to 4.31%. Sales tax is 5%.
Ohio
Business Climate: An increasingly diverse economy that is expanding beyond agriculture, with strengths in areas like manufacturing, healthcare, and technology.
Tax Structure: No corporate income tax, but a gross receipts tax applies. Sales tax is 5.75%.
Oklahoma
Business Climate: As with Ohio, Oklahoma is increasingly diversifying and repositioning as a low-cost state with strengths in energy, aerospace, and manufacturing.
Tax Structure: Corporate tax is 4%. Sales tax is 4.5%.
Oregon
Business Climate: A leader in sustainability, technology, and outdoor industries, with a large tourism base and no state sales tax. The state is also a progressive leader in healthcare and wellness fields.
Tax Structure: No state sales tax. Corporate tax ranges from 6.6% to 7.6%.
Pennsylvania
Business Climate: A highly diverse economy with key industries in healthcare, education, and manufacturing.
Tax Structure: Corporate tax is 8.99%. Sales tax is 6%.
Rhode Island
Business Climate: Geographically small, but increasingly strong in areas like healthcare, education, and tourism.
Tax Structure: Corporate tax is 7%. Sales tax is 7%.
South Carolina
Business Climate: A key Southern U.S. manufacturing and logistics hub with relatively low business costs.
Tax Structure: Corporate tax is 5%. Sales tax is 6%.
South Dakota
Business Climate: No corporate or personal income tax makes it appealing for businesses, particularly in finance and agriculture, the latter of which has played a key role in the state’s development.
Tax Structure: No corporate or personal income tax. Sales tax is 4.5%.
Tennessee
Business Climate: A booming economy with strong healthcare, logistics, and music industries. No personal income tax makes it a positive environment for sole proprietors and small businesses.
Tax Structure: No personal income tax. Corporate tax is 6.5%. Sales tax is 7%.
Texas
Business Climate: A top business state with no personal income tax and a strong energy and technology sector, making it a leader in many sectors and home to many large multinationals.
Tax Structure: No corporate or personal income tax. Businesses pay a franchise tax. Sales tax is 6.25%.
Utah
Business Climate: A rapidly growing economy, with growing strengths in areas like tech and healthcare.
Tax Structure: Corporate tax is 4.85%. Sales tax is 4.85%.
Vermont
Business Climate: Small, but well-connected to other states and strong in agriculture, tourism, and sustainability.
Tax Structure: Corporate tax is 6% to 8.5%. Sales tax is 6%.
Virginia
Business Climate: A major tech and leading U.S. defense contractor hub with a strong business environment.
Tax Structure: Corporate tax is 6%. Sales tax is 4.3%.
Washington
Business Climate: Home to major tech and aerospace companies, with no corporate income tax.
Tax Structure: No corporate or personal income tax. Businesses pay a gross receipts tax. Sales tax is 6.5%.
West Virginia
Business Climate: Coal, energy, and tourism drive the state economy, which has faced growing pressure to diversify, creating corresponding opportunities for innovative startups and small businesses.
Tax Structure: Corporate tax is 6.5%. Sales tax is 6%.
Wisconsin
Business Climate: Manufacturing and agriculture remain key industries within the state, which is also expanding into areas like agribusiness technologies.
Tax Structure: Corporate tax is 7.9%. Sales tax is 5%.
Wyoming
Business Climate: One of the most business-friendly states on a tax basis, with no corporate or personal income tax.
Tax Structure: No corporate or personal income tax. Sales tax is 4%.
Note: State tax rates and business environments are subject to change.
No matter where in the business development process you are, which industry you want to excel in, or which state your company operates in, Mikel Consulting is ready to help. With our custom-tailored business plans and financial models, our expert team can help you succeed, no matter which U.S. state is home. Contact us today to get started!
