North Carolina continues to cut tax rates. But that hasn’t stopped the state from dropping three spots to No. 15 in the Tax Foundation’s 2020 State Business Tax Climate Index.

Why the decline? Other states are doing even more to reduce tax burdens. The Tax Foundation explains:

North Carolina’s individual income tax rate decreased from 5.499 to 5.25 percent, while the corporate income tax rate—already the nation’s lowest—was cut from 3 to 2.5 percent, completing the latest in several rounds of tax reforms and rate reductions in North Carolina in recent years.[6] These improvements, however, did not help the state on the Index overall, because they failed to leapfrog any states on the corporate or individual income tax components, while changes to the state’s unemployment insurance tax regime, along with improvements in other highly competitive states, slid the state three places from 12th to 15th.

Among the components of the overall ranking, North Carolina ranks No. 3 in corporate taxes, No. 10 in unemployment insurance taxes (down from No. 7 in the last ranking), No. 16 in individual income taxes, No. 21 in sales taxes, and No. 34 in property taxes.

Who tops the Tar Heel State?

  1. Wyoming
  2. South Dakota
  3. Alaska
  4. Florida
  5. Montana
  6. New Hampshire
  7. Nevada
  8. Oregon
  9. Utah
  10. Indiana
  11. Delaware
  12. Michigan
  13. Texas
  14. Missouri