State rankings for small business owners based on tax rates, cost of living, labor costs, and business climate.
| # | State | Business Score ▼ | Visual | Income | COL | Grade |
|---|---|---|---|---|---|---|
| #1 | Tennessee | 80/100 | $59,700 | 91 | A+ | |
| #2 | South Dakota | 78/100 | $62,100 | 91 | A+ | |
| #3 | Mississippi | 75/100 | $46,500 | 83 | A+ | |
| #4 | Texas | 75/100 | $67,300 | 93 | A+ | |
| #5 | Arkansas | 74/100 | $52,100 | 84 | A+ | |
| #6 | West Virginia | 74/100 | $48,000 | 84 | A+ | |
| #7 | Indiana | 71/100 | $58,600 | 90 | A+ | |
| #8 | Louisiana | 71/100 | $52,300 | 91 | A+ | |
| #9 | Kentucky | 70/100 | $55,600 | 87 | A+ | |
| #10 | Oklahoma | 70/100 | $55,800 | 86 | A+ | |
| #11 | Wyoming | 70/100 | $65,000 | 95 | A+ | |
| #12 | Ohio | 69/100 | $59,300 | 89 | A | |
| #13 | Alabama | 68/100 | $56,200 | 87 | A | |
| #14 | Florida | 67/100 | $63,100 | 103 | A | |
| #15 | North Dakota | 67/100 | $64,800 | 93 | A | |
| #16 | Michigan | 66/100 | $63,400 | 89 | A | |
| #17 | Missouri | 66/100 | $61,000 | 88 | A | |
| #18 | Nevada | 66/100 | $64,200 | 104 | A | |
| #19 | New Mexico | 65/100 | $53,000 | 91 | A | |
| #20 | Pennsylvania | 65/100 | $67,600 | 94 | A | |
| #21 | Kansas | 62/100 | $62,100 | 89 | A | |
| #22 | South Carolina | 62/100 | $56,200 | 92 | A | |
| #23 | Georgia | 60/100 | $63,400 | 93 | A | |
| #24 | Iowa | 60/100 | $63,200 | 90 | A | |
| #25 | Nebraska | 59/100 | $66,500 | 91 | B+ | |
| #26 | North Carolina | 59/100 | $61,000 | 95 | B+ | |
| #27 | Arizona | 58/100 | $65,600 | 103 | B+ | |
| #28 | Illinois | 58/100 | $72,200 | 93 | B+ | |
| #29 | Idaho | 53/100 | $62,300 | 97 | B+ | |
| #30 | Wisconsin | 53/100 | $64,800 | 93 | B+ | |
| #31 | New Hampshire | 52/100 | $83,300 | 112 | B+ | |
| #32 | Montana | 51/100 | $60,600 | 103 | B+ | |
| #33 | Washington | 51/100 | $82,100 | 115 | B+ | |
| #34 | Alaska | 48/100 | $77,800 | 127 | B | |
| #35 | Utah | 47/100 | $75,600 | 103 | B | |
| #36 | Delaware | 45/100 | $69,100 | 102 | B | |
| #37 | Colorado | 44/100 | $80,200 | 105 | B | |
| #38 | Maine | 42/100 | $63,200 | 109 | B | |
| #39 | Rhode Island | 42/100 | $71,200 | 109 | B | |
| #40 | Virginia | 41/100 | $80,600 | 103 | B | |
| #41 | Vermont | 37/100 | $63,400 | 110 | C | |
| #42 | Minnesota | 33/100 | $77,700 | 97 | C | |
| #43 | Maryland | 29/100 | $90,200 | 118 | D | |
| #44 | Oregon | 28/100 | $71,200 | 113 | D | |
| #45 | Connecticut | 27/100 | $83,800 | 121 | D | |
| #46 | Massachusetts | 25/100 | $89,700 | 135 | D | |
| #47 | New York | 17/100 | $75,900 | 139 | F | |
| #48 | New Jersey | 16/100 | $87,700 | 121 | F | |
| #49 | California | 15/100 | $84,900 | 142 | F | |
| #50 | Hawaii | 13/100 | $84,900 | 190 | F |
Based on our analysis of business climate across all 50 states, Tennessee ranks #1 with 80/100, while Hawaii ranks last at 13/100. The national average is 54/100.
States with no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) generally perform well on affordability metrics due to higher effective take-home pay.
The gap between the best and worst state is significant: 67/100. This means your choice of state can make a dramatic difference in your business climate. Use our startup cost calculator to run the numbers for your specific situation.
Tennessee ranks #1 with 80/100. South Dakota and Mississippi round out the top 3.
Hawaii ranks last (#50) with 13/100. California and New Jersey are also among the worst.
The average across all 50 states is 54/100. The median is 59/100.
This data is calculated using the latest available median income, housing prices, cost of living indices, tax rates, and expense data for each state. Our methodology uses consistent formulas applied to all 50 states for fair comparison.