The Tax Foundation has rebranded its State Business Tax Climate Index into the State Tax Competitiveness Index. Every year, the release gives Americans a view into which states are best at respecting residents’ money and which are the worst. Here’s the summary of the 2025 Index results:
The Tax Foundation’s State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
The 10 best states in this year’s Index are:
- Wyoming
- South Dakota
- Alaska
- Florida
- Montana
- New Hampshire
- Texas
- Tennessee
- North Dakota
- Indiana
The absence of a major tax is a common factor among many of the top 10 states. 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 income tax, the individual income tax, or the sales tax. South Dakota and Wyoming have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida and Texas have no individual income tax; and New Hampshire and Montana have no sales tax, with New Hampshire also only imposing a narrow tax on interest and dividend income.
The lowest ranked states are the usual suspects.
The 10 lowest-ranked, or worst, states in this year’s Index are:
- Massachusetts
- Hawaii
- Vermont
- Minnesota
- Washington
- Maryland
- Connecticut
- California
- New Jersey
- New York
The states in the bottom 10 tend to have a number of issues in common: complex, nonneutral taxes with comparatively high rates. New Jersey, for example, is hampered by some of the highest property tax burdens in the country, has the highest-rate corporate income tax in the country, and has one of the highest-rate individual income taxes. Additionally, the state has a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.
Action Line: If you’re looking to relocate to a better America, start your search for a new home with Your Survival Guy’s 2024 Super States. I take taxation into account, as well as many other factors that concern Americans looking for freedom. Click here to subscribe to my free monthly Survive & Thrive letter.
