Colorado ranks 21st among the 50 states in the latest comparison of how tax systems affect businesses.
Colorado fared well in the comparison 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 State Business Tax Climate 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 scored 5.18 to maintain its ranking in the 2021 State Business Tax Climate Index. Colorado has ranked 21st in three out of the last five years, coming in 19th in 2019 and 22nd in 2017.
For 2021, Colorado ranked highest at 10th for corporate taxes and 14th for individual taxes. Colorado ranked lower at 32nd for property taxes, 36th for its sales tax structure and 41st for its unemployment insurance structure.
Wyoming remained atop the State Business Tax Climate Index for an eighth consecutive year. Wyoming imposes no corporate or individual income taxes and ranks sixth for sales tax.
South Dakota remained second and also imposes no corporate or individual income taxes. Alaska remained third, followed by Florida and Montana. Alaska imposes no individual income or state-level sales taxes. Florida imposes no individual income tax. Montana imposes no sales tax.
New Jersey remained dead last at 50th in the 2020 index. New Jersey imposes some of the highest property taxes in the country in addition to the second-highest corporate and individual income tax rates. California ranked 49th, followed by New York, Connecticut and Minnesota.