As the new year approaches, Hoosier business owners should be happy to hear that their state rose by two ranks, coming in 8th in comparison to last year’s 10th ranking, in the 2017 national business tax climate index, based off of an annual study performed by the Tax Foundation. Compared to our bordering states, Michigan, Illinois, Kentucky and Ohio, who are ranked 12th, 23rd, 34th and 45th respectively, our climate is incredibly favorable for both businesses and individuals. In terms of ranking for individual tax types, Indiana came in fourth nationally for property taxes, 10th in both unemployment insurance tax and sales tax, 11th in individual income taxes, and the “highest” ranking in corporate income tax, though still in the bottom 50 percent, at 23rd.

However, many other top ranking states, such as Florida, Wyoming or South Dakota, may find themselves in that category because they do not leverage either income or sales tax on their residents. Indiana and Utah are the only two states in the top ten that collect all of the major tax types, yet it is their low rates overall that provide both states such high rankings.

Much of Indiana’s favorable rankings are due to a four-year corporate income tax rate phase down, which began in 2012. However, the state is positioned to further advance in the rankings largely because of legislation instituting additional corporate income tax rate reductions by the year 2021, although a 0.07 percent decline in the individual income tax rate, beginning in January of 2017, will also assist in advancing our ranking.

Thus, Indiana is poised for success in both 2017 and the years to come. In the past five years, Indiana has cut its unemployment rate in half and sits below the national average. Hoosiers across the state are thriving both individually and in their businesses, and it appears that we can only anticipate more growth in the future.

If you have any questions about the corporate income tax rate phase down or the corporate income tax rate reductions, please contact me or your representative at Brammer & Yeend Certified Public Accountants. Your Business is our priority.