Money Makers - Best States for Business Taxes

A new study found Minnesota is the No. 3 worst state for small business taxes.

 

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. Owning a small business is part of the American dream but 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 relocate to tax-friendlier locations.

 

Simplify LLC today released a study on the Best States for Small Business Taxes using 2023 data from the U.S. Department of Labor, Tax Foundation, and Federation of Tax Administrators.

 

Five tax categories affecting small businesses were analyzed. Here is how Minnesota ranked in each: corporate tax (51), personal income tax (45), property tax (32), sales tax (46) and unemployment tax (38).

 

The 10 best states for small business taxes are Nevada, South Dakota, Washington, Wyoming, Texas, North Carolina, Florida, Missouri, Ohio, and Alabama. The top five had corporate or personal income tax.

 

3 Tips to Lower Your Business Taxes

·         Structure Your Business Wisely: Forming a sole proprietorship, LLC, or corporation have varying tax implications. Choose the structure that aligns with your business goals.

 

·         Take Advantage of Deductions and Credits: Common deductions include expenses related to business operations, such as supplies, travel, equipment, and office space. Consult a local expert.

 

·         Invest in Tax-Advantaged Accounts: Contribute to tax-advantaged retirement accounts, like a 401(k) or an IRA to reduce your overall tax liability.