As the primary source of revenue for government at the state, local, and federal levels, taxes are a certainty. But the ways in which tax codes are drawn up and implemented are not, and variations in tax policy at the state-level can have meaningful economic implications.
According to the latest data from the Bureau of Economic Analysis and the Bureau of Labor Statistics, the private sector accounts for nearly 89% of gross domestic product and over 87% of employment in the United States. Indeed, businesses, both large and small, are the backbone of the U.S. economy. But while the business climate in a given state can be impacted by a number of factors that are largely outside the control of policymakers, the tax code is not one of them.
Ultimately, taxes are a financial burden on both consumers and businesses. Income taxes reduce consumer budgets, property taxes impact commercial entities, sales taxes raise prices for goods and services, and corporate taxes diminish profits. But when tax policies are designed or modified at the state level to minimize these burdens, the private sector often benefits.
By incentivizing entrepreneurship and bringing in new businesses, state-level tax codes can stimulate employment growth and economic expansion. According to a 2024 study from the Tax Foundation, a non-profit tax policy advocacy group, some states have implemented more business-friendly tax policies than others.
Using data from the Tax Foundation’s report State Business Tax Climate Index, 24/7 Wall St. identified the states with the most business-friendly tax climates. We ranked all 50 states based on a weighted index score, as calculated by the Tax Foundation, from the least business friendly, to the most. Index scores take into account sales tax rates, property tax rates, unemployment insurance taxes, and the structures of both individual and corporate income taxes. The rankings for each tax category are also sourced from the Tax Foundation and may include ties between states. Supplemental data on sales tax rates and effective property tax rates are also from the Tax Foundation and are current as of 2025 and 2023, respectively, the most recent years of available data. A full explanation of the methods and metrics used in this ranking is available here.
The highest ranking states on this list are disproportionately concentrated in the West, while many of the lowest ranking states are in the Northeast.
The most heavily weighted component of the index used to calculate this ranking is the individual income tax rate. Income tax rates impact the competitive climate of a state’s private sector because many businesses, including partnerships and sole proprietorships, report revenue through individual income tax filings. Additionally, income tax rates impact the labor pool, as lower rates offer a greater incentive for workers to relocate. Perhaps not surprisingly, six of the seven highest ranking states on this list do not levy an individual income tax.
These are the states with the most business-friendly tax climates.
Why It Matters

State-level tax policy is only one of many factors that can contribute to a favorable business climate. But unlike many other considerations — such as the presence of natural resources, infrastructure, and access to a skilled labor pool — tax policy is fully within the government’s control, and can quickly improve a given state’s competitive advantage in the private sector. Both directly and indirectly, state-level tax codes can be optimized to favor business interests and foster economic growth.
50. New Jersey

- State corporate tax rank: 3rd least favorable for business of the 50 states
- State income tax rank: 3rd least favorable for business of the 50 states
- State sales tax rate: 6.6% (8th least favorable for business of the 50 states)
- State and local effective property tax rate: 1.8% (7th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 14th least favorable for business of the 50 states
49. New York

- State corporate tax rank: 24th most favorable for business of the 50 states
- State income tax rank: the least favorable for business of the 50 states
- State sales tax rate: 4.0% (9th least favorable for business of the 50 states)
- State and local effective property tax rate: 1.3% (2nd least favorable for business of the 50 states)
- State unemployment insurance tax rank: 12th least favorable for business of the 50 states
48. California

- State corporate tax rank: 6th least favorable for business of the 50 states
- State income tax rank: 2nd least favorable for business of the 50 states
- State sales tax rate: 7.3% (4th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.7% (22nd most favorable for business of the 50 states)
- State unemployment insurance tax rank: 21st least favorable for business of the 50 states
47. Connecticut

- State corporate tax rank: 21st least favorable for business of the 50 states
- State income tax rank: 5th least favorable for business of the 50 states
- State sales tax rate: 6.4% (23rd most favorable for business of the 50 states)
- State and local effective property tax rate: 1.5% (the least favorable for business of the 50 states)
- State unemployment insurance tax rank: 25th least favorable for business of the 50 states
46. Massachusetts

- State corporate tax rank: 15th least favorable for business of the 50 states
- State income tax rank: 7th least favorable for business of the 50 states
- State sales tax rate: 6.3% (14th most favorable for business of the 50 states)
- State and local effective property tax rate: 1.0% (4th least favorable for business of the 50 states)
- State unemployment insurance tax rank: the least favorable for business of the 50 states
45. Maryland

- State corporate tax rank: 18th least favorable for business of the 50 states
- State income tax rank: 6th least favorable for business of the 50 states
- State sales tax rate: 6.0% (17th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.9% (9th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 8th least favorable for business of the 50 states
44. Minnesota

- State corporate tax rank: 4th least favorable for business of the 50 states
- State income tax rank: 9th least favorable for business of the 50 states
- State sales tax rate: 6.9% (20th least favorable for business of the 50 states)
- State and local effective property tax rate: 1.0% (19th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 20th least favorable for business of the 50 states
43. Vermont

- State corporate tax rank: 13th least favorable for business of the 50 states
- State income tax rank: 12th least favorable for business of the 50 states
- State sales tax rate: 6.0% (17th most favorable for business of the 50 states)
- State and local effective property tax rate: 1.4% (3rd least favorable for business of the 50 states)
- State unemployment insurance tax rank: 18th most favorable for business of the 50 states
42. Hawaii

- State corporate tax rank: 18th most favorable for business of the 50 states
- State income tax rank: 4th least favorable for business of the 50 states
- State sales tax rate: 4.0% (25th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.3% (20th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 10th least favorable for business of the 50 states
41. Rhode Island

- State corporate tax rank: 11th least favorable for business of the 50 states
- State income tax rank: 20th least favorable for business of the 50 states
- State sales tax rate: 7.0% (22nd most favorable for business of the 50 states)
- State and local effective property tax rate: 1.1% (16th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 2nd least favorable for business of the 50 states
40. Louisiana

- State corporate tax rank: 17th least favorable for business of the 50 states
- State income tax rank: 22nd least favorable for business of the 50 states
- State sales tax rate: 5.0% (3rd least favorable for business of the 50 states)
- State and local effective property tax rate: 0.6% (21st most favorable for business of the 50 states)
- State unemployment insurance tax rank: 13th most favorable for business of the 50 states
39. Alabama

- State corporate tax rank: 19th most favorable for business of the 50 states
- State income tax rank: 18th least favorable for business of the 50 states
- State sales tax rate: 4.0% (the least favorable for business of the 50 states)
- State and local effective property tax rate: 0.4% (17th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 15th most favorable for business of the 50 states
38. Arkansas

- State corporate tax rank: 23rd least favorable for business of the 50 states
- State income tax rank: 14th least favorable for business of the 50 states
- State sales tax rate: 6.5% (7th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (24th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 24th most favorable for business of the 50 states
37. Illinois

- State corporate tax rank: 8th least favorable for business of the 50 states
- State income tax rank: 14th most favorable for business of the 50 states
- State sales tax rate: 6.3% (12th least favorable for business of the 50 states)
- State and local effective property tax rate: 1.8% (6th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 9th least favorable for business of the 50 states
36. Ohio

- State corporate tax rank: 12th least favorable for business of the 50 states
- State income tax rank: 11th least favorable for business of the 50 states
- State sales tax rate: 5.8% (15th least favorable for business of the 50 states)
- State and local effective property tax rate: 1.3% (5th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 12th most favorable for business of the 50 states
35. Washington

- State corporate tax rank: 14th least favorable for business of the 50 states
- State income tax rank: 8th most favorable for business of the 50 states
- State sales tax rate: 6.5% (2nd least favorable for business of the 50 states)
- State and local effective property tax rate: 0.7% (25th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 19th most favorable for business of the 50 states
34. Maine

- State corporate tax rank: 16th least favorable for business of the 50 states
- State income tax rank: 25th least favorable for business of the 50 states
- State sales tax rate: 5.5% (8th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.9% (5th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 22nd least favorable for business of the 50 states
33. Iowa

- State corporate tax rank: 22nd least favorable for business of the 50 states
- State income tax rank: 22nd most favorable for business of the 50 states
- State sales tax rate: 6.0% (15th most favorable for business of the 50 states)
- State and local effective property tax rate: 1.2% (10th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 19th least favorable for business of the 50 states
32. Georgia

- State corporate tax rank: 9th most favorable for business of the 50 states
- State income tax rank: 16th least favorable for business of the 50 states
- State sales tax rate: 4.0% (23rd least favorable for business of the 50 states)
- State and local effective property tax rate: 0.8% (23rd least favorable for business of the 50 states)
- State unemployment insurance tax rank: 17th least favorable for business of the 50 states
31. Pennsylvania

- State corporate tax rank: 10th least favorable for business of the 50 states
- State income tax rank: 23rd most favorable for business of the 50 states
- State sales tax rate: 6.0% (16th most favorable for business of the 50 states)
- State and local effective property tax rate: 1.2% (14th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 21st most favorable for business of the 50 states
30. Nebraska

- State corporate tax rank: 20th least favorable for business of the 50 states
- State income tax rank: 19th least favorable for business of the 50 states
- State sales tax rate: 5.5% (9th most favorable for business of the 50 states)
- State and local effective property tax rate: 1.4% (11th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 9th most favorable for business of the 50 states
29. South Carolina

- State corporate tax rank: 6th most favorable for business of the 50 states
- State income tax rank: 21st least favorable for business of the 50 states
- State sales tax rate: 6.0% (18th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (15th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 24th least favorable for business of the 50 states
28. Oregon

- State corporate tax rank: 2nd least favorable for business of the 50 states
- State income tax rank: 10th least favorable for business of the 50 states
- State sales tax rate: 0.0% (4th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.8% (20th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 13th least favorable for business of the 50 states
27. Colorado

- State corporate tax rank: 7th most favorable for business of the 50 states
- State income tax rank: 13th most favorable for business of the 50 states
- State sales tax rate: 2.9% (11th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (13th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 7th least favorable for business of the 50 states
26. Kansas

- State corporate tax rank: 21st most favorable for business of the 50 states
- State income tax rank: 24th least favorable for business of the 50 states
- State sales tax rate: 6.5% (22nd least favorable for business of the 50 states)
- State and local effective property tax rate: 1.2% (18th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 16th most favorable for business of the 50 states
25. Virginia

- State corporate tax rank: 16th most favorable for business of the 50 states
- State income tax rank: 17th least favorable for business of the 50 states
- State sales tax rate: 5.3% (10th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.8% (22nd least favorable for business of the 50 states)
- State unemployment insurance tax rank: 15th least favorable for business of the 50 states
24. Wisconsin

- State corporate tax rank: 19th least favorable for business of the 50 states
- State income tax rank: 13th least favorable for business of the 50 states
- State sales tax rate: 5.0% (6th most favorable for business of the 50 states)
- State and local effective property tax rate: 1.3% (16th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 23rd least favorable for business of the 50 states
23. New Mexico

- State corporate tax rank: 13th most favorable for business of the 50 states
- State income tax rank: 15th least favorable for business of the 50 states
- State sales tax rate: 4.9% (16th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.6% (the most favorable for business of the 50 states)
- State unemployment insurance tax rank: 11th most favorable for business of the 50 states
22. West Virginia

- State corporate tax rank: 17th most favorable for business of the 50 states
- State income tax rank: 25th most favorable for business of the 50 states
- State sales tax rate: 6.0% (24th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (10th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 18th least favorable for business of the 50 states
21. Delaware

- State corporate tax rank: the least favorable for business of the 50 states
- State income tax rank: 8th least favorable for business of the 50 states
- State sales tax rate: 0.0% (2nd most favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (6th most favorable for business of the 50 states)
- State unemployment insurance tax rank: the most favorable for business of the 50 states
20. Mississippi

- State corporate tax rank: 8th most favorable for business of the 50 states
- State income tax rank: 19th most favorable for business of the 50 states
- State sales tax rate: 7.0% (25th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.6% (14th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 5th most favorable for business of the 50 states
19. Oklahoma

- State corporate tax rank: 4th most favorable for business of the 50 states
- State income tax rank: 24th most favorable for business of the 50 states
- State sales tax rate: 4.5% (13th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.8% (15th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 2nd most favorable for business of the 50 states
18. Kentucky

- State corporate tax rank: 15th most favorable for business of the 50 states
- State income tax rank: 18th most favorable for business of the 50 states
- State sales tax rate: 6.0% (13th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.7% (23rd most favorable for business of the 50 states)
- State unemployment insurance tax rank: 5th least favorable for business of the 50 states
17. North Dakota

- State corporate tax rank: 10th most favorable for business of the 50 states
- State income tax rank: 21st most favorable for business of the 50 states
- State sales tax rate: 5.0% (19th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.9% (7th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 14th most favorable for business of the 50 states
16. Idaho

- State corporate tax rank: 24th least favorable for business of the 50 states
- State income tax rank: 17th most favorable for business of the 50 states
- State sales tax rate: 6.0% (11th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (2nd most favorable for business of the 50 states)
- State unemployment insurance tax rank: 4th least favorable for business of the 50 states
15. Tennessee

- State corporate tax rank: 9th least favorable for business of the 50 states
- State income tax rank: 6th most favorable for business of the 50 states
- State sales tax rate: 7.0% (5th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (18th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 20th most favorable for business of the 50 states
14. Arizona

- State corporate tax rank: 22nd most favorable for business of the 50 states
- State income tax rank: 9th most favorable for business of the 50 states
- State sales tax rate: 5.6% (10th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.4% (11th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 10th most favorable for business of the 50 states
13. Texas

- State corporate tax rank: 5th least favorable for business of the 50 states
- State income tax rank: 7th most favorable for business of the 50 states
- State sales tax rate: 6.3% (14th least favorable for business of the 50 states)
- State and local effective property tax rate: 1.4% (12th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 8th most favorable for business of the 50 states
12. Missouri

- State corporate tax rank: 3rd most favorable for business of the 50 states
- State income tax rank: 20th most favorable for business of the 50 states
- State sales tax rate: 4.2% (21st least favorable for business of the 50 states)
- State and local effective property tax rate: 0.9% (9th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 3rd most favorable for business of the 50 states
11. Michigan

- State corporate tax rank: 20th most favorable for business of the 50 states
- State income tax rank: 12th most favorable for business of the 50 states
- State sales tax rate: 6.0% (12th most favorable for business of the 50 states)
- State and local effective property tax rate: 1.1% (25th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 7th most favorable for business of the 50 states
10. Indiana

- State corporate tax rank: 12th most favorable for business of the 50 states
- State income tax rank: 16th most favorable for business of the 50 states
- State sales tax rate: 7.0% (18th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.8% (3rd most favorable for business of the 50 states)
- State unemployment insurance tax rank: 25th most favorable for business of the 50 states
9. North Carolina

- State corporate tax rank: 5th most favorable for business of the 50 states
- State income tax rank: 15th most favorable for business of the 50 states
- State sales tax rate: 4.8% (20th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.6% (12th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 6th most favorable for business of the 50 states
8. Utah

- State corporate tax rank: 14th most favorable for business of the 50 states
- State income tax rank: 11th most favorable for business of the 50 states
- State sales tax rate: 6.1% (21st most favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (8th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 17th most favorable for business of the 50 states
7. Nevada

- State corporate tax rank: 25th most favorable for business of the 50 states
- State income tax rank: 5th most favorable for business of the 50 states
- State sales tax rate: 6.9% (6th least favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (4th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 6th least favorable for business of the 50 states
6. New Hampshire

- State corporate tax rank: 7th least favorable for business of the 50 states
- State income tax rank: 10th most favorable for business of the 50 states
- State sales tax rate: 0.0% (the most favorable for business of the 50 states)
- State and local effective property tax rate: 1.4% (8th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 11th least favorable for business of the 50 states
5. Montana

- State corporate tax rank: 23rd most favorable for business of the 50 states
- State income tax rank: 23rd least favorable for business of the 50 states
- State sales tax rate: 0.0% (3rd most favorable for business of the 50 states)
- State and local effective property tax rate: 0.6% (19th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 22nd most favorable for business of the 50 states
4. Florida

- State corporate tax rank: 11th most favorable for business of the 50 states
- State income tax rank: the most favorable for business of the 50 states
- State sales tax rate: 6.0% (19th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.7% (13th most favorable for business of the 50 states)
- State unemployment insurance tax rank: 4th most favorable for business of the 50 states
3. Alaska

- State corporate tax rank: 25th least favorable for business of the 50 states
- State income tax rank: the most favorable for business of the 50 states
- State sales tax rate: 0.0% (5th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.9% (24th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 3rd least favorable for business of the 50 states
2. South Dakota

- State corporate tax rank: the most favorable for business of the 50 states
- State income tax rank: the most favorable for business of the 50 states
- State sales tax rate: 4.2% (24th least favorable for business of the 50 states)
- State and local effective property tax rate: 1.0% (21st least favorable for business of the 50 states)
- State unemployment insurance tax rank: 16th least favorable for business of the 50 states
1. Wyoming

- State corporate tax rank: the most favorable for business of the 50 states
- State income tax rank: the most favorable for business of the 50 states
- State sales tax rate: 4.0% (7th most favorable for business of the 50 states)
- State and local effective property tax rate: 0.5% (17th least favorable for business of the 50 states)
- State unemployment insurance tax rank: 23rd most favorable for business of the 50 states