(The Center Square) – Tennessee ranks second for its economic outlook in an annual analysis of the fiscal health of the 50 states.
The 18th annual Rich States, Poor States from the American Legislative Exchange Council shows Tennessee moved to the second spot after ranking 6th in 2024 and 13th in 2023.
The Volunteer State received its highest marks for its tax policies. The state has no income tax or estate/inheritance tax. Tennessee also received the top mark for its minimum wage, which is at the federal level of $7.25 an hour.
Tennessee’s high sales tax rate placed it at 44th, its worst rating. The sales tax rate is 7%.
The state’s economic performance ranking was 12th among the 50 states, according to the report.
An analysis of Tennessee’s gross domestic product for 2013 to 2023 showed it was 76.25%, 10th in the country.
The state welcomed 405,833 new residents between 2021 and 2023, ranking it seventh among the states, according to the report.
“As Washington attempts to tackle debt and dysfunction, the states remain America’s last line of defense for fiscal responsibility and economic growth,” said ALEC President and Chief Economist Jonathan Williams. “Rich States, Poor States once again illustrates that Americans vote with their feet – leaving high-tax, high-regulation states in favor of those embracing low taxes, balanced budgets, and worker freedom. The states leading our rankings thrive because they put the people first.”
Utah took the top spot in the report, with Indiana, North Carolina and North Dakota rounding out the top five. The bottom five states are Illinois, California, New Jersey, Vermont and New York.
The report was co-authored by Reagan economist Dr. Arthur B. Laffer, policy expert Stephen Moore, and ALEC president and chief economist Jonathan Williams.
