The state of Minnesota drastically fell 20 spots to 49th – that’s second worst among the 50 states for entrepreneurs in just one year of Simply LLC’s national rankings.
The annual study from Simplify LLC uses data from the Census Bureau, Bureau of Economic Analysis, Tax Foundation, and the U.S. Senate. They use six categories to determine the best and worst states for entrepreneurs; those categories include job creation, consumer spending, inflation, business growth, corporate taxes, and educated worker migration.
According to that study, a sharp drop in consumer spending contributed to Minnesota’s drop in rankings. New business growth plunged by 33.5 points, and the state had the highest maximum corporate income tax rate at 9.8%.
Iowa took the ranking of number 50, also having a higher maximum corporate income tax rate, and stagnant consumer spending growth.
Key Findings
Washington Is the Best State for Entrepreneurs. Its No. 1 spot was driven by strong business growth (110.8% increase in the year ending November 2024) and a lack of corporate income taxes, making it an appealing state to set up shop.
Alabama Is the Worst State for Entrepreneurs. Consumer spending was down by 0.6% year-over-year, inflation has hit hard and the state is struggling to attract educated workers.
Major Changes Between 2024 and 2025. New England states climbed in the rankings this year (Vermont, New Hampshire, Rhode Island, Massachusetts, Connecticut and Maine) largely because of increases in job creation and consumer spending growth. On the other side of the spectrum, four states – Kansas, Pennsylvania, Delaware and Utah – fell more than 30 places after scoring poorly across the board.
Record Number of Small Business Loans for Minorities: Loans to black-owned businesses tripled since 2020, while loans to Latinos and Women doubled during that period.
Determining the Best & Worst States for Entrepreneurs in 2025:
Simplify LLC analyzed the most recent federal data across the following six categories:
– Job creation
– Consumer spending
– Inflation
– Business growth
– Corporate taxes
– Educated worker migration
However, these self-starters are also grappling with economic uncertainty, funding disparities, and regulatory hurdles that mean not every state is created equal when it comes to business opportunities. SimplifyLLC analyzed the most recent federal data across six metrics to identify the best and worst states for entrepreneurs in 2025, including job creation, consumer spending, inflation, business growth, corporate taxes, and whether educated workers are more likely to move in or out of the state.
We also used our 2024 rankings to measure how the climate for entrepreneurs has changed over the past year.
