Monday, September 18, 2023

Money Makers - Tax-Friendly States for Small Business

 A new study found Minnesota is the No. 3 least tax-friendly state to start a small business.


In an uncertain economy, starting a business in a tax-friendly location is critical and it goes beyond choosing a state with no corporate tax. A bevy of taxes impact whether a startup succeeds. Income tax affects take-home pay, a high sales tax means a competitor could charge less, property tax increases overhead, and unemployment tax impacts labor costs.


Simplify LLC today released a study on the Most Tax-Friendly States to Start a Small Business using 2023 data from the U.S. Department of Labor, Tax Foundation, and Federation of Tax Administrators.


Here is how Minnesota ranked in each of the five tax categories analyzed:


·       Corporate tax: No. 51 (9.8%)

·       Personal Income Tax: No. 45 (9.85%)

·       Property Tax: No. 32 ($1,870)

·       Sales Tax: No. 46 (6.88%)

·       Unemployment Tax: No. 38 (9%)


Among the key findings, the average state-local tax burden as a share of income was 11.2% in 2022 -- the highest in decades. To help ease that burden, the 10 most tax-friendly states are NevadaSouth DakotaWashingtonWyomingTexasNorth CarolinaFloridaMissouriOhioand Alabama.

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