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Total state and local business taxes State-by-state estimates for FY24

Authors

  • Andrew Phillips

    Principal, EY Americas Quantitative Economics & Statistics (QUEST) Leader, Ernst & Young LLP

  • Caroline Sallee

    EY US Quantitative Economics and Statistics (QUEST) Managing Director

5 minute read 02 Feb 2026
Related topics
Tax

An overview of FY24 business taxes by state, highlighting state-by-state variations in composition and level and policy trends driving overall business tax growth

In brief
  • How are evolving state tax policies shaping the overall burden companies face across different industries and regions?
  • Which states show the greatest volatility in business tax collections, and what economic or policy drivers explain these swings?
  • How should organizations interpret differences in effective business tax rates when assessing competitiveness and future investment plans?

How EY can help

In FY24, businesses contributed $1.1 trillion in state and local taxes, reflecting a 4.7% increase from the prior year and accounting for nearly 46% of all U.S. subnational tax collections. Growth was driven primarily by increased property tax collections, increased sales tax payments tied to business input purchases, and notable gains in income taxes on pass-through entities. At the same time, corporate income and gross receipts tax revenue declined modestly as several states reduced statutory tax rates or adjusted business tax thresholds.
 

Property taxes remain the most significant component of the business tax burden, representing over one third of total payments, while sales taxes on business inputs accounted for more than one fifth. Income taxes on pass-through income increased 21% over the prior year with California contributing most of the national increase. Severance tax revenues, by contrast, fell steeply due to commodity price softening, heavily affecting states reliant on natural resource extraction.
 

Business tax burdens, measured as total business taxes divided by private sector economic activity, were 4.5% on average in FY24.  State total effective business tax rates ranged from 3.2% to 10.6%, reflecting structural differences in state tax systems, economic bases and the presence of severance taxes. States without broad individual income taxes or those relying on gross receipts or extraction taxes tend to collect a higher share of revenue from businesses.

The report also evaluates the extent to which businesses benefit from state and local spending. Because education dominates government budgets, the assumed share of education benefits going to businesses significantly affects the estimated tax to benefit ratio. Depending on the education benefit assumption used, 50% versus 0%, businesses pay between $1.06 and $2.37 in taxes for every $1.00 of government services they receive. 

Overall, FY24 results highlight a continued trend of faster growth of income taxes on pass-through entities, but a decline in corporate income tax collections. However, the share of taxes paid by business has remained stable at nearly 46%. Individual state tax changes were driven by a combination of policy and economic changes, particularly in states dependent on severance taxes. These findings support a deeper understanding of business tax burdens as organizations navigate planning, investment and fiscal risk across diverse state environments.

Click here to read the full report

Summary 

Businesses contributed over a trillion dollars in state and local taxes in FY24, with growth driven mainly by property and sales related liabilities and significant increases in pass through income taxation. Revenue patterns varied widely by state, reflecting differing tax structures, economic conditions and policy changes. The report highlights how these shifts influence overall business tax burdens, state competitiveness and the balance between taxes paid and benefits received from public spending.

About this article

Authors

  • Andrew Phillips
    Principal, EY Americas Quantitative Economics & Statistics (QUEST) Leader, Ernst & Young LLP
  • Caroline Sallee
    EY US Quantitative Economics and Statistics (QUEST) Managing Director
Related topics
Tax

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