Best (And Worst) States For Taxes In 2018 For Solution Provider Startups
Taxing Issues For Startups
Nearly every startup faces a cash crunch. After all, there's more money going out than coming in as a business develops its products, hires its core staff and spends capital to build the company's foundation. Having to pay taxes as a startup is getting off the ground can be yet another obstacle.
As part of the 2018 Best (And Worst) States For Starting A Solution Provider Business, CRN looked at the 2018 top corporate income tax rate (as of Jan. 1, 2018), state and local sales taxes (as of Jan. 1, 2018), property taxes and unemployment insurance taxes levied in each state. (Individual income tax rates were considered as part of the "personal cost of living/quality of life" criteria.) Most of the tax data was obtained from the Tax Foundation.
In addition to specific tax rates, we considered the overall rankings on the Tax Foundation's 2018 State Business Climate Index and the Small Business & Entrepreneurship Council's Small Business Tax Index rank.
For criteria that's ranked, the lower the number, the lower the tax burden.
Best States No. 10: Nebraska
Top corporate income tax rate: 7.81%
Combined state and average local sales tax rates: 6.89%
Top individual income tax rate: 6.84%
Property tax rank: 40
Unemployment insurance tax rank: 9
Tax Foundation's 2018 State Business Climate Index rank: 25
Small Business Tax Index rank: 39
Best States No. 9: Louisiana
Top corporate income tax rate: 8.00%
Combined state and average local sales tax rates: 10.02%
Top individual income tax rate: 6.00%
Property tax rank: 30
Unemployment insurance tax rank: 4
Tax Foundation's 2018 State Business Climate Index rank: 42
Small Business Tax Index rank: 20
Best States No. 8: Ohio
Top corporate income tax rate: (None)
Combined state and average local sales tax rates: 7.15%
Top individual income tax rate: 4.997%
Property tax rank: 11
Unemployment insurance tax rank: 8
Tax Foundation's 2018 State Business Climate Index rank: 45
Small Business Tax Index rank: 8
Best States No. 7: Mississippi
Top corporate income tax rate: 5.00%
Combined state and average local sales tax rates: 7.07%
Top individual income tax rate: 5.00%
Property tax rank: 35
Unemployment insurance tax rank: 5
Tax Foundation's 2018 State Business Climate Index rank: 24
Small Business Tax Index rank: 17
Best States No. 6: Missouri
Top corporate income tax rate: 6.25%
Combined state and average local sales tax rates: 8.03%
Top individual income tax rate: 5.90%
Property tax rank: 7
Unemployment insurance tax rank: 7
Tax Foundation's 2018 State Business Climate Index rank: 16
Small Business Tax Index rank: 21
Best States No. 5: Indiana
Top corporate income tax rate: 5.75% (scheduled to decline to 5.5% July 1, 2019)
Combined state and average local sales tax rates: 7.00%
Top individual income tax rate: 3.23% (of federal adjusted gross income with modifications)
Property tax rank: 4
Unemployment insurance tax rank: 10
Tax Foundation's 2018 State Business Climate Index rank: 9
Small Business Tax Index rank: 14
Best States No. 4: North Carolina
Top corporate income tax rate: 3.00%
Combined state and average local sales tax rates: 6.95%
Top individual income tax rate: 5.499%
Property tax rank: 32
Unemployment insurance tax rank: 6
Tax Foundation's 2018 State Business Climate Index rank: 11
Small Business Tax Index rank: 9
Best States No. 3: Oklahoma
Top corporate income tax rate: 6.00%
Combined state and average local sales tax rates: 8.91%
Top individual income tax rate: 5.00%
Property tax rank: 15
Unemployment insurance tax rank: 1
Tax Foundation's 2018 State Business Climate Index rank: 32
Small Business Tax Index rank: 19
Best States No. 2: Delaware
Top corporate income tax rate: 8.70%
Combined state and average local sales tax rates: None
Top individual income tax rate: 6.60%
Property tax rank: 20
Unemployment insurance tax rank: 3
Tax Foundation's 2018 State Business Climate Index rank: 15
Small Business Tax Index rank: 36
Best States No. 1: Florida
Top corporate income tax rate: 5.50%
Combined state and average local sales tax rates: 6.80%
Top individual income tax rate: None
Property tax rank: 10
Unemployment insurance tax rank: 2
Tax Foundation's 2018 State Business Climate Index rank: 4
Small Business Tax Index rank: 6
Worst States No. 41: New Hampshire
Top corporate income tax rate: 8.20%
Combined state and average local sales tax rates: None
Top individual income tax rate: 5.00% (on interest and dividend income only)
Property tax rank: 44
Unemployment insurance tax rank: 43
Tax Foundation's 2018 State Business Climate Index rank: 7
Small Business Tax Index rank: 32
Worst States No. 42: Michigan
Top corporate income tax rate: 6.00%
Combined state and average local sales tax rates: 6.00
Top individual income tax rate: 4.25% (of federal adjusted gross income with modifications)
Property tax rank: 21
Unemployment insurance tax rank: 48
Tax Foundation's 2018 State Business Climate Index rank: 12
Small Business Tax Index rank: 13
Worst States No. 43: Minnesota
Top corporate income tax rate: 9.80%
Combined state and average local sales tax rates: 7.42%
Top individual income tax rate: 9.85%
Property tax rank: 28
Unemployment insurance tax rank: 37
Tax Foundation's 2018 State Business Climate Index rank: 46
Small Business Tax Index rank: 47
Worst States No. 44: Idaho
Top corporate income tax rate: 7.40%
Combined state and average local sales tax rates: 6.03
Top individual income tax rate: 7.4%
Property tax rank: 3
Unemployment insurance tax rank: 46
Tax Foundation's 2018 State Business Climate Index rank: 20
Small Business Tax Index rank: 35
Worst States No. 45: Illinois
Top corporate income tax rate: 9.50%
Combined state and average local sales tax rates: 8.70%
Top individual income tax rate: 4.95% (of federal adjusted gross income with modifications)
Property tax rank: 45
Unemployment insurance tax rank: 42
Tax Foundation's 2018 State Business Climate Index rank: 29
Small Business Tax Index rank: 25
Worst States No. 46: New Jersey
Top corporate income tax rate: 9.00%
Combined state and average local sales tax rates: 6.60%
Top individual income tax rate: 8.970%
Property tax rank: 50
Unemployment insurance tax rank: 36
Tax Foundation's 2018 State Business Climate Index rank: 50
Small Business Tax Index rank: 49
Worst States No. 47: Maine
Top corporate income tax rate: 8.93%
Combined state and average local sales tax rates: 5.50%
Top individual income tax rate: 7.15%
Property tax rank: 41
Unemployment insurance tax rank: 44
Tax Foundation's 2018 State Business Climate Index rank: 28
Small Business Tax Index rank: 48
Worst States No. 48: Kentucky
Top corporate income tax rate: 6.00%
Combined state and average local sales tax rates: 6.00%
Top individual income tax rate: 6.00%
Property tax rank: 36
Unemployment insurance tax rank: 47
Tax Foundation's 2018 State Business Climate Index rank: 33
Small Business Tax Index rank: 40
Worst States No. 49: Massachusetts
Top corporate income tax rate: 8.00%
Combined state and average local sales tax rates: 6.25%
Top individual income tax rate: 5.10%
Property tax rank: 46
Unemployment insurance tax rank: 49
Tax Foundation's 2018 State Business Climate Index rank: 22
Small Business Tax Index rank: 31
Worst State No. 50: Pennsylvania
Top corporate income tax rate: 9.99%
Combined state and average local sales tax rates: 6.34%
Top individual income tax rate: 3.07%
Property tax rank: 33
Unemployment insurance tax rank: 50
Tax Foundation's 2018 State Business Climate Index rank: 26
Small Business Tax Index rank: 29