How does your state rank on individual income taxes? According to the Tax Foundation’s 2023 State Business Tax Climate Index, the individual income tax is important to businesses because states tax sole proprietorships, partnerships, and, in most cases, limited liability companies (LLCs) and S corporations under the individual income tax code. In fact, states that score well on the Index’s individual income tax component usually have a flat, low-rate income tax with few deductions and exemptions.
“High marginal rates adversely affect labor output and investment and can influence location decision-making, especially in an era of enhanced mobility, where it is easier for individuals to move without jeopardizing their current job, or without limiting the scope of their search for a new one.”
Click here to read the full report at the Tax Foundation.