Alaska ranks third in Tax Foundation’s Top-10

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The 2025 State Tax Competitiveness Index published by the Tax Foundation puts Alaska at #3 for states’ overall tax competitiveness, as well as the business tax climate.

The annual index is intended to help taxpayers, lawmakers, and business decision-makers to gauge how their states’ tax systems compare with other states. While there are many ways to show how much state governments collect in taxes, the index evaluates how well states structure their tax systems and provides a road map for improvement, the foundation said.

While the top 10% of income earners already pay more than 60% of all federal taxes and 76% of income taxes, tax policy is especially important this year, because the Trump-era tax breaks are expiring in 2025, and candidate Kamala Harris has said she will increase taxes on many of the job-creating American entrepreneurs, including taxing unrealized gains.

The absence of a major tax broadband tax is a common factor among many of the top 10 states on the index.

Although property taxes and unemployment insurance taxes are levied in every state, there are several states that do without one or more of the other major taxes: corporate income tax, individual income tax, or sales tax. South Dakota and Wyoming have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida and Texas have no individual income tax; and New Hampshire and Montana have no sales tax, with New Hampshire also only imposing a narrow tax on interest and dividend income.

The design of the Index changed this year to account for new taxes that have been introduced, such as a new digital advertising tax imposed by Maryland in 2021.

The 10 best states in this year’s Index are governed by Republicans:

  1. Wyoming
  2. South Dakota
  3. Alaska
  4. Florida
  5. Montana
  6. New Hampshire
  7. Texas
  8. Tennessee
  9. North Dakota
  10. Indiana

The 10 lowest-ranked, or worst, states in this year’s Index are run by Democrats, with New York state being the worst offending state for taxation:

  1. Massachusetts
  2. Hawaii
  3. Vermont
  4. Minnesota
  5. Washington
  6. Maryland
  7. Connecticut
  8. California
  9. New Jersey
  10. New York

Read the study and compare the states at this Tax Foundation link.

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