In 2015, North Carolina made the most dramatic improvement in the Tax Foundation’s State Business Tax Climate Index’s history by jumping from 41st to 12th in one year. Since then, things continue on an upward trend: North Carolina ranks 11th in the 2018 rankings.
“North Carolina has continued to improve its tax structure, and now imposes the lowest-rate corporate income tax in the country at 3 percent, down from 4 percent the previous year,” the study authors write. “This rate cut improves the state from 4th to 3rd on the corporate income tax component, the best ranking for any state that imposes a corporate tax. … An individual income tax reduction, from 5.75 to 5.499 percent, improved the state’s individual income tax component rank from 15th to 13th. At 11th overall, North Carolina trails only Utah and Indiana among states which do not forgo any of the major tax types.”
Additionally, the further reductions the state made to both the individual (down to 5.25 percent) and corporate income tax (down to 2.5 percent) rates, which will take effect in 2018, will be taken into consideration in the 2019 edition of the Index.
Here’s how North Carolina performed across the board:
- Overall rank: 11th
- Corporate tax rank: 3rd
- Individual income tax rank: 13th
- Sales tax rank: 20th
- Unemployment insurance tax rank: 6th
- Property tax rank: 32nd
“North Carolina’s surge in economic competitiveness means more jobs, higher wages, and better opportunities for families and businesses who call our state home,” House Speaker Tim Moore said in a statement. “Our commitment to North Carolina’s tax transformation provides relief for working people, helps employers grow, and attracts increased investment in our state’s economy.”