How do you judge the top states for business when you’re looking to expand to America? That really depends on you and your business, of course, but the beauty of the United States is that its size and scale allows for speciality areas in many different sectors. Some states have the right blend of specialist workers for a particular industry, for example, and some have favourable taxes.
A number of studies have been published assessing the relative strengths of the individual states. Here, we look at some of the most high-profile of these studies, what they found and how they found it in a bid to help you get a better understanding of the variety that awaits in the world’s biggest economy.
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The US News 10 Best States for Business 2021
For 2021, US News has published its top ten US states based on metrics such as their average patent creation, average business creation rates, tax burden, the number of top company headquarters in the state and venture capital investments.
Using that data, its top ten was as follows:
- Massachusetts
- California
- Washington
- Colorado
- Idaho
- Delaware
- Connecticut
- Utah
- Georgia
- Rhode Island
CNBC: America’s Top States for Business in 2021
CNBC used a different set of criteria to assess the states – and came up with a very different list. Its study scored all 50 states against 85 metrics in 10 broad categories. It also weights categories based on how each state markets itself and uses input from business and policy experts and government sources.
The overall CNBC list for 2021 was as follows:
- Virginia
- North Carolina
- Utah
- Texas
- Tennessee
- Georgia
- Minnesota
- Colorado
- Washington
- Ohio
Virginia, the overall leader, scored high marks for education and workforce. The Old Dominion has a varied economy that is strong in agriculture, technology, military, mining and aerospace.
Other states led the way for other facets of the CNBC study. They were:
- Cost of doing business – Oklahoma
- Infrastructure – Illinois
- Life, health and inclusion – Vermont
- Workforce – Texas
- Economy – Idaho
- Business friendliness – South Dakota
- Access to capital – California
- Technology and innovation – California
- Education – Massachusetts
- Cost of living – Mississippi
Forbes Best States for Business
Forbes also compiles an annual Best States for Business list, based on six categories – the cost of doing business, the supply of labour, the regulatory environment, economic climate, prospects for growth and quality of life.
Using these categories, Forbes 2019 Best States for Business ranking ( latest available data) came out as follows:
- North Carolina
- Texas
- Utah
- Virginia
- Florida
- Georgia
- Tennessee
- Washington
- Colorado
- Idaho
North Carolina has a diverse economy that helps to promote business growth in a number of sectors. Once strong for tobacco, timber and cotton, modern-day North Carolina thrives for food processing, pharmaceuticals, technology, vehicle parts and banking – with Charlotte one of the country’s leading banking centres.
Innovation That Matters: The Top Cities
Of course, you don’t just want to know about the best states – the top cities matter too.
According to the US Chamber of Commerce’s Innovation That Matters report ( the latest one of its kind), the top five cities were:
- Boston (Massachusetts)
- Bay Area (California)
- Philadelphia (Pennsylvania)
- San Diego (California)
- Austin (Texas)
Boston is home to world-leading universities such as the Massachusetts Institute of Technology (MIT) and Harvard, which help to create the ecosystem needed for innovation and entrepreneurship. Industries such as finance, life sciences, tech and business services thrive here.
The 2022 State Business Tax Climate Index
Many businesses are, understandably, interested in tax. From the tax you pay to the taxes your customers pay, this is an important consideration. So, what are the best states for business taxes? The Tax Foundation compiles an annual State Business Tax Climate Index to address this very question. It avoids the temptation to look at tax in a black and white ‘how much is paid’ list and, instead, analyses how well the state’s tax system is structured and administered.
The 10 best states in the Tax Foundation’s 2022 list are:
- Wyoming
- South Dakota
- Alaska
- Florida
- Montana
- New Hampshire
- Nevada
- Tennessee
- Indiana
- Utah
The Tax Foundation notes that the states that perform best on its list don’t have one or more of the major taxes. Wyoming, Nevada and South Dakota have no corporate or individual income tax ( though Nevada imposes gross receipts taxes), while third-placed Alaska has no individual income or state-based sales tax.
Each of these studies and reports are interesting in their own right and all help us to understand the strengths of the individual states. What they also prove is that determining the best state for your business depends on what you’re looking for. Each of the above reports comes to a different answer because it uses different data points to arrive at the final answer.
The trick for your business is to be able to determine the factors that matter to you and find your own number one state. That can be tough – but that’s where we come in.
Speak to our specialist advisers and we’ll be able to help you find the state with the right workforce, tax regime and regulatory environment for your business.
