After riding high among the top five best state economies in 2024, Texas' robust economy may be showing some cracks. Texas now ranks as the state with the eighth best economy, four spots lower than last year's ranking, according to a new WalletHub report.

WalletHub's experts ranked all 50 states and the District of Columbia across 28 metrics to measure each state's economic activity and health and its "innovation potential."

Massachusetts moved up two spots from last year to claim the No. 1 best state economy title for 2025, followed by Utah (No. 2) and Washington (No. 3). Texas was surpassed by No. 4-ranking California, as well as New Hampshire (No. 5), North Carolina (No. 6), and Idaho (No. 7).

This is how Texas fared across the three major categories in the study:

• No. 4 – Economic activity (down from No. 2)
• No. 11 – Economic health (down from No. 7)
• No. 24 – Innovation potential (unchanged)

WalletHub analyst Chip Lupo says the states that have the best economies are often those that invest in new businesses, technology, and more. The report also suggests low unemployment rates and high wages are among the many factors that can help Texas residents be successful while also boosting the state economy.

"A strong state economy doesn’t guarantee success for the state’s residents, but it certainly makes financial success more attainable," Lupo said.

The states with the worst economies in 2025, according to WalletHub, are Hawaii (No. 49), West Virginia (No. 50), and Iowa (No. 51).