Bringing the Economy Home

Idaho Ranks 21st in the Annual State Business Tax Climate Index

According to the Tax Foundation’s annual report on state business tax climate, Idaho ranks in the middle of the pack.  The Foundation looks at corporate, individual income, sales, property and unemployment insurance tax rates to compare states.  You can read more about the methodology here.

Click to enlarge / The Tax Foundation

Idaho ranks 21st among states with a business friendly tax climate.

Idaho ranks 21st this year.  The state received high marks for its property tax system, Idaho is number two behind New Mexico in this category.  Idaho is in the middle of the pack when comparing corporate, individual and sales tax rates.  Idaho’s worst score came from its unemployment insurance tax.  The state ranked 48th in this category.  Here’s what the Tax Foundation wrote:

“The states with the worst UI taxes are Rhode Island, Massachusetts, Idaho, Kentucky, and New York. These states tend to have rate structures with high minimum and maximum rates and wage bases above the federal level. Moreover, they have more complicated experience formulas and charging methods, and they have added benefits and surtaxes to their systems.”

Here are the top ten states:

  1. Wyoming
  2. South Dakota
  3. Nevada
  4. Alaska
  5. Florida
  6. New Hampshire
  7. Washington
  8. Montana
  9. Texas
  10. Utah

“It is obvious that the absence of a major tax is a dominant factor in vaulting many of these 10 states to the top of the rankings. 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 tax, the individual income tax, or the sales tax. Wyoming, Nevada and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.

The lesson is simple: a state that raises sufficient revenue without one of the major taxes will, all things being equal, have an advantage over those states that levy every tax in the state tax collector’s arsenal.”

The Tax Foundation is a nonpartisan educational organization. Each year it publishes a report looking at the tax trends across the country. The organization says its annual State Business Tax Climate Index is intended to let business leaders, policymakers and taxpayers compare tax systems across state lines.

Does this ranking impact your business decisions?  Or where you’d like to live?


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