State, local taxes paid by businesses rose 2% to $738.4 billion in 2017

The state and local taxes paid by businesses rose 2 percent to $738.4 billion in 2017 from the prior year, according to a study by Ernst & Young LLP, the Council on State Taxation and the State Tax Research Institute.

State business taxes increased by 0.4 percent and local business tax grew by 3.7 percent. Business tax revenue accounted for approximately 44% of all state and local tax revenue in 2017.

Property taxes had the biggest share of total state and local business tax revenue at 38.9 percent, or $287.4 billion, in 2017. Business property tax revenue rose 3.9 percent in 2017, the fifth time since 2009 that the growth rate was greater than 1 percent.

State and local corporate income and business gross receipts tax revenue fell 0.7 percent to $62.7 billion in 2017. Federal tax reform, under the Tax Cuts and Jobs Act (TCJA), was signed into law in December of 2017, reducing federal corporate income taxes while expanding state income tax bases.

General sales and use tax revenue derived from businesses on purchases of inputs, including capital equipment, rose 2.7 percent to $157.4 billion in 2017 from the prior year, making up 21.3 percent of all state and local business taxes. Sales taxes on business inputs are the largest state tax paid by businesses, representing 32.4 percent of all state taxes paid by businesses.

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