The Center Square [By Jon Styf] –
Tennessee ranks near the middle of the pack, tied for 23rd, in a new ranking of state corporate income tax rates heading into 2023.
Tennessee’s 6.5% rate is tied for 23rd with Alabama and West Virginia in the Tax Foundations new rankings but local taxes in the state can also increase that rate.
The top rates in the country belong to New Jersey (11.5%), Minnesota (9.8%), Illinois (9.5%) and Alaska (9.4%).
As of the ranking, 44 states have corporate income tax with Wyoming and South Dakota going without it and Nevada, Washington, Texas and Ohio using a gross receipts tax instead of corporate income tax.
Tennessee is one of 29 states, along with the District of Columbia, to use a single-rate system for corporate income tax.
“A single-rate system minimizes the incentive for firms to engage in economically wasteful tax planning to mitigate the damage of higher marginal tax rates that some states levy as taxable income rises,” the report said.
Tennessee has gross receipts taxes in addition to corporate income taxes, along with Delaware and Oregon.
Parts of Pennsylvania, Virginia, and West Virginia have local gross receipts taxes, which the Tax Foundation says are “generally understood to be more economically harmful than corporate income taxes.”
About the Author: Jon Styf, The Center Square Staff Reporter – Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies. Follow Jon on Twitter @JonStyf.
