The story of how states compete with one another for new residents and job creators can be found in the latest edition of our annual “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index,” which demonstrates how economically farsighted legislators and governors are reducing taxes and boosting growth.
Since 2007, this research has provided state lawmakers with clear, data-driven insights into how tax and other fiscal policies impact economic competitiveness. Using 15 proven policy variables, the report ranks each state’s economic outlook and highlights the direct connection between free-market reforms — like cutting taxes, reducing debt and limiting government overreach — and stronger economic growth.
For an unprecedented 18th consecutive year, Utah claimed the top spot in the economic outlook ranking while leading the nation in job and state GDP growth. This sustained success is no accident: Utah’s leaders have consistently championed pro-taxpayer reforms, from enacting flat personal and business income taxes to keeping property tax burdens in check. Meanwhile, Tennessee soared to No. 2, with Indiana, North Carolina and North Dakota rounding out the top five.
A notable winner this year was Louisiana, jumping 13 spots to 18th overall for economic outlook. Thanks to GOP Gov. Jeff Landry and principled legislators, Louisiana’s recent tax overhaulboosted its competitiveness across major tax categories. The state flattened and reduced its personal and business income taxes, with the former reduced to an especially competitive flat 3 percent rate.
West Virginia also saw strong gains in economic outlook, climbing seven spots to 16th place. Historically, West Virginia suffered from out-migration, but the tide has turned. The Mountain State has now experienced four straight years of positive in-migration as state leaders lowered taxes and implemented a universal education freedom program.
Meanwhile, after six straight years of cutting personal income taxes and five straight years of cutting corporate taxes, Arkansas arrives with its best finish ever, landing at 10th overall for economic outlook. The Arkansas turnaround is already showing up in domestic migration figures: As recently as 2015, Arkansas was a net out-migration state; from 2023 to 2024, the state gained more than 13,000 residents from net domestic migration.
At the other end of the spectrum, New York continues its 12-year streak in dead last for economic outlook. Once an economic powerhouse, the Empire State now suffers from one of the nation’s highest marginal personal income tax and corporate income tax rates, and the fourth-highest property tax burden. Since 2014, New York has seen net domestic out-migration of more than 2 million residents.
California isn’t far behind, ranking 47th overall after enacting the largest increase in state taxes since 2023. Since 2014, the state has seen net out-migration of more than 2.2 million residents, the most of any state. Despite its famously hospitable climate, economic policies have proven to make one of the most attractive states uncompetitive, with people and businesses choosing to locate elsewhere.
Our path to economic revival has always run through the states. As Washington attempts to tackle its legacy of debt and dysfunction, states remain America’s last line of defense for fiscal responsibility and economic growth. The states leading our rankings thrive because they put the people first. When lawmakers prioritize limited government, low taxes and pro-growth reforms, the results speak for themselves: jobs are created, families prosper and communities thrive.
Jonathan Williams is president and chief economist at the American Legislative Exchange Council (ALEC). He is a co-author of ALEC’s annual “Rich States, Poor States” report. Follow him on X at @TaxEconomist. Lee Schalk is senior vice president of policy at ALEC.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
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