The Tax Foundation has named Wyoming the most competitive tax state again.
The Tax Foundation issued its 2025 State Competitiveness Index. This analysis found states that favor individuals and businesses as taxpayers. State income, sales, excise, property, capital gains, corporate, payroll, estate, and VAT taxes are ranked. Wyoming is the most taxpayer-friendly state, Montana 5th, Idaho 11th, and Washington 45th, according to the Tax Foundation.
Wyoming’s tax structure may not be replicable due to its high natural resource tax revenue, but Montana and Idaho can be.
Wyoming topped the list for the fifth year in a row due to its lack of corporate or individual income tax. It lacks inventory, franchise, occupation, and VAT. Manufacturers and data centers are tax-exempt. Mineral tax revenue allows Wyoming to have no corporation or personal income tax. Wyoming’s tax approach is unique, but its ideas can be adapted anywhere.
Idaho rose from 16th to 11th. Its individual and corporate tax rates dropped from 5.8% to 5.695%. Idaho has a 33-cent gas tax, municipal property tax, and no estate tax. Per capita, Idaho collects $4,541 in state and local taxes. Idaho may improve its position by decreasing individual income taxes further.
Idaho has moderate to low taxes, according to the Idaho Tax Commission’s lead research analyst. A proportional tax system with a broad structure and strong tax type balance.”
Multiple high taxes hurt Washington’s ranking. It has a 7% capital gains income tax but no income tax, making it an oddity. Instead of a corporate income tax, it has a 1.3% to 3.3% state gross receipts tax. Sales, property, estate, and hefty gas taxes are also levied. Washington’s state and local taxes per person are $6,644. Washington must cut spending and taxes. Unfortunately, a recent state court order enabling a capital gains income tax allows taxing other assets and income.
Personal income taxes in Montana range from 4.7% to 5.9%. With a 0.69% property tax, no estate tax, and 33.75 cent gas tax, Montana offers modest taxes. Montana collects $5,065 per capita in state and local taxes. Montana has been improving by enacting various tax cuts in 2023. cutting the income tax ceiling from 6.75% to 5.9%, boosting small business exemptions from $100,000 in 2021 to roughly $1 million in 2024, and cutting the capital gains tax to make Montana the 4th lowest in the nation were included. Gov. Gianforte just announced a 4.9% state income tax cut.
Following the Tax Foundation research, Montana Gov. Greg Gianforte said, “In Montana, we’ll continue advancing our pro-jobs, pro-family, pro-business policies to make our state the best place to live, work, and start a business. The American dream may be realized for more Montanans by eliminating taxes and red tape.
The Tax Foundation analysis suggests that every legislative session should prioritize tax rate reduction. Washington needs to fix its tax code. Instead of stretching terms to tax more like the capital gains effort, the Evergreen State should cut spending. Montana, Idaho, and Wyoming are on the right track and should stick to limited government, efficient expenditure, and low taxes.
