The 5 best states for starting a business in 2026 — and the 5 worst
'It’s crucial to establish your business in a state that will maximize your chances of success,' one analyst said.
Twenty percent of new businesses don’t make it past their first year — and while there’s a variety of factors at play for why, some of it has to do with the states where they set up shop.
WalletHub set out to find the best and worst states to start a business in 2026.
“It’s crucial to establish your business in a state that will maximize your chances of success,” said WalletHub analyst Chip Lupo. “The best states have low corporate tax rates, strong economies, an abundance of reliable workers, easy access to financing and affordable real estate."
Lupo added that, if you're operating locally, it's important to start in a location with an engaged customer base.
Continue reading to see which states were ranked the best five — and which were ranked the worst five.
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5th best: Idaho
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Idaho leads the nation with the top rank for growth in the number of small businesses as well as working-age population growth. It also came in third for both GDP growth and labor costs. Still, it ranked 21st for corporate taxes, and had a weak score for its business survival rate.
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4th best: Oklahoma
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Oklahoma stands out for its affordability, with the fourth-lowest labor costs and fifth-lowest lowest average annual single health insurance premiums. It tied for fifth in the share of engaged workers and has low corporate taxes.
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3rd best: Texas
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Texas ranked third in both working-age population and job growth, and has a relatively strong business survival rate. It ranks 11th in fast-growing firms and ninth in industry-cluster strength, but corporate taxes are weak at 46th. Office space and labor costs are both midrange, which prevented it from ranking higher.
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2nd best: Utah
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Utah holds the top position in several metrics, including startups per capita, financing accessibility, and job growth. It also ranks first on the entrepreneurship index. It was dragged down by its corporate taxes, for which it ranked 17th.
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Best: Florida
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Florida ranked first in its number of fast-growing firms and second in job growth, with the third-most startups per capita and fifth-strongest small-business growth. Financing access is solid at 13th, while labor costs ranked 17th.
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5th worst: New Jersey
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New Jersey struggles with high expenses, ranking last for labor costs and third-to-last for office-space affordability. While it ranks well for human-capital availability at third, its business costs are high, and it ranks 44th for corporate taxes.
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4th worst: Connecticut
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Connecticut ranks near the bottom for growth in small businesses at 47th and doesn’t have a large working-age population growth compared to other states. Despite having the second-best rank for industry variety, it is weighed down by high labor costs and a corporate tax that ranks 31st.
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3rd worst: Hawaii
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Hawaii is the most expensive state for business owners, coming in dead last for cost of living. It also isn’t growing too much, ranking 46th for growth in the number of small businesses and 45th for the five-year business survival rate. Its corporate tax rank is 25th.
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2nd worst: Maryland
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Maryland faces significant resource and growth hurdles, ranking last for human-capital availability and 49th for industry-cluster strength. It also ranks 47th for job growth and 46th for working-age population growth. The state’s corporate tax rank is 37th.
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Worst: Rhode Island
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Rhode Island is the lowest-ranked state, sitting at 49th for its entrepreneurship index and 48th for the share of fast-growing firms. Rhode Island holds the 35th rank for corporate taxes and 46th for its cost of living.