The Best and Worst States to Start a Business in 2026, Ranked

You've got a lightbulb above your head, burning bright with an idea that's ready to become something real. But before you plaster "open for business" signs all over social media, ask yourself where you should start your business.

WalletHub ranked all 50 states on startup friendliness in 2026, based on labor costs, corporate taxes, small-business growth, industry diversity, and access to funding. The results reveal a stark divide: some states are basically handing entrepreneurs a starter kit, making it easy to launch and grow a business, while others are putting up barriers, making the path to success an entrepreneurial obstacle course.

Let's explore the states giving entrepreneurs the green light and those covering businesses in red tape.

BEST STATES TO START A BUSINESS

If you want to start your business with momentum instead of losing your mind one spreadsheet at a time, think sunshine. Florida isn't just Walt Disney World and retirees: it's a thriving place for new businesses. Here you’ll find low corporate taxes, steady business growth, and a welcoming environment that supports your ideas. 

Utah is not far behind, offering access to investors, a growing workforce, and a culture that's rooting for your business venture to succeed. Texas, of course, provides ample space for business growth and access to a vast pool of talent. Rent might not be the cheapest, but the growth potential is hard to beat.

Other states, such as Oklahoma, Idaho, Mississippi, and Georgia, recognize the importance of reasonable costs, decent infrastructure, and accessible resources that make starting a business less chaotic. They get the job done, which is what most startups require.

WORST STATES TO START A BUSINESS

Not every state rewards hustle the same way. Rhode Island lands at the very bottom, where high costs and sluggish growth turn simple tasks into uphill battles for new businesses. Maryland, Connecticut, and Hawaii follow close behind. Despite their appeal as beautiful places to live and visit, these states hit startups with steep expenses that make it tough to gain traction.

Even New York, a state synonymous with ambition, lands lower than many expect. The market is enormous, but high expenses and low business growth mean businesses have to work harder to stay afloat. Pennsylvania and West Virginia face similar challenges, offering fewer advantages for entrepreneurs seeking rapid scale.

It's not impossible to start a business in these states, but you might need to be more clever (and consume a few extra cups of coffee) to make it work.

LOCATION, LOCATION, LOCATION

States like Florida, Utah, and Texas combine growth, access to resources, and manageable costs in ways that give business owners a real advantage. Lower-ranking states are not dead ends, but they do require additional patience and planning. Starting a business is always a risk, but choosing the right state removes unnecessary roadblocks and helps your best ideas shine even brighter.  

In 2026, it's not just about what business you're building, but where you choose to launch it. The right location can be the difference between a business lost in the crowd and one that stands out.