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.
My eyes quickly ran to the bottom of the list, which included New York (50), New Jersey (49) and California (48). I’m not going to lie; I might have cracked a smile when I read the list from the bottom up. Nevada’s positioning relative to California has been a key source of growth and economic opportunity for decades. The stark contrast in rankings puts massive daylight between scores of 17 and 48. Maintaining a gap of that magnitude against the fifth-largest economy in the world to our west should pay dividends for Nevada going forward.
Nevada’s appeal to new residents and businesses extends well beyond its favorable tax environment. The state is consistently recognized for its dynamic qualities that attract investment, relocation and growth. From measurable economic advantages to intangible community assets, Nevada offers a competitive edge that continues to set it apart.
For instance, LAS Airport consistently earns high marks, recently ranked by J.D. Power as one of the nation’s best for traveler satisfaction. It also stood as the fifth busiest airport in North America last year for takeoffs and landings, connecting Nevada to the world. Las Vegas reinforces its position as a leader in the leisure and business travel sectors by being ranked the top tradeshow destination in North America. Additionally, Southern Nevada leads the nation with the largest inventory of hotel rooms, widely recognized as ranking among the world’s most sought-after destinations.
Nevada’s excellence isn’t confined to tourism and business rankings. Southern Nevada boasts five of the country’s fastest-selling master-planned communities, according to RCLCO, reflecting the region’s strong housing demand and vibrant growth. Frequently ranked among the fastest-growing states in the nation, Nevada is a place where people want to live. Its community assets add to its appeal: Las Vegas was named the best city for outdoor recreation by WalletHub, and the state’s two flagship universities have achieved the prestigious Carnegie R1 Research designation, placing Nevada at the forefront of innovation and education.
I suppose there are lists that track lists of positive attributes when describing all that this community offers. While a ranking of 17 out of 50 from a state tax competitiveness perspective is lower than I had expected, Nevada remains competitive relative to many of its peers on a number of fronts. I particularly like Nevada’s chances if the battle is against top state tax performers Wyoming (1), South Dakota (2) and Alaska (3). However, it is important that businesses, residents and local leaders ensure Nevada’s enviable position is preserved for future generations. Complacency can be the biggest threat to future performance.