Nebraska Climbs State Tax Competitiveness Rankings as Arizona, Georgia Fall

The nonpartisan Tax Foundation recently published its annual State Tax Competitiveness Index for 2027.

The Tax Foundation’s State Tax Competitiveness Index is designed to give policymakers, taxpayers, and business leaders a gauge of how their states’ tax systems compare. Rather than looking exclusively at tax collections, which can be volatile, particularly in poorly designed tax systems, the index evaluates how well states structure their tax policy and provides a road map for improvement.

Wyoming came in first this year, with Florida and Texas close behind in 4th and 5th place, respectively. Unsurprisingly, New Jersey, California, and New York occupied the bottom 3 spots in the 50-state ranking.

Nebraska climbed significantly in the rankings, while Arizona took a slight tumble. Wisconsin held steady, but Georgia saw the biggest drop. Here’s how each of CFFE’s states fared in the ranking, and what caused changes from last edition:

Nebraska improved eight places overall, from 24th to 16th from last year’s ranking. The growth was primarily driven by the continued phase-down of its income tax rates. The state’s top individual income tax rate and flat corporate tax rate dropped from 5.2 percent to 4.55 percent.

Arizona fell modestly, three places overall, from 14th to 17th. The fall was driven mainly by Arizona’s failure to adopt conformity legislation to align the state’s tax code with changes made in the OBBBA by the Index’s snapshot date of July 1, 2026. Arizona’s fiscal year 2027 budget included a three-year moratorium on tax incentives for certain businesses' qualifying equipment purchases, which contributed to the state’s drop in ranking.

Georgia dropped markedly, from 18th to 24th, in its overall ranking. The fall was almost entirely due to the state’s failure to conform to the competitive corporate expensing provisions in the OBBBA.

Wisconsin ranked 20th overall. The state was praised for its property and sales tax environment but lost ground for its income and corporate tax structure.