State of innovation
Texas named one of the best states to start a business in 2025
Texas' friendly business climate has allowed the state to regain its rightful position among the top five best states to start a new business.
As one of the largest states in the U.S., it's no surprise Texas is big on business and entrepreneurship. Now the state is earning new praise among WalletHub's 2025 list of "Best & Worst States to Start a Business."
The Lone Star State claimed the No. 4 spot in the report's rankings, proving that Texas is in a much better shape than it was last year when it earned No. 8 in WalletHub's 2024 report.
The study compared all 50 states across 25 metrics to determine the best places to start, grow, and find success with a new business. Factors that were considered include the number of startups per capita, job growth rates, financing accessibility measures, labor costs, and corporate tax rates.
The three states to outperform Texas are Florida (No. 1), Georgia (No. 2), and Utah (No. 3). Idaho rounded out the top five.
Across the study's three main categories, Texas performed the best in the "business environment" rank, earning No. 1 nationally. This section compared the states based on its five-year business survival rates, average business revenues growth, and more.
Texas ranked No. 12 in the nationwide comparison of "access to resources" – which covers working age population growth, venture investment amounts per capita, and other means – and earned a fair No. 34 in the report's "business costs" ranking.
But Texas can still do better with its business friendliness to reclaim a top-three overall ranking, which the state last earned in 2023.
WalletHub analyst Chip Lupo said in the report that it is imperative for potential new business owners to establish their enterprise in a place that can maximize their ability to succeed.
"Around half of all new businesses don’t survive five years, so the idea of becoming a business owner can be daunting, especially with the current high cost of living," Lupo said. "The best states have low corporate tax rates, strong economies, an abundance of reliable workers, easy access to financing and affordable real estate. On top of that, you’ll need to make sure you start in a place with an engaged customer base, if you’re operating locally."
Houston has also proven to be at the top of the destination list for entrepreneurs who are looking for their next venture.
The top 10 best states to start a new business in 2025 are:
- No. 1 – Florida
- No. 2 – Georgia
- No. 3 – Utah
- No. 4 – Texas
- No. 5 – Idaho
- No. 6 – Oklahoma
- No. 7 – Nevada
- No. 8 – Colorado
- No. 9 – Arizona
- No. 10 – Kentucky
