Are You Living in One of the Fastest-Growing Low-Tax States?

There’s a reason why entrepreneurs are increasingly pulling up stakes and heading to states where their money works harder—and it’s not just for the sunshine. Business owners are recognizing that state tax policies can make or break profitability. And while moving isn't always the right call, knowing where people—and businesses—are heading gives you a sense of how to play the game smarter.

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The latest data from the Tax Foundation and other economic reports show a clear trend: lower taxes and a lower cost of doing business are driving both population growth and economic opportunity in key states. If you’re a business owner who’s wondering whether your state is holding you back, let’s take a look at what’s happening and why it matters.

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Wyoming: Why More Entrepreneurs Are Incorporating in the Cowboy State

You wouldn’t expect a state better known for rodeos than revenue streams to be leading the charge in new business formations—but Wyoming has quietly become one of the fastest-growing low-tax states for entrepreneurs.

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Here’s why:

• No personal or corporate income tax.
• Low filing fees that keep administrative overhead minimal.
• Strong asset protection laws, especially for LLCs, that make it harder for creditors to pierce the corporate veil.

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I recently worked with a client, a SaaS company owner, who was tired of fighting the high-tax environment in California. Rather than relocate his entire team, he set up a Wyoming LLC to house his intellectual property and shifted significant revenue streams through it. His state tax liability dropped considerably—without ever packing a moving van.

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According to the Tax Foundation’s State Business Tax Climate Index, Wyoming ranks in the top five for corporate tax treatment and overall business friendliness.

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North Carolina: A Low-Tax State That’s More Than a Tax Haven

North Carolina often surprises clients I work with. On paper, it doesn’t scream “tax haven,” but with the lowest corporate income tax rate in the country at 2.5%, and plans to phase it out entirely, it’s gaining traction among savvy entrepreneurs.

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What sets North Carolina apart isn’t just taxes—it’s the combination of a pro-business legal framework, an educated workforce, and access to major markets along the East Coast. One of my manufacturing clients expanded their operations there and saw both lower payroll costs and an uptick in productivity—two metrics we obsess over at Nth Degree.

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The state's consistent ranking at the top of CNBC’s America’s Top States for Business underscores that this isn’t a fluke.

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Missouri: The Unexpected Leader in Cannabis and Growth Industries

Missouri is a case study in how policy changes can spark entrepreneurial opportunity. With the legalization of recreational marijuana, the state has become the seventh-largest cannabis market in the U.S. But beyond that, Missouri boasts low property taxes, low corporate income tax, and minimal regulations, making it fertile ground for growth industries beyond cannabis.

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A client of ours, who owns a chain of dispensaries, chose Missouri as their launchpad. In the first year, they outpaced revenue projections by 30%, largely because their tax burden was significantly lower than it would’ve been in a state like Illinois.

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The key takeaway? Sometimes, the best opportunities aren’t where the headlines point—but where the tax code quietly opens doors.

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How to Make a Low-Tax State Work for Your Business—Without Moving

The conversation doesn’t have to end with relocation. Here are strategies that high-income entrepreneurs are using to capture the benefits of low-tax states, even if they don’t want to uproot their lives:

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1.  Leverage Pass-Through Entity (PTE) Elections
   If your business operates in a high-tax state, you may be eligible to elect PTE status. This allows you to pay state income taxes at the entity level, often avoiding the SALT deduction cap that limits personal itemized deductions to $10,000.
2. Set Up a Multi-State Structure
   Many businesses benefit from establishing operations or entities in low-tax states (like Wyoming or Nevada) while maintaining headquarters elsewhere. It’s a complex strategy, but with the right guidance, it can minimize your state tax footprint and maximize asset protection.
3. Explore Trust Structures (Like ING Trusts)
   High-net-worth individuals are increasingly utilizing Incomplete Non-Grantor (ING) Trusts set up in states with no income tax to shield investment income from state-level taxation. But be cautious—some states are catching on and closing loopholes.

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Conclusion

Whether you’re thinking about relocating or just looking for smarter ways to structure your business, it’s clear: tax-friendly states offer more than just lower bills—they offer room for growth. But strategies that work for one business might not make sense for another.

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At Nth Degree CPAs, we help entrepreneurs find the right balance between maximizing tax efficiency and maintaining business flexibility—no matter where you live.

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Sources

Investopedia

Tax Foundation

Newsweek

EDPNC

Nasdaq

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