The Best States to Start a Business

Whether it’s a brick-and-mortar small business or a tech company with a remote workforce, the environment in which your business operates plays a crucial role in its success.

Being headquartered in a state that offers business-friendly taxes, access to a pool of skilled and high-quality workers, and a relatively low cost of living can make all the difference.

These factors not only influence profitability but also help attract and retain talent, ensuring that your business has a strong foundation to thrive. In an increasingly competitive market, the advantages of operating in a state that supports entrepreneurial growth cannot be overstated.

To determine the best states for starting a business in 2025, we conducted an in-depth analysis of a variety of key factors that influence business success. Our research examined a number of data points, including tax policies, the growth rate of small businesses, the likelihood of business survival, overall economic health, and workforce-related statistics.

By evaluating all 50 states through this lens, we identified the regions that offer the most favorable conditions for entrepreneurs, helping them navigate challenges and maximize opportunities for long-term success. Whether you’re a budding entrepreneur or an established business owner looking to expand, these insights provide a roadmap to states that truly foster innovation and growth.

Top 10 States to Start a Business in 2025

1. North Carolina

North Carolina’s beautiful beaches aren’t the only reason to flock to the state. The Tar Heel State claims the top spot thanks to its excellent business growth and survival rate, which ranks among the best nationwide. Combined with a strong economy, a competitive tax environment, and a top-tier workforce, the state sets the benchmark for business-friendly environments.

• Taxes Overall Score: 18.84
• Business Growth & Survival Overall Score: 22.63
• Economy Overall Score: 14.02
• Workforce Overall Score: 18.10

2. Ohio

Ranked second overall, Ohio shines with an impressive business growth and survival rate score of 14.61, with help from its economy and competitive tax policies. The Buckeye State’s growing workforce further enhances its appeal as a top state for businesses to thrive.

• Taxes Overall Score: 17.47
• Business Growth & Survival Overall Score: 23.94
• Economy Overall Score: 15.25
• Workforce Overall Score: 9.08

3. Texas

Thanks to its thriving economy and no state income tax, Texas secures the third spot, contributing to its strong business growth and workforce appeal. The Lone Star State’s favorable tax climate and business-friendly policies continue to attract entrepreneurs and corporations.

• Taxes Overall Score: 18.86
• Business Growth & Survival Overall Score: 10.98
• Economy Overall Score: 17.80
• Workforce Overall Score: 16.63

4. Indiana

Indiana ranks fourth overall, supported by its high-ranking business growth and survival rate that emphasizes its appeal to entrepreneurs. The Hoosier State’s solid economy and reasonable tax policies make it a compelling destination for starting and sustaining a business.

• Taxes Overall Score: 17.39
• Business Growth & Survival Overall Score: 19.10
• Economy Overall Score: 13.86
• Workforce Overall Score: 12.74

5. Florida

Known for its beaches and warm climate, Florida ranks fifth, with a dynamic economy and attractive tax structure encouraging business growth. Known for its entrepreneurial spirit, the Sunshine State also benefits from a growing and diverse workforce that cements its position as a hub for innovation and expansion.

• Taxes Overall Score: 17.80
• Business Growth & Survival Overall Score: 16.08
• Economy Overall Score: 18.08
• Workforce Overall Score: 10.47

6. Georgia

Georgia has one of the strongest workforces in the nation and an economy that continues to grow. The Peach State ranks in the top 20 for cost of living, while its competitive tax environment further positions it as one of the top contenders for business success and innovation.

• Taxes Overall Score: 12.45
• Business Growth & Survival Overall Score: 14.96
• Economy Overall Score: 16.02
• Workforce Overall Score: 18.69

7. Colorado

Colorado offers outdoor enthusiasts so much to do which makes it a desirable location for business development; it also stands out for its tax environment, which is ranked in the top 5. Ranking among the most favorable in the country and a skilled and growing workforce justifies its position as a top state for businesses.

• Taxes Overall Score: 19.51
• Business Growth & Survival Overall Score: 8.80
• Economy Overall Score: 16.22
• Workforce Overall Score: 16.43

8. Alabama

With its workforce strength and tax competitiveness, Alabama takes the eighth spot. Its high business survival rate emphasizes its potential for long-term business stability; it also lands in the top 5 for cost of living, with its economic foundation providing businesses with a strong environment for success.

• Taxes Overall Score: 14.82
• Business Growth & Survival Overall Score: 18.78
• Economy Overall Score: 12.25
• Workforce Overall Score: 14.82

9. South Dakota

Home to the iconic Mount Rushmore, South Dakota also stands out as an excellent destination for starting a business. The state is ranked in the top 5 for business growth and survival and claims the ninth spot overall. Its steady economy and supportive environment are key draws that provide businesses with the resources they need to thrive.

• Taxes Overall Score: 20.43
• Business Growth & Survival Overall Score: 19.78
• Economy Overall Score: 9.06
• Workforce Overall Score: 10.53

10. Utah

Known for its skiing in Salt Lake City, Utah rounds out the top 10 states, with a strong workforce and favorable tax policies contributing to its high ranking. The Beehive State’s economic growth and support for businesses set it apart as a top choice for entrepreneurs.

• Taxes Overall Score: 18.39
• Business Growth & Survival Overall Score: 13.35
• Economy Overall Score: 9.90
• Workforce Overall Score: 18.12

Top States Within Key Metrics

The above list shows the states’ overall rank; however, some states stood out in each category.

Taxes

• Nevada comes in first for this category overall. The state's income tax rate comes in at 0%, which is 13.30% lower than the state with the highest rate.
• Coming in at second place is Wyoming, with a 0% corporate tax rate.
• In third place is South Dakota, with both a 0% income tax rate and a 0% corporate tax rate.

Income tax is calculated based on a median income of $80,610, corporate tax is assessed for incomes of $50,000 or less, and property tax is derived from owner-occupied housing using the ratio of total real taxes paid to the total home value.

Sort the chart below to see how your state ranked.

Business Growth & Survival

• Ohio takes the top spot for this category, with the highest business survival rate at 55%.
• Even though it comes in first overall for the best state to start a business, North Carolina comes in second for business growth and survival, with a 10% change from 2023 to 2024.
• Georgia rounds out the top three, with a 49.20% business survival rate.

The percentage change in businesses is calculated by comparing the number of businesses in 2023 to those in 2024. The business survival rate reflects the percentage of businesses started between 2019 and 2024 that are still operational.

Sort the chart below to see how your state ranked.

Economy

• Mississippi is ranked number one for an overall economy score, with its cost of living index being the lowest out of all states at 85.30.
• Arkansas comes in second with a 140.78 gross domestic products per capita rate.
• Coming in at third, Oklahoma has a high gross domestic products per capita rate at 201.66 and a low cost of living index at 86.

Personal consumption expenditures by state are calculated based on consumer spending in categories like healthcare, housing and utilities, and food services and accommodations. Gross domestic product (GDP) per capita is derived from each state's GDP in billions of current U.S. dollars (2023). The cost of living in 2024 reflects essential expenses, including food, housing, transportation, and healthcare.

Sort the chart below to see how your state ranked.

Workforce

• California ranks first for this category with the highest minimum wage at $16.00.
• With a high percentage of the population that is of working age at 57.11%, Arizona comes in second.
• Coming in third, Arkansas has a low unemployment rate of 3.30% and a high percentage of the population that is of working age at 63.42.

Minimum wage figures for each state are based on state minimum wage laws as of 2024. Unemployment rates are expressed as a percentage of the labor force (as of October 2024). The percentage of the population that is of working age is calculated for individuals aged 15 to 64, while the percentage of degree-level workers is based on individuals aged 18 to 64.

Sort the chart below to see how your state ranked.

Methodology

B2B Reviews compared all 50 states across four main metrics—taxes, business growth & survival, economy, and workforce—to determine the best states to start a business. Data points within the four main metrics included income, corporate, and property tax; growth in number of businesses from 2023 to 2024 and business survival rate; per capita personal expenditures, gross domestic products per capita, and cost of living index; and minimum wage, unemployment rate, the percentage of population that is of working age, and the percentage of degree-level workers.

States were ranked within each metric, earning a total score based on the weighted values shown below.

Taxes - 25 Points

Using data from the Tax Foundation, we compared the income, corporate, and property tax in each state. States with lower tax rates earned more points.

• Income Tax (8 points)
• Corporate Tax (10 points)
• Property Tax (7 points)

Business Growth & Survival - 25 Points

To measure business growth and survival in each state, we looked at data from the U.S. Bureau of Labor Statistics and the U.S. Small Business Administration, Office of Advocacy. States that had the most growth from 2023 to 2024 and higher overall survival rate earned more points.

• Business Growth from 2023-2024 (12 points)
• Business Survival Rate (13 points)

Economy - 25 Points

Using data from the Bureau of Economic Analysis, U.S. Department of Commerce, Statista, and World Population Review, we determined the economy by state. States that had the highest per capita personal expenditures, the highest gross domestic products per capita, and the lowest cost of living index earned the most points.

• Per Capita Personal Expenditures (8 points)
• Gross Domestic Products Per Capita (9 points)
• Cost of Living Index (8 points)

Workforce- 25 Points

To measure workforce size and quality for each state, we used data the U.S. Department of Labor, the U.S. Bureau of Labor Statistics, and the United States Census Bureau. Each state earned points based on the highest minimum wage, the lowest unemployment rate, the highest percentage of the population that is of working age, and the highest percentage of degree-level workers.

• Minimum Wage (6 points)
• Unemployment Rate (5 points)
• Percent of Population that is of Working Age (7 points)
• Percent of Degree-Level Workers (7 points)

The Bottom Line

While choosing the state that will best give your business a head start, long-term success comes down to the decisions you make as an entrepreneur. Here are some tips to help you thrive wherever you decide to set up shop:

1. Research Local Market Demand: Every state has their own unique industries and customer needs. Study your target audience and competitors in your chosen state to make sure that there is a demand for your product or service and what you are selling.
2. Research State-Specific Incentives: Many states offer tax breaks, grants, or startup incentives for new businesses. Research programs like enterprise zones or small business development resources to maximize your funding opportunities.
3. Build a Strong Network: Get involved in the local business communities or attend networking events to establish relationships and gain valuable insights. These connections you make can lead to partnerships, funding, and opportunities you might not have found on your own.
4. Utilize Digital Tools: Even if you operate in a state that has limited local demand, this is where digital marketing and e-commerce comes into play and can expand your reach beyond state lines. Use online platforms to tap into national or global markets.
5. Plan for Growth: When choosing a state, choose one that has the infrastructure to support scalability. Look for places with a growing economy and access to capital.
6. Keep Costs in Check: Starting a business is expensive, so prioritize your spending. Focus on the essentials that drive growth, such as marketing, operations, and talent. States that have a lower cost of living index can help to stretch your budget further.

No matter where you start, the success of your business depends on your ability to adapt, innovate, and stay focused on your goals. With the right strategies, you can overcome challenges and build a thriving business anywhere in the country.

Fair Use Statement

If you wish to share our findings, please do so for non-commercial purposes only and provide a link back to this report so readers can access our methodology.

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