With around 1 in 5 new businesses failing within the first year and inflation making things even more difficult, the personal-finance website WalletHub today released its report on the Best & Worst States to Start a Business in 2025, as well as expert commentary, to help people maximize their chances of success by starting in the right location.
WalletHub compared the 50 U.S. states across 25 key indicators of startup success. The data set ranges from financing accessibility to labor costs to office-space affordability.
Starting a Business in New York (1=Best; 25=Avg.):
- Overall Rank for New York: 40th
- 47th – Avg. Growth in Number of Small Businesses
- 47th – Office-Space Affordability
- 37th – Labor Costs
- 7th – Availability of Human Capital
- 42nd – Avg. Length of Work Week (in Hours)
- 37th – Cost of Living
- 25th – Industry Variety
Expert Commentary
To what extent do state policies, such as corporate tax rates, influence decisions about whether and where to start a new business?
“State policies, particularly corporate tax rates, play a significant role in decisions about where to establish a business. Entrepreneurs often look for tax-friendly environments that reduce their operating costs. States like Florida, which have no personal income tax and competitive corporate tax rates, attract businesses seeking to minimize financial burdens. However, other factors such as access to talent, infrastructure, and market demand are equally influential. A holistic policy approach that combines low taxes with business-friendly infrastructure can be a game-changer for states aiming to attract startups.”
Bert Seither – Manager of Operations, John P. Lowth Entrepreneurship Center, The University of Tampa
“State policies, particularly corporate tax rates, significantly influence where entrepreneurs decide to start businesses. Lower tax rates can reduce operational costs, making states like Texas, Florida, and Nevada attractive for new businesses. However, tax rates aren't the sole factor; infrastructure, workforce availability, and access to markets are equally crucial. States that combine low taxes with supportive ecosystems (e.g., business grants, and workforce development programs) often attract more startups. For instance, California’s high tax rates are offset by its access to capital and talent, making it a hub for tech startups despite higher costs.”
Stephanie Black, Ph.D. – Associate Professor, Texas A&M University - San Antonio
Which, in your opinion, are the best industries for starting a business in 2025, and what states are most likely to see an increase in start-up activity?
“In 2025, industries poised for growth include renewable energy, health tech, e-commerce, and artificial intelligence. The demand for sustainable solutions and the integration of AI into everyday services will create numerous entrepreneurial opportunities. States like Florida, Texas, and North Carolina are likely to see increased startup activity due to their business-friendly climates, growing populations, and access to skilled workforces. Florida, for instance, is well-positioned with its diverse economy and burgeoning tech scene, particularly in cities like Miami and Tampa.”
Bert Seither – Manager of Operations, John P. Lowth Entrepreneurship Center, The University of Tampa
“Elder care and other health care industries will see growth as the population continues to age. Also, lifestyle brands, such as cosmetics, clothing, healthy foods, and certain recreation businesses, should see growth both online and in person. Technology will see continued growth, including AI related businesses and robotics.”
Daniel E. Goldberg, Ed.D. – Associate Professor; Academic Director of the Business Management BBA Program, Temple University
What measures can state authorities undertake in order to encourage entrepreneurs to start new businesses in their state?
“State authorities can encourage entrepreneurship by implementing measures such as streamlining business licensing processes, offering grants and low-interest loans, and investing in workforce development programs. Additionally, creating hubs of innovation, such as incubators and accelerators, can attract startups. Florida, for example, has benefitted from fostering collaborative ecosystems in cities like Orlando and Miami, where entrepreneurs have access to mentorship, networking, and venture capital. Finally, investing in infrastructure – both physical and digital – ensures that entrepreneurs have the resources needed to thrive in the modern economy.”
Bert Seither – Manager of Operations, John P. Lowth Entrepreneurship Center, The University of Tampa
“States can make sure that regulations and tax structures are beneficial for entrepreneurs to start and maintain their businesses as they grow. It also helps to have entities such as colleges/universities, other complimentary businesses, and/or organizations that can provide mentors and/or advisors close by to help startups grow and prosper.”
Daniel E. Goldberg, Ed.D. – Associate Professor; Academic Director of the Business Management BBA Program, Temple University