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Best Rates

JIM WATSON/AFP/Getty Images

By John Tozzi

Best Rates

Where will your company pay the lowest taxes in 2009? Knowing what share of your business profits and personal income you'll owe the state can help you decide where to locate your business. The Tax Foundation, a nonprofit Washington research group, ranks each state annually to give a sense of states' relative tax climates. The rankings account for tax rates for business profits and personal income, sales tax, unemployment insurance tax, and property tax. (Business tax rates generally don't apply to non-incorporated companies or S-corps, in which profits are taxed as the owners' personal income.) You can see the Tax Foundation's full report here.

Of course, other factors affect a state's business climate: the labor force, the market for products or services, and proximity to suppliers and distributors, not to mention quality of life. And state tax codes are filled with deductions, credits, exemptions, and other modifications that affect the base rates reported here. But for a snapshot of the 25 states with the lowest projected business taxes in 2009, flip through this slide show.

(In cases where states have graduated tax systems, we report the top rate and the amount of income at which that rate applies. Individual income brackets are for single filers.)

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