Kyle Wingfield
Columnist
People across the state are watching the rankings this time of year, anxious to see where Georgia may land. I’m as big a football fan as the next person, but another list caught my eye. Each year, the Tax Foundation rates the states based on their tax codes. In the latest edition of its rankings, Georgia came in 26th.
Considering that the index also includes the District of Columbia, that places our state exactly in the middle nationally: 25 above us and 25 below us. Before we compare Georgia to its past performance, or to its neighbors, it’s worth noting some changes to the rankings themselves.
This year that list, formerly known as the State Business Tax Climate Index, was rebranded the State Tax Competitiveness Index. The methodology also was changed to better reflect the changed tax landscape. Two prominent examples are the increased prevalence of remote work since the pandemic and the U.S. Supreme Court’s Wayfair decision, which changed the way states can collect sales taxes from companies outside their borders selling to residents inside their borders. “We have reworked the Index from the ground up to make it a better product,” explained Jared Walczak, vice president of state projects for the nonpartisan group based in Washington, D.C.
As in the past, Georgia’s best performance came on corporate taxation, where it rated 12th best. The worst score for Georgia was on property taxes, where it was only 34th.
Georgia also ranked 23rd for sales taxes, 24th for unemployment insurance taxes and 31st for individual income taxes.
Of course, rankings are all about comparisons. So, how do we compare to our neighbors?
To no one’s surprise, we trail Florida (fourth overall) and Tennessee (eighth) by a considerable margin. Neither of those states imposes an individual income tax, but Florida beats us on every count except corporate taxes, where it still ranks an impressive 16th.
Tennessee is more of a mixed bag, riding high on its lack of a personal income tax but sinking toward the bottom on corporate taxes (48th) and sales taxes (47th).
Perhaps a more interesting comparison is to North Carolina, which used to be considered a relatively high-tax state but has steadily improved its tax code. The Tar Heel State now ranks a lofty 12th overall, and it beats Georgia on every component.
“Of the states that levy all the major taxes, North Carolina is among the highest performers on the Index, with its flat 4.5% individual income tax rate, low 2.5% corporate income tax rate (slated for eventual repeal), and relatively competitive property and sales tax systems,” the Tax Foundation notes. “These low rates are made possible in part by North Carolina’s decision to forgo many nonneutral and distortive business tax credits, such as jobs, R& D, and investment tax credits, and for its commitment – secured through a series of reforms in the past decade – to broad bases and low rates.”
In other words, North Carolina doesn’t use its tax code to pick winners and losers; everyone benefits from its favorable tax climate. Our other neighbors, Alabama (38th overall) and South Carolina (33rd), trail Georgia in the rankings.
Besides this 2025 edition of the State Tax Competitiveness Index, the Tax Foundation also provided scores with the new methodology dating back to 2020, to allow for comparisons over the years.
Georgia improved by six spots compared to last year – a kind of “attaboy” to state lawmakers for the reforms they’ve embraced lately. The Tax Foundation specifically mentioned our move to a flat tax structure for the individual income tax, alignment of the individual and corporate income tax rates, and gradual lowering of those rates. Georgia’s current ranking is its best in the 2020-2025 data set.
Everyone wants to be No. 1, and Georgia should be no exception. The respect for the changes our state has already made point the way: steady, broad-based reforms.
More of those, please. Kyle Wingfield is the president and CEO of the Georgia Public Policy Foundation.