August 30, 2023
Nevada is the best state in the U.S. to own a small business in when it comes to taxes, according to a new study from accounting and legal firm SimplifyLLC.
Washington is third best, followed closely by Wyoming at No. 4. California is the fourth-worst state for small business taxes. The rankings are based on 2023 data from the U.S. Department of Labor, Tax Foundation, and Federation of Tax Administrators, according to a release.
The state of the economy has small businesses increasingly worried about taxes -- 16% say taxes are their top problem, up from 11% one year ago, according to the firm.
Small business taxes vary widely by state. In 2022, the average state and local tax burden of 11.2% was the highest it has been in decades, leading many companies to move to tax-friendlier locations.
The study analyzed five tax categories that affect small businesses – corporate tax, personal income tax, property tax, sales tax and unemployment tax. None of the top five states -- Nevada, South Dakota, Washington, Wyoming and Texas – have personal or corporate taxes, according to the study.
Among other Western states:
Montana is 20th best, Utah 21st and Colorado 22nd.
Idaho is ranked No. 25.
Arizona is rated No. 31, followed closely by Oregon at No. 33.
New Jersey was rated the worst state, driven by the second-highest per capita property tax in the U.S. ($3,538) and high taxes on sales as well as corporate and personal income.
California has the nation’s worst burden when it comes to personal income tax and sales tax, according to the study.
SimplifyLLC advises that a business owner can manage taxes by structuring the business wisely, taking advantage of deductions and credits and investing in tax-advantaged accounts.
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