According to the Tax Foundation’s 2023 State Business Tax Climate Index, Alabama has the poorest tax climate for businesses in the Southeastern United States.
The index ranked Alabama’s business tax climate as the 41st best in the nation, two spots lower than last year, and the lowest in the Southeast.
The index evaluates the tax structure of each state and the District of Columbia. It is intended to assist legislators, business leaders, and taxpayers in understanding their tax codes and how they may be improved.
Alabama ranks among the top 20 states for its corporate, property, and unemployment insurance tax rates.
Other areas of the tax code are weighed down by the state’s ranking of 30th in the nation for individual income taxes and last in the nation for its sales tax burden.
In This Year’s Index, the Top 10 States Are as Follows:
- Wyoming
- South Dakota
- Alaska
- Florida
- Montana
- New Hampshire
- Nevada
- Utah
- Indiana
- North Carolina
In This Year’s Index, the Ten Worst States Are as Follows:
- Alabama
- Rhode Island
- Hawaii
- Vermont
- Minnesota
- Maryland
- Connecticut
- California
- New York
- New Jersey
Numerous state legislators and statewide elected officials have either remained silent regarding plans for permanent tax reductions in the near future or wish to use record state surpluses for government savings accounts or a one-time tax rebate for Alabama residents. In 2023, removing the $350 million cap on economic development incentives has also been mentioned as a possibility.
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