For as long as I can remember, Nevada has ranked near the top of the Tax Foundation’s annual report on the relative business tax climate of all 50 states. I expected to see the Silver State in its usual spot among the top 10 when I recently opened the new 2025 State Tax Competitiveness Index report. However, I was somewhat surprised to see the state tracking at number 17 – still in the top third of the country but below my expectations and years of history.
Just one year ago, Nevada ranked as the seventh-best tax climate in the Tax Foundation’s 2024 State Business Tax Climate report, continuing the state’s run in the top 10 for the better part of the past two decades. The new index value that ranked Nevada lower is computed differently and focuses on slightly different attributes. The new value still considers the fact that Nevada has no corporate income tax and no personal income tax, which reflects a pro-business environment that is helpful when courting new businesses and residents to the community. Nevada also ranked in the top seven performers as it relates to overall property taxes, contributing to a competitive cost of living.
The state’s overall ranking was impacted by things such as the Modified Business Tax, a modest rate that employers pay on reported wages; the structure of the Commerce Tax; and lower ratings relative to sales and use tax rates. Importantly, sales taxes are only applicable on tangible goods sold at retail – not services – and items such as everyday groceries and prescription medications are also exempt from sales taxes. It is unclear how the latest report accounted for the 50 million-plus visitors to the state each year who contribute substantially to the tax base. While selected rankings may be subjective, Nevadans continued to enjoy some of the lowest tax burdens in the nation…