Total state and local business taxes for FY21

This state-by-state examination illustrates the total state and local taxes businesses paid in FY21 as outlined in the 20th annual report.

Businesses paid $951.4 billion in state and local taxes in FY21, which was 43.6% of all tax revenue at the state and local level. Businesses paid $493.7 billion in state taxes in FY21, which was 17.0% higher than the prior fiscal year, and $457.6 billion in local taxes, which was 10.2% higher, for a combined year-over-year growth rate of 13.6% over FY20. Both corporate income and individual income tax collections experienced higher than normal growth rates in FY21, in part because the filing deadline was extended from April 15 to July in 2020, which shifted revenues from FY20 to FY21.

The state and local business tax estimates reflect tax collections from July 2020 through June 2021. The report includes business taxes in its analysis, such as property taxes paid by businesses; sales and excise taxes on intermediate inputs and capital expenditures purchased by businesses; business entity taxes, such as the corporate income tax, gross receipts tax, franchise tax and license taxes on businesses and corporations; the share of individual income taxes paid by owners of noncorporate businesses (pass-through entities); unemployment insurance taxes, and all other state and local taxes that are the statutory liability of business taxpayers

Key findings

• Revenue collections from taxing business property grew by 11.9% in FY21 to $368.8 billion. Property taxes account for 38.8% of all state and local taxes paid by businesses, the most of any tax category.
• Sales tax collections from business purchases of intermediate inputs and capital expenditures are the second largest source of business tax revenue for state and local governments, accounting for 20.4% of all taxes paid by businesses in FY21.
• Corporate income tax collections grew 53.3% in FY21 to $111.0 billion, in part because many states extended the filing deadline for businesses and individuals in the spring of 2020 in response to the COVID-19 pandemic, which shifted collections from FY20 to FY21.
• Individual income taxes paid on pass-through income was the fourth largest source of business tax revenue at 6.2% of total state and local business tax collections.
• Total state and local taxes paid by businesses in FY21 equaled 4.9% of US private-sector gross state product (GSP), which measures the value of private-sector production of goods and services in a state.