Best States for Small Business (2026)
South Dakota ranks #1 for small business with a score of 87.4 out of 100, ahead of Idaho (80.2) and North Dakota (79.1).
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.
- Fiscal Health weight
- 25%
- Economy weight
- 20%
- Growth weight
- 18%
Top 10 States for Small Business
#1 to #5
Score · grade- 1South DakotaFiscal Health: 76.3 · Economy: 70.0 · Growth: 60.387.4A+
- 2IdahoFiscal Health: 71.0 · Economy: 50.9 · Growth: 72.680.2A+
- 3North DakotaFiscal Health: 69.8 · Economy: 63.7 · Growth: 51.779.1A+
- 4New HampshireFiscal Health: 63.1 · Economy: 74.0 · Growth: 49.978.3A+
- 5UtahFiscal Health: 71.4 · Economy: 65.6 · Growth: 50.078.2A
#6 to #10
Score · grade- 6WyomingFiscal Health: 79.4 · Economy: 50.3 · Growth: 42.577.9A+
- 7NebraskaFiscal Health: 71.4 · Economy: 56.7 · Growth: 45.273.6A
- 8TennesseeFiscal Health: 76.1 · Economy: 45.8 · Growth: 56.973.5B
- 9North CarolinaFiscal Health: 71.5 · Economy: 43.2 · Growth: 65.671.1B
- 10MontanaFiscal Health: 59.5 · Economy: 51.5 · Growth: 53.671.0A
All 50 States Ranked for Small Business
| # State | Grade | Small Business score | Overall | Fiscal Health | Economy | Growth | Region | Cities |
|---|---|---|---|---|---|---|---|---|
| 1South Dakota | A+ | 87.4 | 79.3 | 76.3 | 70.0 | 60.3 | Midwest | Cities → |
| 2Idaho | A+ | 80.2 | 78.4 | 71.0 | 50.9 | 72.6 | West | Cities → |
| 3North Dakota | A+ | 79.1 | 75.5 | 69.8 | 63.7 | 51.7 | Midwest | Cities → |
| 4New Hampshire | A+ | 78.3 | 83.4 | 63.1 | 74.0 | 49.9 | Northeast | Cities → |
| 5Utah | A | 78.2 | 75.4 | 71.4 | 65.6 | 50.0 | West | Cities → |
| 6Wyoming | A+ | 77.9 | 79.9 | 79.4 | 50.3 | 42.5 | West | Cities → |
| 7Nebraska | A | 73.6 | 71.1 | 71.4 | 56.7 | 45.2 | Midwest | Cities → |
| 8Tennessee | B | 73.5 | 57.1 | 76.1 | 45.8 | 56.9 | South | Cities → |
| 9North Carolina | B | 71.1 | 59.1 | 71.5 | 43.2 | 65.6 | South | Cities → |
| 10Montana | A | 71.0 | 75.0 | 59.5 | 51.5 | 53.6 | West | Cities → |
| 11Wisconsin | B+ | 68.2 | 70.6 | 63.6 | 54.8 | 40.0 | Midwest | Cities → |
| 12Virginia | B+ | 68.0 | 67.7 | 62.8 | 64.6 | 45.1 | South | Cities → |
| 13Georgia | B | 66.7 | 55.4 | 69.7 | 54.1 | 51.5 | South | Cities → |
| 14Iowa | B+ | 65.8 | 69.2 | 66.0 | 48.8 | 35.0 | Midwest | Cities → |
| 15Texas | C+ | 64.3 | 52.2 | 72.2 | 42.5 | 51.7 | South | Cities → |
| 16Maine | A | 63.8 | 71.6 | 57.0 | 51.1 | 49.2 | Northeast | Cities → |
| 17Minnesota | B+ | 63.2 | 70.4 | 59.2 | 53.1 | 40.7 | Midwest | Cities → |
| 18Indiana | B | 63.0 | 59.2 | 65.3 | 42.9 | 42.7 | Midwest | Cities → |
| 19Florida | B | 62.4 | 59.9 | 70.2 | 45.0 | 44.9 | South | Cities → |
| 20Colorado | B+ | 59.8 | 64.7 | 60.4 | 60.3 | 31.0 | West | Cities → |
| 21Delaware | C+ | 59.5 | 53.6 | 67.2 | 40.6 | 49.9 | Northeast | Cities → |
| 22Vermont | A | 59.3 | 74.0 | 51.1 | 66.5 | 29.9 | Northeast | Cities → |
| 23Washington | B | 58.8 | 61.8 | 64.3 | 52.3 | 40.8 | West | Cities → |
| 24Alabama | C | 58.7 | 48.5 | 56.4 | 49.8 | 53.6 | South | Cities → |
| 25South Carolina | C | 58.4 | 49.0 | 54.4 | 31.8 | 71.0 | South | Cities → |
| 26Missouri | C+ | 56.7 | 51.0 | 65.4 | 38.3 | 39.0 | Midwest | Cities → |
| 27Kansas | C+ | 53.7 | 55.1 | 52.4 | 44.6 | 35.6 | Midwest | Cities → |
| 28Oklahoma | D | 53.4 | 43.0 | 58.4 | 42.2 | 48.9 | South | Cities → |
| 29Massachusetts | B+ | 52.7 | 70.0 | 50.1 | 59.8 | 19.4 | Northeast | Cities → |
| 30Arizona | C | 52.2 | 47.8 | 59.4 | 42.6 | 48.3 | West | Cities → |
| 31Maryland | C+ | 52.0 | 53.6 | 55.0 | 65.3 | 29.8 | Northeast | Cities → |
| 32Connecticut | B+ | 51.6 | 66.9 | 38.4 | 59.4 | 31.3 | Northeast | Cities → |
| 33Ohio | C+ | 49.7 | 52.1 | 56.6 | 30.3 | 31.0 | Midwest | Cities → |
| 34Hawaii | B+ | 48.7 | 64.8 | 36.5 | 86.3 | 25.3 | West | Cities → |
| 35Arkansas | D | 48.5 | 40.1 | 56.2 | 28.7 | 45.8 | South | Cities → |
| 36Alaska | C | 46.8 | 44.3 | 74.2 | 49.1 | 13.4 | West | Cities → |
| 37Nevada | C | 46.4 | 45.8 | 57.6 | 28.0 | 41.9 | West | Cities → |
| 38Pennsylvania | B | 46.1 | 56.9 | 45.6 | 39.2 | 26.8 | Northeast | Cities → |
| 39West Virginia | D | 46.1 | 42.8 | 60.1 | 26.2 | 31.4 | South | Cities → |
| 40Rhode Island | B | 43.3 | 62.0 | 43.0 | 41.4 | 27.9 | Northeast | Cities → |
| 41Mississippi | D | 41.3 | 41.9 | 43.8 | 30.4 | 30.9 | South | Cities → |
| 42Oregon | C | 40.2 | 50.9 | 55.4 | 32.9 | 23.2 | West | Cities → |
| 43Kentucky | C | 39.1 | 44.8 | 38.4 | 23.7 | 34.9 | South | Cities → |
| 44New York | C+ | 37.5 | 54.9 | 44.5 | 46.3 | 14.0 | Northeast | Cities → |
| 45Michigan | D | 36.9 | 42.7 | 56.2 | 21.9 | 24.3 | Midwest | Cities → |
| 46New Jersey | C+ | 36.8 | 55.0 | 33.2 | 49.4 | 19.7 | Northeast | Cities → |
| 47New Mexico | F | 34.6 | 30.6 | 62.0 | 32.2 | 23.2 | West | Cities → |
| 48Illinois | C | 30.3 | 47.6 | 21.9 | 39.8 | 20.0 | Midwest | Cities → |
| 49Louisiana | F | 29.9 | 30.0 | 43.1 | 24.9 | 21.1 | South | Cities → |
| 50California | D | 26.8 | 40.2 | 47.5 | 41.5 | 6.1 | West | Cities → |
Best States for Small Business in 2026: What the Data Shows
South Dakota leads our rankings for small business with a score of 87.4 out of 100. Close behind are Idaho (80.2) and North Dakota (79.1). 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 60.6 points — a substantial difference that translates to real quality-of-life differences. The median state scores 58.4/100, meaning the top half of states cluster in the 58-87 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 60.6, followed by the South (55.8), West (55.5), and Northeast (52.8).
Surprise rankings
Texas jumps from #32 overall to #15 for small business — a gain of 17 spots. Meanwhile, Rhode Island drops from #19 to #40, losing 21 spots when small business priorities are applied.
States facing challenges
At the bottom of the list, California (26.8), Louisiana (29.9), and Illinois (30.3) 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, CDC and Department of Education — 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 87.4/100. The top 3 are South Dakota, Idaho, North Dakota.
What are the worst states for small business?
The lowest-ranked states for small business are California, Louisiana, Illinois. 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.