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 • Jan 20, 2025

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.

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.

“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.”

Source: WalletHub

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.}