(The Center Square) — The Tax Foundation conducts a study every year to measure tax competitiveness and Louisiana was in the bottom of the rankings.
For the 2025 state tax competitive index, Louisiana ranked 40th, just outside the bottom 10, which is the same state ranking as the last index except an slight increase (0.04) in individual score.
The five major taxes that the non-partisan nonprofit uses to rank states are corporate taxes, individual income taxes, sales taxes, property taxes and unemployment insurance taxes.
The Pelican State’s low ranking is mostly because of its sales tax rank of 48th, which is below California and New York and only above Washington and Alabama.
Louisiana also ranked 33rd in income tax and 29th in corporate tax. The corporate tax is actually up two in the rankings from 31st in 2024 due to the Legislature eliminating the state’s throw-out rule.
This rule applied taxes to the “nowhere income”, which are sales made because the seller lacks sufficient nexus to be taxed in the destination state, leading to taxation in the wrong state at the wrong rate.
Property tax and unemployment insurance tax had rankings at 16th and 9th respectively, which are both higher marks than the first place state Wyoming.
However, Wyoming was No. 1 in corporate and individual income tax. That’s because, like many other states in the top 10, they simply do not impose one or both of those taxes.
In the case of Wyoming and South Dakota, number one and two, the answer is both. But for states closer to Louisiana in geography and economy, like Texas, Tennessee, and Florida, it’s no state income tax.
Florida, which is 4th in the overall rankings, did not dip below 21 on any of their rankings and only fell below 16 on property taxes.
Texas was carried by their no income tax policy into the 7th spot, with a 46th rank in corporate tax and 40 rank in property tax. Tennessee could say the same with a 48th ranked corporate tax and 47th ranked sales tax.
The organization said in their Index summary and introduction that although every state can’t apply the same tax structure as a Wyoming, they can look at states like Indiana, Idaho and North Carolina who are all top 12 states and all apply every major tax.
They also said that although taxes are not everything, they do matter, and they are within the control of policymakers. Even within a given revenue target, there are better and worse ways to raise revenue.
