Who loves small biz? Top 10 for taxes

Which places are low on taxes?

Exclusive rankings for FSB.com from the Small Business & Entrepreneurship Council. The SBE Council, a Washington, D.C.-based nonprofit which advocates for reduced government taxes and regulations on small business, tends to lobby for the Republican agenda when it comes to taxes and regulations.

1. South Dakota
   Tax index score: 10.01
   South Dakota's key advantage is its tax climate, says Raymond J. Keating, chief economist with the SBE Council. Election Day may change the landscape a bit: On the ballot are proposals to eliminate the state's cellphone tax and increase cigarette taxes.
   TAXES
   Top personal income tax rate: 0%
   Top corporate income tax rate: 0%
   Estate or inheritance tax? No
2. Nevada
   Tax index score: 12.02
   Nevada is booming and not just because of Las Vegas, says Keating. As in South Dakota, Nevada entrepreneurs pay no income, capital gains or estate or inheritance taxes.
   TAXES
   Top personal income tax rate: 0%
   Top corporate income tax rate: 0%
   Estate or inheritance tax? No
3. Wyoming
   Tax index score: 13.60
   "Wyoming's nickname is the Equality State," says Keating. "That could be applied to taxes as well. All income is treated equally, that is, none of it is taxed."
   TAXES
   Top personal income tax rate: 0%
   Top corporate income tax rate: 0%
   Estate or inheritance tax? No
4. Washington
   Tax index score: 15.85
   "As in every state, there is something to gripe about when it comes to taxes," says Keating. "In Washington, it's an ugly and costly gross receipts tax on business." On the other hand, it has no income or capital gains taxes. A measure to eliminate the estate tax is on the November 7 ballot.
   TAXES
   Top personal income tax rate: 0%
   Top corporate income tax rate: 0%
   Estate or inheritance tax? Yes
5. Florida
   Tax index score: 16.82
   "Florida attracts a lot of people not just for the warm weather, but for a welcoming tax climate," says Keating. The Sunshine State has no personal income, capital gains or estate tax.
   TAXES
   Top personal income tax rate: 0%
   Top corporate income tax rate: 5.5%
   Estate or inheritance tax? No
6. Mississippi
   Tax index score: 19.30
   Mississippi has no capital gains, estate, or alternative minimum tax, and unemployment taxes, regulations are fairly low. Unfortunately, while "the business climate is great, they've never been able to really capitalize on it," says Kerrigan.
   TAXES
   Top personal income tax rate: 5%
   Top corporate income tax rate: 5%
   Estate or inheritance tax? No
7. Alaska
   Tax index score: 19.30
   Alaska has no personal income or individual capital gains taxes, and it has the lowest gas tax in the nation. But it also imposes one of the highest corporate income taxes in the country, says Keating.
   TAXES
   Top personal income tax rate: 0%
   Top corporate income tax rate: 9.4%
   Estate or inheritance tax? No
8. Alabama
   Tax index score: 20.47
   Alabama enjoys the lowest property tax burden in the nation, no estate tax, and a relatively low corporate income tax, says Keating.
   TAXES
   Top personal income tax rate: 3.25%
   Top corporate income tax rate: 4.23%
   Estate or inheritance tax? No
9. Texas
   Tax index score: 21.18
   Texas has no personal income, capital gains or estate taxes. However property taxes are relatively high and a corporate income tax was instituted in the 1990s.
   TAXES
   Top personal income tax rate: 0%
   Top corporate income tax rate: 4.5%
   Estate or inheritance tax? No
10. Michigan
    Tax index score: 22.05
    "Michigan certainly is having its economic problems," says Keating. But the state enjoys relatively low income tax rates and no estate tax.
    TAXES
    Top personal income tax rate: 3.9%
    Top corporate income tax rate: 1.9%
    Estate or inheritance tax? No

— FORTUNE Small Business, Copyright 2007