South Dakota
Rank: #2
Income tax: None
Corporate tax: None
Sales tax: Low

South Dakota comes in at a close second to Wyoming.

The state has no corporate or individual income taxes. And its sales tax is also low at 4% -- only six states have a lower rate.

Another plus, according to the Tax Foundation: South Dakota makes it less expensive for businesses to pay unemployment taxes. That tax is paid by employers to benefit those without work, but it can be confusing and expensive. How much a business pays depends on several factors, and there's always a range. In other states, rates can range from 2.7% to 15% of its workers' incomes. South Dakota's range drops all the way down to 0%, which means that if the economy there goes sour, some businesses don't have to pay at all.

As for property taxes, South Dakota's on the lower end. Companies pay an effective rate of 2.86%.


Source: Tax Foundation, 2013 State Business Tax Climate Index
- Last updated October 15 2012 10:30 AM ET
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