Best States for Small Business (2026)
Rankings weighted toward business-friendly tax climate, strong economy, population growth, workforce quality, and transportation infrastructure — what matters when starting or running a small business.
Top 10 States for Small Business
All 50 States Ranked for Small Business
| Rank | State | Grade | Small Business Score | Overall | 💼 Fiscal Health | 💰 Economy | 📈 Growth | Region |
|---|---|---|---|---|---|---|---|---|
| 1 | South Dakota | A+ | 70.4 | 80.2 | 76.3 | 70.3 | 63.4 | Midwest |
| 2 | Utah | A+ | 66.8 | 81.5 | 71.4 | 68.7 | 61.0 | West |
| 3 | New Hampshire | A+ | 65.7 | 86.6 | 63.1 | 84.5 | 52.9 | Northeast |
| 4 | North Dakota | A | 65.1 | 77.1 | 69.8 | 67.7 | 53.7 | Midwest |
| 5 | Nebraska | A | 62.5 | 74.5 | 71.4 | 60.0 | 46.9 | Midwest |
| 6 | Idaho | B+ | 61.6 | 69.2 | 71.0 | 49.8 | 76.0 | West |
| 7 | Virginia | A | 61.0 | 74.3 | 62.8 | 72.2 | 50.4 | South |
| 8 | Minnesota | A+ | 59.0 | 77.1 | 59.2 | 63.6 | 42.0 | Midwest |
| 9 | Iowa | B+ | 58.6 | 68.7 | 66.0 | 56.1 | 41.5 | Midwest |
| 10 | Wyoming | B+ | 58.5 | 68.2 | 79.4 | 48.4 | 44.3 | West |
| 11 | Montana | B+ | 58.3 | 70.8 | 59.5 | 46.1 | 62.7 | West |
| 12 | Colorado | B+ | 57.6 | 67.4 | 60.4 | 63.6 | 49.8 | West |
| 13 | Maine | A | 56.6 | 76.8 | 57.0 | 49.7 | 48.8 | Northeast |
| 14 | Wisconsin | B | 56.3 | 63.7 | 63.6 | 56.2 | 43.7 | Midwest |
| 15 | Maryland | B+ | 56.1 | 66.9 | 55.0 | 83.6 | 42.2 | Northeast |
| 16 | North Carolina | C+ | 56.0 | 53.5 | 71.5 | 43.5 | 65.7 | South |
| 17 | Tennessee | C | 55.1 | 45.3 | 76.1 | 43.5 | 62.2 | South |
| 18 | Florida | C+ | 54.6 | 51.7 | 70.2 | 36.7 | 65.3 | South |
| 19 | Georgia | C+ | 54.4 | 51.3 | 69.7 | 47.9 | 57.9 | South |
| 20 | Vermont | A+ | 53.6 | 77.5 | 51.1 | 62.9 | 30.2 | Northeast |
| 21 | Texas | C | 53.0 | 45.9 | 72.2 | 39.6 | 60.8 | South |
| 22 | Connecticut | A | 51.6 | 73.5 | 38.4 | 59.8 | 37.0 | Northeast |
| 23 | Kansas | B | 51.5 | 59.5 | 52.4 | 49.2 | 38.4 | Midwest |
| 24 | Missouri | C+ | 51.5 | 48.7 | 65.4 | 45.7 | 45.6 | Midwest |
| 25 | Massachusetts | B+ | 51.3 | 70.3 | 50.1 | 57.9 | 29.8 | Northeast |
| 26 | Indiana | C+ | 51.2 | 49.6 | 65.3 | 42.4 | 42.7 | Midwest |
| 27 | South Carolina | C | 50.7 | 43.2 | 54.4 | 38.6 | 78.3 | South |
| 28 | Washington | B | 50.6 | 63.2 | 64.3 | 46.9 | 39.1 | West |
| 29 | Delaware | C+ | 50.4 | 52.4 | 67.2 | 32.1 | 45.4 | Northeast |
| 30 | Rhode Island | B+ | 49.5 | 69.3 | 43.0 | 46.9 | 33.6 | Northeast |
| 31 | Arizona | C | 48.5 | 44.3 | 59.4 | 39.7 | 65.2 | West |
| 32 | Hawaii | B | 48.3 | 64.8 | 36.5 | 90.0 | 27.0 | West |
| 33 | Pennsylvania | B | 47.7 | 58.2 | 45.6 | 41.8 | 30.5 | Northeast |
| 34 | Alabama | C | 47.7 | 39.4 | 56.4 | 47.6 | 56.5 | South |
| 35 | Oklahoma | C | 47.5 | 41.8 | 58.4 | 40.0 | 49.3 | South |
| 36 | New Jersey | B | 46.6 | 65.1 | 33.2 | 55.1 | 27.2 | Northeast |
| 37 | Ohio | C+ | 46.2 | 49.1 | 56.6 | 31.7 | 30.0 | Midwest |
| 38 | Oregon | B | 45.5 | 60.0 | 55.4 | 27.1 | 25.8 | West |
| 39 | New York | B | 42.5 | 56.8 | 44.5 | 43.7 | 19.9 | Northeast |
| 40 | Nevada | D | 42.3 | 39.2 | 57.6 | 18.4 | 52.5 | West |
| 41 | Michigan | C | 41.8 | 45.0 | 56.2 | 25.1 | 25.0 | Midwest |
| 42 | Alaska | D | 40.4 | 39.3 | 74.2 | 35.0 | 14.4 | West |
| 43 | Arkansas | F | 40.2 | 29.9 | 56.2 | 22.9 | 42.8 | South |
| 44 | New Mexico | D | 40.1 | 32.6 | 62.0 | 26.9 | 35.0 | West |
| 45 | Illinois | C+ | 37.7 | 50.5 | 21.9 | 39.2 | 20.5 | Midwest |
| 46 | West Virginia | D | 37.4 | 32.5 | 60.1 | 13.9 | 27.3 | South |
| 47 | Kentucky | D | 37.0 | 38.0 | 38.4 | 22.7 | 32.1 | South |
| 48 | California | C | 35.5 | 42.9 | 47.5 | 41.3 | 10.1 | West |
| 49 | Mississippi | D | 34.9 | 31.4 | 43.8 | 26.7 | 28.4 | South |
| 50 | Louisiana | F | 32.6 | 25.2 | 43.1 | 20.6 | 22.1 | South |
Best States for Small Business in 2026: What the Data Shows
South Dakota leads our rankings for small business with a score of 70.4 out of 100. Close behind are Utah (66.8) and New Hampshire (65.7). These top-ranked states consistently score well across the categories that matter most to small business: fiscal health, economy, growth.
Key Findings
The gap between the #1 and #50 state is 37.8 points — a substantial difference that translates to real quality-of-life differences. The median state scores 51.3/100, meaning the top half of states cluster in the 51-70 range.
For small business, the most important category is Fiscal Health (25% weight), followed by Economy (20%) and Growth (18%). States that score above 70 in these top categories almost always place in the top 15.
Regional Patterns
For small business, Midwestern states lead with an average persona score of 54.3, followed by the Northeast (52), West (50.3), and South (47.3).
Surprise Rankings
Tennessee jumps from #36 overall to #17 for small business — a gain of 19 spots. Meanwhile, New Jersey drops from #19 to #36, losing 17 spots when small business priorities are applied.
States Facing Challenges
At the bottom of the list, Louisiana (32.6), Mississippi (34.9), and California (35.5) face the biggest challenges for small business. Lower scores in fiscal health and economy are the primary drivers.
Methodology
These rankings use the same real government data as our overall state rankings — from the Bureau of Labor Statistics, U.S. Census Bureau, FBI, and America's Health Rankings — but re-weighted to reflect the priorities of small business. The top-weighted categories are Fiscal Health (25%), Economy (20%), Growth (18%). Categories with 0% weight are not included in the calculation. See our full methodology for details.
Frequently Asked Questions
What is the best state for small business in 2026?
South Dakota ranks #1 for small business with a persona-weighted score of 70.4/100. The top 3 are South Dakota, Utah, New Hampshire.
What are the worst states for small business?
The lowest-ranked states for small business are Louisiana, Mississippi, California. These states score lower on the categories most important to small business.
How are "best for small business" rankings calculated?
We re-weight the 11 scoring categories based on what matters most to small business. Rankings weighted toward business-friendly tax climate, strong economy, population growth, workforce quality, and transportation infrastructure — what matters when starting or running a small business.