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On that score, the state showing the most improvement since last year’s ranking is North Carolina. The Tarheel State climbed to 16th this year from 44th in last year’s ranking. The Tax Foundation reports that “North Carolina’s largest improvement was in the individual income tax component section, where legislation restructured the previously multi-bracketed system” with a top rate of 7.75% to a single-bracket system with a rate of 5.8% “and a generous standard deduction of $7,500.”

North Carolina is also reducing its corporate income tax rate—to 6% this year from 6.9% last year. The rate could drop as low as 3% by 2017 if the state achieves certain revenue targets for its general fund. North Carolina also received credit in this year’s ranking for a simplified sales tax system.
     
 
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