Wyoming is the most competitive US state when it comes to tax, according to US think tank the Tax Foundation, which has released its 2015 State Business Tax Climate Index on October 28. The next most competitive states are South Dakota, Nevada, Alaska, Florida, Montana, New Hampshire, Indiana and Utah, with Texas ranking 10th.

Economists at the Washington, DC group say the index is an indicator of which states’ tax systems are the most hospitable to business and economic growth. It does not measure economic opportunity or freedom, or broad business climate.

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The 2015 ranking saw four states move up from their 2014 ranking. Montana, New Hampshire and Texas all moved up one place, while Indiana jumped two places.

A common factor in most of the top 10 states is the lack of tax. Wyoming, Nevada and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax. 

In Indiana, the corporate income tax will be reduced from 7% to 4.9% by 2021, which the Tax Foundation believes will continue to improve the state’s score on corporate income tax.

“The federal government is gridlocked, but state policymakers on both sides of the aisle are enacting truly fundamental reforms,” said Tax Foundation economist and manager of state projects Scott Drenkard. “States are doing their part and it’s time that Washington steps up.”

North Carolina has shown the most dramatic improvement in its tax environment. The state moved to 16th position, up from 44th place in 2014 – the single largest rank jump in the history of the index. The reason: the state improved its score in the corporate, individual and sales tax components of the index. Tax Foundation economists contend that as the state’s reform package continues to phase in, it will continue climbing in the rankings. 

Other states making notable ranking changes are Nebraska, North Dakota, New York, Wisconsin, Maine and Kansas.

The 10 least competitive states are Iowa, ranked 41st, followed by Connecticut, Wisconsin, Ohio, Rhode Island, Vermont, Minnesota, California and New York, with New Jersey ranking last.