Washington scores well on ranking of best states for taxes

by Liz Hughes

A new report ranks Washington in the upper third of states when it comes to taxes.

The index is designed to help business leaders, taxpayers and government officials gauge how their states’ tax systems compare to others in terms of how they are structured and can be improved. 

The Tax Foundation’s ​​2022 State Business Tax Climate Index ranked the Evergreen State 15th on its list. Wyoming was the best state in the nation, while New Jersey was the worst.

States were compared on more than 120 variables in the five major areas of taxation. Each state’s overall ranking was based on how it ranked in several categories: Corporate tax, individual income tax, sales tax, property tax and unemployment insurance tax.

Washington was No. 7 for individual income taxes and was in the top half for unemployment insurance taxes and property taxes. Its corporate tax score was 39th, and its sales tax ranking was 49, dragging down Washington’s overall score.

States in the top 10 of the index shared a common factor — the absence of a major tax. While property and unemployment insurance taxes are collected in all states, several don’t have a corporate income tax, individual income tax or sales tax, and some only have one of the latter three taxes. 

Nevada, South Dakota and Wyoming, which ranked seventh, second and first respectively, don’t have corporate or individual income taxes. No. 3 ranked Alaska doesn’t have an individual income tax or a state-level sales tax, while No. 4 ranked Florida and No. 8 ranked Tennessee don’t have an individual income tax. Both New Hampshire, which ranked sixth, and Montana, which ranked fifth, do not have a sales tax. 

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