Colorado ranks 21st in latest state tax comparison

Colorado ranks 21st among the 50 states in the latest comparison of how tax systems affect businesses.

Colorado fared well in the 2023 State Business Tax Climate Index for lower corporate and individual income taxes, but less so for property and sales taxes and unemployment insurance.

The Tax Foundation — a nonprofit, nonpartisan tax research organization based in Washington, D.C. — compiles the index to compare states for the competitiveness of their tax codes. The index takes into account variables in five major areas of taxation: corporate and individual income taxes, property and sales taxes and unemployment insurance. The index compares not only how much states collect in taxes, but also how well they structure their tax systems.

Colorado ranked 20th in the 2022 index and has ranged between 19th and 23rd in the index since 2014.

For the 2023 index, Colorado ranked seventh for the lowest corporate tax rate and 14th for the lowest individual income tax rate. The state ranked fared less well at 36th for property taxes, 40th for sales taxes and 42nd for unemployment insurance taxes.

Wyoming remained atop the 2023 State Business Climate Index for a 10th straight year. Wyoming imposes no corporate or individual income taxes and ranked sixth for sales tax.

South Dakota remained second and also imposes no corporate or individual income taxes. Alaska ranked third, followed by Florida at fourth and Montana at fifth. Alaska imposes no individual income tax or sales tax. Florida imposes no individual income tax. Montana imposes no sales tax.

New Jersey remained last in the 2023 index at 50th. The state imposes some of the highest corporate and individual income taxes as well as property and sales taxes.

New York ranked 49th with the highest individual income tax and comparatively high property and sales taxes.

California ranked 48th, followed by Connecticut at 47th and Maryland at 46th.