Best States for Small Business 2026: All 50 Ranked
Which states are best for small business? Custom-weighted rankings based on fiscal health, economy, growth, and more.
Top 10 states for 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.
South Dakota leads the small business rankings with a persona-weighted score of 70.4/100. Utah (66.8) and New Hampshire (65.7) round out the top three.
The gap between #1 and #10 is 11.9 points. What separates these states from the rest is consistent strength across the categories that matter most for small business: fiscal health, economy, growth.
| Rank | State | Small Business Score | Fiscal Health | Economy | Growth |
|---|---|---|---|---|---|
| #1 | South Dakota | 70.4 | 76.3 | 70.3 | 63.4 |
| #2 | Utah | 66.8 | 71.4 | 68.7 | 61.0 |
| #3 | New Hampshire | 65.7 | 63.1 | 84.5 | 52.9 |
| #4 | North Dakota | 65.1 | 69.8 | 67.7 | 53.7 |
| #5 | Nebraska | 62.5 | 71.4 | 60.0 | 46.9 |
| #6 | Idaho | 61.6 | 71.0 | 49.8 | 76.0 |
| #7 | Virginia | 61.0 | 62.8 | 72.2 | 50.4 |
| #8 | Minnesota | 59.0 | 59.2 | 63.6 | 42.0 |
| #9 | Iowa | 58.6 | 66.0 | 56.1 | 41.5 |
| #10 | Wyoming | 58.5 | 79.4 | 48.4 | 44.3 |
#1: South Dakota
South Dakota leads the small business rankings with a weighted score of 70.4/100. The state scores 76.3 in fiscal health, 70.3 in economy, 63.4 in growth. Overall rank: #3 (80.2/100, A+ grade). Median income: $72,280. Cost of living: 88.
South Dakota's weakest area for this ranking is outdoor access at 45.8, but the weights for small business put less emphasis on that category. Unemployment: 2%. Violent crime: 330/100K. Life expectancy: 78.5 years.
#2: Utah
Utah scores 66.8/100 for small business, with strength in fiscal health (71.4) and economy (68.7). The state ranks #2 overall and offers a cost of living index of 95 with $548,000 median homes.
Utah's weakest area for this ranking is livability at 22.6, but the weights for small business put less emphasis on that category. Unemployment: 3.2%. Violent crime: 228/100K. Life expectancy: 79.4 years.
#3: New Hampshire
New Hampshire scores 65.7/100 for small business, with strength in fiscal health (63.1) and economy (84.5). The state ranks #1 overall and offers a cost of living index of 105 with $483,000 median homes.
New Hampshire's weakest area for this ranking is transportation at 35.9, but the weights for small business put less emphasis on that category. Unemployment: 2.8%. Violent crime: 110/100K. Life expectancy: 79.2 years.
#4: North Dakota
At #4, North Dakota scores 65.1/100. Fiscal Health: 69.8. Economy: 67.7. Growth: 53.7. Overall rank: #6. The state's affordability score of 84.7 is a standout.
North Dakota's weakest area for this ranking is environment at 38.5, but the weights for small business put less emphasis on that category. Unemployment: 2.2%. Violent crime: 267/100K. Life expectancy: 79 years.
#5: Nebraska
At #5, Nebraska scores 62.5/100. Fiscal Health: 71.4. Economy: 60.0. Growth: 46.9. Overall rank: #8. The state's education score of 83.7 is a standout.
Nebraska's weakest area for this ranking is outdoor access at 22.0, but the weights for small business put less emphasis on that category. Unemployment: 2.8%. Violent crime: 290/100K. Life expectancy: 78.8 years.
How these rankings differ from overall rankings
Our overall state rankings weight all categories equally. Small Business rankings shift the emphasis to what this group cares about most: fiscal health (25%), economy (20%), growth (18%). Categories like health and environment carry zero weight.
This means a state can rank poorly overall but well for small business if its strengths align with the weighted categories. South Dakota ranks #3 overall but #1 for small business — in this case, both rankings agree.
States to avoid for small business
The bottom of the small business rankings: Louisiana (32.6), Mississippi (34.9), California (35.5). Lower scores in fiscal health and economy are the primary reasons.
Louisiana scores 32.6/100 with fiscal health at 43.1, economy at 20.6, growth at 22.1. These aren't necessarily bad states — they just don't align well with what small business prioritize.
Frequently Asked Questions
Q:What is the best state for small business in 2026?
South Dakota ranks #1 with a small business score of 70.4/100, driven by strong fiscal health, economy, growth scores.
Q:What categories matter most for small business?
The top-weighted categories are Fiscal Health (25%), Economy (20%), Growth (18%).
Q:How do small business rankings differ from overall rankings?
Small Business rankings emphasize fiscal health, economy, growth while de-weighting categories less relevant to this lifestyle.
Q:Which state ranks worst for small business?
California ranks last with a score of 35.5/100, primarily due to low fiscal health and economy scores.