The 10 States Most Friendly To Business

united states map

States are facing budget shortfalls as revenue from the federal government is cut and their tax base’s suffer from nation-wide unemployment woes. But, there are some shining stars in the union that can still keep taxes low and attractive for businesses.

The U.S. Chamber of Congress has ranked the top states for taxes and regulations. It took into account each states’ cost of living, local tax burden, and budget outlook. The organisation is a lobbying group for big businesses.

Friendly states are those with their fiscal houses in order, even if their economies aren’t that huge. Many of them are states whose economy is dependent on one sector and are looking to diversify. Look for that in states like Wyoming and South Dakota.

#10 Utah

Utah plans to keep taxes low in the face of rising unemployment by streamlining government operations.

From the report:

The Beehive State recently launched an advisory committee to optimise its state government... the committee made over 50 recommendations, including calling for review of regulatory processes that impact businesses in the state. Greater coordination between regulatory agencies was identified as a way to maintain a business friendly environment and avoid harmful duplication of services and unneeded red-tape.

Facts about Utah from the report:

  • The state has a $400 million deficit-small by state standards- so they haven't had to raise taxes.

Source: The U.S. Chamber of Commerce

#9 North Dakota

North Dakota largely avoided the recession, so its tax base is still in tact. Meanwhile, the state is trying to become more attractive to those looking to invest in its energy sector.

From the report:

The Peace Garden State recently passed a ballot-initiated measure changing the state constitution to create a long-term savings Legacy Fund for oil extraction tax revenue, while other oil tax revenues were diverted to fund road improvements in heavy drilling areas and to property tax relief.

Facts about North Dakota from the report:

  • The state has cut individual income tax by 18% and cooperate tax by 20%.

Source: The U.S. Chamber of Commerce

#8 Kentucky

#7 Missouri

Despite the loss of about $860 million in federal funding, this state is still doing well fiscally.

From the report:

The Show Me State remains at seventh this year on the tax and regulation list. It ranks better than 20th on all five measures, topping out eighth in cost of living. In recent years, Missouri has enacted comprehensive reforms in its workers' compensation system and enacted strong tort reform laws.

Facts about Missouri from the report:

  • The state will save employers about $80 by gradually ending its franchise tax over the next six years.
  • The state is working on streamlining tax credits as we speak.
  • Only income earned in-state is taxed.
  • Manufacturers' inventories and goods/wares of retailers, distributors and wholesalers, are exempt from property taxes.

Source: The U.S. Chamber of Commerce

#6 Texas

You're not surprised with this one, are you?

From the report:

The Lone Star State is a low tax and low cost of living state, as well as an enterprise friendly climate that's paying off as it is adding jobs at a much faster rate than other large states.

Facts about Texas from the report:

  • No personal income tax.
  • Not tax on property used for the pollution control, goods in transit, or machinery and equipment used for manufacturing.

Source: The U.S. Chamber of Commerce

#5 Indiana

Indiana is a comeback kid.

From the report:

After bordering on insolvency in past years, the Hoosier State has turned around its budget situation with a series of state government reforms to reduce redundancy and improve efficiency. Indiana's latest biannual budget includes a $1 billion surplus... and provisions for an automatic taxpayer refund should revenue reach certain benchmarks.

Fact about Indiana from the report:

  • In an effort to attract more businesses to the state, the legislature has lowered corporate taxes.

Source: The U.S. Chamber of Commerce

#4 Alaska

Alaska has its fiscal house in order, which means it won't be asking for money from taxpayers to fill state coffers.

From the report:

Alaska's closing of its budget gap and its top state and local tax and business tax climates propelled it onto the top 10 list this year. The Last Frontier State has almost $12 billion in savings--excluding the Permanent Fund savings--enough for about two years of state funding for operating and capital budgets to insulate it from fluctuating energy prices.

Facts from the report:

  • There's a two year suspension of motor fuel tax.
  • The state offers tax incentives for oil and gas exploration.

Source: The U.S. Chamber of Commerce

#3 Wyoming

Wyoming entered this year with a budget surplus, so now the government is focused on diversifying the economy (which is heavily reliant on agriculture and tourism). Expect to see some business friendly tax legislation coming your way.

From the report:

Wyoming is a top five state for state budget gap, state and local tax burden, and business tax climate. Governor Matt Mead's administration has made streamlining government functions a focus, proposing department mergers and reviewing and repealing executive orders seen as unnecessary.

Facts from the report:

  • Wyoming boasts a manufacturing tax exemption for business' regular purchases.

Source: The U.S. Chamber of Commerce

#2 South Dakota

South Dakota faces a budget deficit of over 127 million, but Governor Dennis Daugaard is emphasising spending cuts rather than raising taxes.

From the report:

South Dakota has the nation's most favourable business tax climate and third lowest overall state and local tax burden. It also has no corporate income tax, personal income tax, personal property tax, business inventory tax, or inheritance tax. While the state does have sales, use, and excise taxes, South Dakota has established a tax refund program offering targeted refunds in these tax classes to qualified business-building projects.

Facts about South Dakota from the report:

  • The Governor's January budget actually called for a 10% tax reduction.
  • There's a tax refund program for business building projects.
  • Sales tax rate of only 4%.

Source: The U.S. Chamber of Commerce

#1 Tennessee

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