Nineteenth annual study shows state business taxes decreased by 1.9% and local business taxes grew by 3.1%
In fiscal year 2020, business tax revenue accounted for 44.3% of all state and local tax revenue
Ernst & Young LLP (EY US) announced today that according to its study prepared for the Council On State Taxation (COST) and its affiliate, the State Tax Research Institute (STRI), businesses paid more than $839 billion in state and local taxes in fiscal year 2020, an increase of 0.5% from fiscal year 2019. State business taxes decreased by 1.9%, and local business taxes grew by 3.1%. The report, titled “Total State and Local Business Taxes: State-by-State Estimates for Fiscal Year 2020,” also shows that in 2020, business tax revenue accounted for 44.3% of all state and local tax revenue.
The study provides estimates of state and local business taxes that reflect tax collections from July 2019 through June 2020 covering a period with the final quarter reflecting the economic effects of COVID-19 lockdowns beginning in mid-March. The data presented in this study is for each state’s fiscal year, which differs by state.
Click here to download the full study.
“The pandemic wreaked havoc on America’s households and just about every aspect of private and public sector business operations, which created an historic disruption in the state and local government’s ability to collect taxes,” said COST President and Executive Director, Douglas Lindholm. “However, state and local governments reported a slight increase in tax revenue, a number we may see go up when the final numbers are tallied in next year’s report.”
“COVID-19 lockdowns triggered widespread tax filing extensions,” said Andrew Phillips, Principal with Ernst & Young LLP’s Quantitative Economics and Statistics (QUEST) practice. “In fact, 43 states shifted the payments of either personal, corporate or general sales taxes to 2021. We expect that a large portion of this lost revenue will be recouped by states when delayed filing payments are collected.”
Other key findings of the study include the following:
- Property taxes totaled $329.2 billion and remain the largest state and local tax paid by businesses. Property taxes accounted for 39.2% of total state and local business taxes and 76.5% of local business taxes.
- General sales taxes on business inputs and capital investments totaled $180.1 billion, or 21.5% of state and local business taxes.
- State and local corporate income taxes totaled $71.7 billion, or 8.5% of all state and local business taxes.
- Individual income taxes on business income totaled $50.4 billion, or 6% of total state and local business taxes.
EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets. Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform, and operate. Working across assurance, consulting, law, strategy, tax, and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data, and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.