A new study found New York is the No. 2 most expensive state to start a business in 2025.
An unprecedented 25.6 million Americans have started their own businesses over the last five years according to the Census Bureau’s Business Formation Statistics. Historically, about 20% of businesses fail within the first year, but startups in 2025 are facing a unique challenge with higher operating expenses following historic inflation. The economic landscape has changed across the country and choosing a location where wages, rent, utilities, and taxes are reasonable could mean the difference between success and failure.
Simplify LLC today released a study on the Most and Least Expensive States to Start a Business in 2025 using the most recent data from the Bureau of Labor Statistics, Federal Reserve of St. Louis, Tax Foundation, Energy Information Administration, and others.
The rankings were determined by analyzing nine key factors such as taxes, business filing fees, commercial rent and utilities, labor costs, regulations, and small business lending.
Key Findings:
- No. 2 New York: New York struggles with 300,095 regulations (#50), high wages of $91,428 (#49) and a $200 LLC fee (#45 tied). A $907.99 monthly commercial electricity bill (#44), and a 6.88% corporate tax (#35) also drive up expenses. Labor force participation in New York is 61.2% (#37), and SBA lending is $7.2 million per 100,000 (#33), but it’s not enough to raise the state out of its spot at #50.
- 10 Least Expensive:Â Utah, South Dakota, Colorado, Wyoming, Montana, Idaho, Nebraska, Kansas, Nevada, and North Dakota.
10 Most Expensive:Â California, New York, Hawaii, Tennessee, Massachusetts, Alabama, New Jersey, D.C. Illinois, and West Virginia.
