10 Best Tax States for Small Business 2011

The Small Business & Entrepreneurship Council recently released its "Business Tax Index 2011: Best to Worst State Tax Systems for Entrepreneurship and Small Business," which ranks the 50 states and the District of Columbia based on their tax systems.The index pulls together 18 different tax measures and combines them into one tax score that allows them to be compared with one another. Among the taxes included are income, capital gains, property, death/inheritance, unemployment, and various consumption-based taxes, including state gas and diesel levies. (REUTERS)

No. 10: Colorado Colorado rounds out the top 10, based on its tax policy, which includes low corporate, income  and sales tax rates.The state also offers corporate income tax credits for child-care programs, alternative fuel-use and investment taxes.

No. 9: Ohio The SBE Council's index ranks the 50 states and the District of Columbia according to the costs of their tax system for entrepreneurship and small business. Ohio has no tax on inventory or corporate income, nor does it tax investments in machinery or equipment. (REUTERS)

No. 8: Alaska According to Ray Keating, SBE Council chief economist, states with low taxes, like Alaska, are better able to attract investors. Alaska's state and local tax burden is the lowest in the nation. (Reuters)

No. 7: Alabama The index helps to shed light on the burdens that affect decisions of individuals and businesses. Alabama's state and local tax burden has been below average for more than 30 years. 

No. 6: Florida The Business Tax Index pulls together 18 different tax measures and combines them into one tax score that allows the states and D.C. to be compared. Florida has no individual income tax, making it attractive to small business owners. (REUTERS)

No. 5: Washington Washington fell right in the middle of the top 10 best tax states, ranking at number five.The state's lack of income tax makes up for some of the other major areas it taxes. (Reuters)

No. 4: Wyoming The taxes included in the SBC's tax index are income, capital gains and property tax. Wyoming has no corporate state income tax, personal income tax or inventory tax. (Reuters)

No. 3: Nevada Death and inheritance taxes, as well as unemployment taxes, are included in the tax score for each state. Nevada does not have any individual income tax, which accounts for its high ranking. (REUTERS)

No. 2: Texas Consumption-based taxes, including state gas and diesel levies, are also included in the ranking comparisons. Texas also does not tax personal income. (Reuters)

No. 1: South Dakota South Dakota took the top spot as the state with the nation's best tax policy for small business owners. The state has no income-based taxes, capital gains taxes or corporate income taxes. (Reuters)