Best (And Worst) States For Taxes In 2019 For Solution Provider Startups
High taxes can hinder a startup's growth by sucking up capital that could be used for expansion. Entrepreneurs starting a solution provider business should consider states with low corporate income, sales, property and unemployment insurance taxes whenever possible.
Tax Preparation
For startups, money is a scare resource. As a young company hires its staff, develops its products and plots its strategy, there's more money going out than coming in. Having to pay taxes – corporate income taxes, sales taxes, unemployment insurance taxes and more – can be tough for a company in startup mode.
As part of the 2019 Best (And Worst) States For Starting A Solution Provider Business, CRN looked at corporate income tax rates, state and local sales taxes, property taxes and unemployment insurance taxes (as of Jan. 1, 2018) 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 (taxfoundation.org).
In addition to specific tax rates, we considered the overall rankings on the Tax Foundation's 2019 State Business Climate Index and the Small Business & Entrepreneurship Council's Small Business Tax Index rank. We also included each state’s fiscal stability rank from the U.S. News and World Reports’ Best States Rankings.
For criteria that's ranked, the lower the number, the lower the tax burden.
Best States No. 10: Louisiana
Top Corporate Income Tax Rate: 8 Percent
Combined State and Average Local Sales Tax Rates: 9.45 Percent
Top Individual Income Tax Rate: 6 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 44
Small Business Tax Index Rank: 20
Fiscal Stability Rank: 43
Best States No. 9: Nebraska
Top Corporate Income Tax Rate: 7.81 Percent
Combined State and Average Local Sales Tax Rates: 6.85 Percent
Top Individual Income Tax Rate: 6.84 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 24
Small Business Tax Index Rank: 39
Fiscal Stability Rank: 7
Best States No. 8: Ohio
Top Corporate Income Tax Rate: None
Combined State and Average Local Sales Tax Rates: 7.17 Percent
Top Individual Income Tax Rate: 4.997 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 42
Small Business Tax Index Rank: 8
Fiscal Stability Rank: 41
Best States No. 7: Mississippi
Top Corporate Income Tax Rate: 5 Percent
Combined State and Average Local Sales Tax Rates: 7.07 Percent
Top Individual Income Tax Rate: 5 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 31
Small Business Tax Index Rank: 17
Fiscal Stability Rank: 44
Best States No. 6: Indiana
Top Corporate Income Tax Rate: 5.75 Percent
Combined State and Average Local Sales Tax Rates: 7 Percent
Top Individual Income Tax Rate: 3.23 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 10
Small Business Tax Index Rank: 14
Fiscal Stability Rank: 6
Best States No. 5: Missouri
Top Corporate Income Tax Rate: 6.25 Percent
Combined State and Average Local Sales Tax Rates: 8.13 Percent
Top Individual Income Tax Rate: 5.4 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 14
Small Business Tax Index Rank: 21
Fiscal Stability Rank: 16
Best States No. 4: North Carolina
Top Corporate Income Tax Rate: 2.5 Percent
Combined State and Average Local Sales Tax Rates: 6.97 Percent
Top Individual Income Tax Rate: 5.25 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 12
Small Business Tax Index Rank: 9
Fiscal Stability Rank: 4
Best States No. 3: Oklahoma
Top Corporate Income Tax Rate: 6 Percent
Combined State and Average Local Sales Tax Rates: 8.92 Percent
Top Individual Income Tax Rate: 5 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 26
Small Business Tax Index Rank: 19
Fiscal Stability Rank: 32
Best States No. 2: Delaware
Top Corporate Income Tax Rate: 8.7 Percent
Combined State and Average Local Sales Tax Rates: None
Top Individual Income Tax Rate: 6.6 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 11
Small Business Tax Index Rank: 36
Fiscal Stability Rank: 18
Best States No. 1: Florida
Top Corporate Income Tax Rate: None
Combined State and Average Local Sales Tax Rates: 7.05 Percent
Top Individual Income Tax Rate: None
Tax Foundation's 2018 State Business Climate Index Rank: 4
Small Business Tax Index Rank: 6
Fiscal Stability Rank: 2
Worst States No. 41: Wisconsin
Top Corporate Income Tax Rate: 7.9 Percent
Combined State and Average Local Sales Tax Rates: 5.44 Percent
Top Individual Income Tax Rate: 7.65 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 32
Small Business Tax Index Rank: 33
Fiscal Stability Rank: 14
Worst States No. 42: Virginia
Top Corporate Income Tax Rate: 6 Percent
Combined State and Average Local Sales Tax Rates: 5.65 Percent
Top Individual Income Tax Rate: 5.75 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 22
Small Business Tax Index Rank: 22
Fiscal Stability Rank: 8
Worst States No. 43: New Hampshire
Top Corporate Income Tax Rate: 7.7 Percent
Combined State and Average Local Sales Tax Rates: None
Top Individual Income Tax Rate: 5 Percent (Interest and dividend income only)
Tax Foundation's 2018 State Business Climate Index Rank: 6
Small Business Tax Index Rank: 32
Fiscal Stability Rank: 10
Worst States No. 44: Nevada
Top Corporate Income Tax Rate: None
Combined State and Average Local Sales Tax Rates: 8.14 Percent
Top Individual Income Tax Rate: None
Tax Foundation's 2018 State Business Climate Index Rank: 9
Small Business Tax Index Rank: 1
Fiscal Stability Rank: 37
Worst States No. 45: Michigan
Top Corporate Income Tax Rate: 6 Percent
Combined State and Average Local Sales Tax Rates: 6 Percent
Top Individual Income Tax Rate: 4.25 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 13
Small Business Tax Index Rank: 13
Fiscal Stability Rank: 27
Worst States No. 46: Illinois
Top Corporate Income Tax Rate: 9.5 Percent
Combined State and Average Local Sales Tax Rates: 8.74 Percent
Top Individual Income Tax Rate: 4.95 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 36
Small Business Tax Index Rank: 25
Fiscal Stability Rank: 50
Worst States No. 47: Idaho
Top Corporate Income Tax Rate: 6.925 Percent
Combined State and Average Local Sales Tax Rates: 6.03 Percent
Top Individual Income Tax Rate: 6.925 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 21
Small Business Tax Index Rank: 35
Fiscal Stability Rank: 11
Worst States No. 48: Pennsylvania
Top Corporate Income Tax Rate: 9.99 Percent
Combined State and Average Local Sales Tax Rates: 6.34 Percent
Top Individual Income Tax Rate: 3.07 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 34
Small Business Tax Index Rank: 29
Fiscal Stability Rank: 38
Worst States No. 49: Kentucky
Top Corporate Income Tax Rate: 5 Percent
Combined State and Average Local Sales Tax Rates: 6 Percent
Top Individual Income Tax Rate: 5 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 23
Small Business Tax Index Rank: 40
Fiscal Stability Rank: 45
Worst State No. 50: Massachusetts
Top Corporate Income Tax Rate: 8.00
Combined State and Average Local Sales Tax Rates: 6.25 Percent
Top Individual Income Tax Rate: 5.1 Percent
Tax Foundation's 2018 State Business Climate Index Rank: 29
Small Business Tax Index Rank: 31
Fiscal Stability Rank: 30