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10 Best Tax States for Small Business 2011
Here are the states with the best tax systems for small business owners this year, according to the Small Business & Entrepreneurship Council's Business Tax Index for 2011.

State Business Tax Climate

The Small Business & Entrepreneurship Council recently released its "Business Tax Index 2011: Best to Worst State Tax Systems for Entrepreneurship and Small Business," which ranks the 50 states and the District of Columbia based on their tax systems.The index pulls together 18 different tax measures and combines them into one tax score that allows them to be compared with one another. Among the taxes included are income, capital gains, property, death/inheritance, unemployment, and various consumption-based taxes, including state gas and diesel levies.

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ColoradoOneSkiHillPlace

No. 10: Colorado

Colorado rounds out the top 10, based on its tax policy, which includes low corporate, income  and sales tax rates.The state also offers corporate income tax credits for child-care programs, alternative fuel-use and investment taxes.

Ohio

No. 9: Ohio

The SBE Council's index ranks the 50 states and the District of Columbia according to the costs of their tax system for entrepreneurship and small business. Ohio has no tax on inventory or corporate income, nor does it tax investments in machinery or equipment.

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Alaska

No. 8: Alaska

According to Ray Keating, SBE Council chief economist, states with low taxes, like Alaska, are better able to attract investors. Alaska's state and local tax burden is the lowest in the nation.

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Cotton Field Near Birmingham, Alabama

No. 7: Alabama

The index helps to shed light on the burdens that affect decisions of individuals and businesses. Alabama's state and local tax burden has been below average for more than 30 years. 

Florida

No. 6: Florida

The Business Tax Index pulls together 18 different tax measures and combines them into one tax score that allows the states and D.C. to be compared. Florida has no individual income tax, making it attractive to small business owners.

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Seattle Space Needle in Washington State

No. 5: Washington

Washington fell right in the middle of the top 10 best tax states, ranking at number five.The state's lack of income tax makes up for some of the other major areas it taxes.

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Wyoming

No. 4: Wyoming

The taxes included in the SBC's tax index are income, capital gains and property tax. Wyoming has no corporate state income tax, personal income tax or inventory tax.

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Nevada

No. 3: Nevada

Death and inheritance taxes, as well as unemployment taxes, are included in the tax score for each state. Nevada does not have any individual income tax, which accounts for its high ranking.

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Austin, Texas Skyline

No. 2: Texas

Consumption-based taxes, including state gas and diesel levies, are also included in the ranking comparisons. Texas also does not tax personal income.

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South Dakota

No. 1: South Dakota

South Dakota took the top spot as the state with the nation's best tax policy for small business owners. The state has no income-based taxes, capital gains taxes or corporate income taxes.

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10 Best Tax States for Small Business 2011

Here are the states with the best tax systems for small business owners this year, according to the Small Business & Entrepreneurship Council's Business Tax Index for 2011.

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