You can’t escape taxes when running a small business, but depending on where you are located, you can minimize your taxable income. Small business tax requirements vary greatly from state to state, which means where you choose to set up shop significantly affects profitability.

When it comes to the tax man’s long list of demands, several tax types in particular can take a big bite out of your bottom line. These include property, sales, excise, unemployment insurance, and corporate and personal income taxes. Personal income taxes are one of the most significant, because 92% of small business owners file taxes as individuals by operating their businesses as “pass-through entities” (sole proprietorships, S corporations, and partnerships), according to the Small Business & Entrepreneurship Council.

These five states are rated as having the top five most favorable small business tax climates, according to the 2017 State Business Tax Climate Index from the Tax Foundation:

1. Wyoming

Considered the most tax-friendly state in recent years, Wyoming is one of only three states in the nation that levy no corporate income tax at all, and is among just seven states that levy no personal income tax. The state’s sales tax rate is one of the lowest in the nation at just 4%, and Wyoming’s unemployment rate was only 4.3% (as of November 2017). Excise taxes are also very reasonable. Property taxes are relatively high, however, at $2,109 per capita (according to the Tax Foundation’s 2017 rankings of states’ per-capita property tax collections).

2. South Dakota

South Dakota features a favorable small business climate with its low unemployment rate at 3.5%, as of November 2017. South Dakota’s sales tax rate is also attractive at just 4.5%. The state collects no personal or corporate income tax, although it does place a franchise tax on financial institutions. Property taxes in the state are considered mid-range (compared to other states) at $1,301 per capita.

3. Alaska

Alaska has no sales tax, providing small business owners with a major plus when it comes to retailing merchandise. There is also no personal income tax in Alaska. Due to the location of the state, it does feature particularly high excise taxes, and property taxes are among the highest in the nation at $2,639 per capita. The unemployment rate is also a little on the high side at 7.2% (as of November 2017).

4. Florida

Conditions are bright in the Sunshine State when it comes to small business taxes. Unemployment rates are fairly low at 3.6%, as of November 2017. Florida also has no personal income tax. Sales tax, however, runs a little high at 6%, and excise tax can also be costly. Property taxes fall mid-range at $1,184 per capita.

5. Nevada

Running a business in Nevada is an educated gamble when you consider that the state doesn’t charge any personal or corporate income taxes. Property tax is also fairly low at $953 per capita. Nevada does have a relatively high statewide sales tax rate at 6.85%, however, and the unemployment rate is one of the highest in the nation at 5.0%, according to November 2017 figures from the Bureau of Labor Statistics.

The tax man knocks no matter what, but if you run your business in one of these states, you can be assured that he isn’t rapping on your door as loudly as in some states. The relative advantages of these states — which tend to have low property taxes and no state income taxes — are likely to grow in the next few years, thanks to the new federal tax law that took effect Jan. 1, 2018. Starting with the 2018 tax year, there will be a limit of $10,000 that can be deducted for state and local taxes, including property taxes. This and other tax factors mean that 2018 could be a good time to start a business in a low-tax state.

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