Most individuals don't choose where to live and work based on the marginal tax rate of each state. However, for a high earner with a web-based business than can be operated out of his house who lives near the border of California and Nevada, the potential tax savings can be enough to take notice. While certainly not a majority, some businesses do indeed take the state corporate income tax rate into consideration before they set up shop. Here are the individual and corporate state rankings by the top marginal tax rates (for 2018):
Individual State Tax Rate Rankings (Lowest to Highest)
1) Alaska - 0.00%
1) Washington - 0.00%
1) Nevada - 0.00%
1) Wyoming - 0.00%
1) South Dakota - 0.00%
1) Texas - 0.00%
1) Florida - 0.00%
8) North Dakota - 2.90%
9) Tennessee - 3.00% (only interest and dividends are taxed)
10) Pennsylvania - 3.07%
11) Indiana - 3.23%
12) Michigan - 4.25%
13) Arizona - 4.54%
14) Colorado - 4.63%
15) New Mexico - 4.90%
16) Illinois - 4.95%
17) Ohio - 4.997%
18) Utah - 5.00%
18) Oklahoma - 5.00%
18) Mississippi - 5.00%
18) Alabama - 5.00%
18) New Hampshire - 5.00%
23) Massachusetts - 5.10%
24) North Carolina - 5.499%
25) Kansas - 5.70%
26) Virginia - 5.75%
26) Maryland - 5.75%
28) Missouri - 5.90%
29) Rhode Island - 5.99%
30) Kentucky - 6.00%
30) Louisiana - 6.00%
30) Georgia - 6.00%
33) West Virginia - 6.50%
34) Delaware - 6.60%
35) Nebraska - 6.84%
36) Arkansas - 6.90%
36) Montana - 6.90%
38) Connecticut - 6.99%
39) South Carolina - 7.00%
40) Maine - 7.15%
41) Idaho - 7.40%
42) Wisconsin - 7.65%
43) New York - 8.82%
44) Vermont - 8.95%
45) New Jersey - 8.97%
46) Iowa - 8.98%
47) Minnesota -9.85%
48) Oregon - 9.90%
49) Hawaii - 11.00%
50) California - 13.30%
* Washington DC - 8.95%
Corporate State Tax Rate Rankings (Lowest to Highest)
1) Ohio - 0.00%
1) Washington - 0.00%
1) Nevada - 0.00%
1) Wyoming - 0.00%
1) South Dakota - 0.00%
1) Texas - 0.00%
7) North Carolina - 3.00%
8) North Dakota - 4.31%
9) Colorado - 4.63%
10) Arizona - 4.90%
11) Utah - 5.00%
11) Mississippi - 5.00%
11) South Carolina - 5.00%
14) Florida - 5.50%
15) New Mexico - 5.90%
16) Oklahoma - 6.00%
16) Michigan - 6.00%
16) Indiana - 6.00%
16) Virginia - 6.00%
16) Kentucky - 6.00%
16) Georgia - 6.00%
22) Missouri - 6.25%
23) Hawaii - 6.40%
24) New York - 6.50%
24) Alabama - 6.50%
24) Arkansas - 6.50%
24) West Virginia - 6.50%
24) Tennessee - 6.50%
29) Montana - 6.75%
30) Kansas - 7.00%
30) Rhode Island - 7.00%
32) Idaho - 7.40%
33) Oregon - 7.60%
34) Nebraska - 7.81%
35) Wisconsin - 7.90%
36) Louisiana - 8.00%
36) Massachusetts - 8.00%
38) New Hampshire - 8.20%
39) Connecticut - 8.25%
39) Maryland - 8.25%
41) Vermont - 8.50%
42) Delaware - 8.70%
43) California - 8.84%
44) Maine - 8.93%
45) New Jersey - 9.00%
46) Alaska - 9.40%
47) Illinois - 9.50%
48) Minnesota - 9.80%
49) Pennsylvania - 9.99%
50) Iowa - 12.00%
* Washington DC - 8.25%