These Are the Best and Worst States to Start a Business in 2025, According to New Research Location can mean the difference between failure and success.
By Amanda Breen Edited by Jessica Thomas
Key Takeaways
- Twenty percent of new businesses fail within the first two years.
- Taxes, zoning regulations and licensing requirements can have a major impact.
- Here's where in the U.S. entrepreneurs might see the most success in 2025.
Is starting a business on your agenda in 2025? If you don't want to launch one of the roughly 20% of businesses that fail within two years, you should consider all of the factors that make or break success.
And exactly where you start your business is one of the most essential pieces of the puzzle.
Related: Starting a Small Business? Here Are the States Where It's Most Likely to Survive — and the Least.
Entrepreneurs who strategically choose their business's state, city or neighborhood can benefit from different taxes, zoning regulations and licensing requirements, according to the U.S. Bureau of Labor Statistics (BLS).
A new study from WalletHub compared all 50 states across 25 key indicators of startup success — factors like labor costs, the availability of human capital and how many hours make up the average work week — to find out where entrepreneurs stand to gain the most.
Related: Want to Start a Small Business? Here Are the Best States to Try (and the Ones to Avoid).
"It's crucial to establish your business in a state that will maximize your chances of success," WalletHub analyst Chip Lupo says. "The best states have low corporate tax rates, strong economies, an abundance of reliable workers, easy access to financing and affordable real estate."
Check out WalletHub's full ranking of the best and worst states to start a business in 2025 below:
Overall Rank | State | Total Score | Business Environment Rank | Access to Resources Rank | Business Costs Rank |
1 | Florida | 59.66 | 1 | 14 | 28 |
2 | Georgia | 58.62 | 2 | 27 | 16 |
3 | Utah | 57.84 | 11 | 2 | 29 |
4 | Texas | 56.28 | 3 | 12 | 34 |
5 | Idaho | 56.02 | 8 | 16 | 11 |
6 | Oklahoma | 55.17 | 16 | 28 | 2 |
7 | Nevada | 54.03 | 13 | 11 | 21 |
8 | Colorado | 53.98 | 5 | 10 | 31 |
9 | Arizona | 53.46 | 4 | 36 | 30 |
10 | Kentucky | 53.36 | 20 | 22 | 4 |
11 | Arkansas | 53.29 | 15 | 26 | 6 |
12 | Tennessee | 53.23 | 6 | 30 | 27 |
13 | South Carolina | 53.15 | 10 | 35 | 10 |
14 | Mississippi | 52.59 | 26 | 37 | 1 |
15 | North Carolina | 52.32 | 9 | 32 | 20 |
16 | Montana | 52.08 | 12 | 41 | 8 |
17 | Alabama | 52.07 | 18 | 39 | 5 |
18 | California | 51.42 | 7 | 1 | 49 |
19 | Indiana | 50.22 | 30 | 21 | 7 |
20 | Louisiana | 48.76 | 25 | 31 | 17 |
21 | Illinois | 48.17 | 39 | 3 | 35 |
22 | Michigan | 48.10 | 33 | 18 | 18 |
23 | Maine | 48.04 | 14 | 44 | 25 |
24 | Nebraska | 47.70 | 32 | 19 | 24 |
25 | Washington | 47.59 | 22 | 6 | 41 |
26 | Ohio | 47.47 | 36 | 23 | 15 |
27 | New Mexico | 47.36 | 34 | 38 | 9 |
28 | South Dakota | 47.13 | 37 | 47 | 3 |
29 | Minnesota | 46.88 | 35 | 9 | 32 |
30 | Kansas | 46.73 | 41 | 25 | 12 |
31 | Wyoming | 46.60 | 21 | 46 | 23 |
32 | North Dakota | 45.74 | 23 | 43 | 22 |
33 | Massachusetts | 45.55 | 29 | 4 | 44 |
34 | Missouri | 45.17 | 46 | 20 | 19 |
35 | Wisconsin | 45.01 | 47 | 15 | 26 |
36 | Iowa | 44.98 | 45 | 29 | 14 |
37 | Delaware | 44.78 | 27 | 7 | 43 |
38 | Virginia | 43.05 | 24 | 34 | 37 |
39 | Oregon | 41.52 | 31 | 24 | 39 |
40 | New York | 41.25 | 40 | 5 | 48 |
41 | West Virginia | 40.43 | 48 | 50 | 13 |
42 | Vermont | 39.91 | 42 | 42 | 33 |
43 | Pennsylvania | 39.29 | 44 | 33 | 38 |
44 | Hawaii | 39.20 | 19 | 49 | 42 |
45 | New Hampshire | 39.02 | 38 | 45 | 36 |
46 | Maryland | 38.93 | 28 | 17 | 47 |
47 | Alaska | 38.37 | 17 | 48 | 45 |
48 | New Jersey | 37.36 | 43 | 8 | 50 |
49 | Connecticut | 34.63 | 49 | 13 | 46 |
50 | Rhode Island | 33.51 | 50 | 40 | 40 |
Note: With the exception of "Total Score," all of the columns in the table above depict the relative rank of that state, where a rank of 1 represents the best conditions for that metric category.
