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Kentucky now 23rd in state tax climate rankings

Tax reform helps state move up 16 spots from 2018

WASHINGTON, D.C. — The Tax Foundation’s newly-released 2019 State Business Tax Climate Index ranks Kentucky as having the 23rd best business tax climate in the country. That’s up from 39th last year and represents the most significant improvement in the 2019 rankings.

The states in the bottom five are New Jersey (50), California (49), New York (48), Connecticut (47), and Arkansas (46). At the other end, Wyoming leads the way, followed by Alaska (2), South Dakota (3), Montana (4), and Florida (5).

While tax burden is an important factor, the index measures how efficiently a state raises revenue using 100 different variables. Kentucky’s improvement came about even though its tax reform law will increase the state’s revenue collections. To help address its budget shortfall, lawmakers eliminated a number of business tax credits and expanded the number of items subject to sales tax. These changes were paired with a 1 point reduction in the income tax.

Click here to view the full report.