State Business Tax Burdens Announced

Where does your state rank?

The tax climate for businesses varies dramatically depending on the state in which the business resides. State business environments are constantly shifting as some states readily enact changes made at the federal level, while others do not.

Each year the non-profit Tax Foundation organization announces a ranking of tax burdens for businesses. The results of their 2014 ranking are noted here.

2014 State Business Tax Climate Index

Some Observations

The 10 best states in this year’s Index:

The 10 worst business tax burden states:

  • Wyoming
  • South Dakota
  • Nevada
  • Alaska
  • Florida
  • Washington
  • Montana
  • New Hampshire
  • Utah
  • Indiana
  1. Maryland
  2. Connecticut
  3. Wisconsin
  4. North Carolina
  5. Vermont
  6. Rhode Island
  7. Minnesota
  8. California
  9. New Jersey
  10. New York

Most of the above states are favorable for businesses because they lack one of the common tax revenue types. Some states lack corporate taxes while others have no sales tax or individual income taxes. Indiana is unique in that is has all the major tax classifications but they are just lower rates than most other states.

The common themes within these non-friendly business states are high tax rates with complex tax code. Minnesota stands out here as recently enacted tax changes will impact the cost of doing business within the confines of this state.

Want to learn more? The full study is available at www.taxfoundation.org

Student Loan Programs Get a Fix

Creative Summer JobsAs students head off to college, one bill recently signed in Washington D.C. makes federal student loan interest rates a bit more predictable.

With over $1 trillion in student loan debt, the cost of student borrowing is quickly becoming a major economic issue in the United States. The rates for many popular government sponsored loan programs doubled on July 1st from 3.4% to 6.8%. Since some 18 million loans could be affected by this change, Congress determined it was necessary to address the scheduled change.

Under the recently passed legislation, the rates for these loans will now be set against a market rate formula with a cap on the highest possible rate. The hope is that by making the rate a formula, it removes politics from the process and allows families and students to better plan their costs. Specifically, interest rates will be set annually with the rate linked to the 10-year Treasury note rate. The rates will be as follows:

Fall 2013 rates Maximum Rate Cap
undergraduate 3.9% 8.25%
graduate 5.4% 9.50%
parents 6.4% 10.50%

With the passage of this law, approximately 11 million loans will see an average interest savings of $1,500 according to the White House.

While the legislation provides some certainty in student loan rates, there are already rumblings that future legislation is forthcoming. So stay tuned.