Business Location Score — Compare All 50 States on Cost, Tax & Safety
Compare two US states on six key business factors. Each dimension is scored 1–5 relative to all 50 states + DC, with 5 being the most business-friendly.
| Dimension | State A | State B |
|---|
Data sources: BEA Regional Price Parities (cost of living), Tax Foundation (corporate tax rates), EIA (commercial electricity prices), FBI UCR (crime rates), Census ACS (property tax rates). Lower values are better for all dimensions.
What This Tool Measures
Cost of Living — BEA Regional Price Parities. 100 = national average. Lower means cheaper operations, rent, and wages.
Corporate Tax Rate — Top marginal state corporate income tax. Some states (NV, OH, SD, TX, WA, WY) have no corporate income tax.
Energy Costs — Commercial electricity price per kWh from the EIA. Critical for offices, warehouses, and manufacturing.
Violent Crime — FBI UCR violent crime rate per 100K residents. Affects employee safety and insurance costs.
Property Crime — FBI UCR property crime rate per 100K residents. Affects theft, insurance premiums, and facility security.
Property Tax Rate — Census ACS effective property tax rate. Median property tax paid as a percentage of home value. Affects real estate costs and facility ownership.
Score Methodology
Each dimension scores 1–5 based on percentile rank among all 50 states + DC. Lower raw values = higher scores for all dimensions.
The overall score is an equal-weighted average of all six dimensions.
Top Business-Friendly States
Why Location Economics Make or Break a Small Business
According to the Tax Foundation's 2024 State Business Tax Climate Index, the range between the most and least business-friendly states on corporate tax burden alone exceeds 12 percentage points — nine states (including Texas, Florida, Nevada, South Dakota, Washington, and Wyoming) levy no state corporate income tax, while California taxes corporations at 8.84% and New Jersey at up to 9%. BEA Regional Price Parities show cost of living varies by more than 30% between states: Hawaii's RPP of 112.9 vs. Mississippi's 87.7 means the same $100K salary has different real purchasing power. For a small business, those gaps compound across wages, rent, utilities, and insurance.
EIA data on commercial electricity prices shows 2024 rates ranging from 7–9 cents per kWh in Washington, Idaho, and Louisiana to 30+ cents in Hawaii, California, and Massachusetts. For a business using 5,000 kWh/month, that is a swing of $12,000+/year between states. Property tax effective rates compiled from Census ACS vary from 0.27% (Hawaii) and 0.41% (Alabama) up to 2.13% (New Jersey) and 2.02% (Illinois) — on a $500,000 facility that is a difference of $8,500+/year. FBI UCR crime statistics further impact insurance premiums: business crime insurance typically costs 0.1%–0.5% of annual revenue, rising sharply in high-crime metros.
These six dimensions — cost of living, corporate tax, energy, violent crime, property crime, and property tax — capture the bulk of controllable operating cost variance between locations. The calculator above scores each state 1–5 on each dimension (equal-weighted) so you can compare your top candidates directly. Use it for decisions about relocation, expansion into a second location, remote-first hiring targeting lower-cost states, or pass-through entity domicile planning. Then validate with state-specific data: our LLC Costs by State guide shows filing fees and annual report costs, which can add another $50–$800/year in compliance burden.
When to Use This Calculator
Choosing Where to Incorporate
LLC and corporate tax treatment varies dramatically by state. Delaware and Wyoming have no state income tax on pass-through income. Some states have franchise taxes that hit small businesses hard regardless of profitability.
Expanding to a Second Location
If your business is location-agnostic (e-commerce, remote services), comparing states on cost, safety, and energy prices can meaningfully affect your bottom line when choosing where to base operations.
Hiring Remote Teams
Each remote employee creates nexus in their state, potentially triggering payroll taxes and corporate income tax obligations. Comparing state costs before hiring helps you anticipate the tax and compliance burden.
Industry Benchmarks
| Metric | Best States | Worst States |
|---|---|---|
| Corporate Income Tax Rate | WY, SD, NV (0%) | NJ (9%), MN (9.8%) |
| Cost of Living (BEA RPP) | MS, WV, AR | HI, DC, NY |
| Commercial Electricity (¢/kWh) | WA, ID, OK (7–9¢) | HI, CT, MA (17–35¢) |
| Violent Crime Rate (per 100K) | ME, NH, VT (<200) | NM, AK, MS (>600) |
| Effective Property Tax Rate | HI, AL, CO (<0.5%) | NJ, IL, CT (>2%) |
Sources: BEA Regional Price Parities, EIA Commercial Electricity Prices, FBI UCR Crime Data, Census ACS Property Tax, Tax Foundation State Tax Rates.
Common Mistakes When Choosing a Business Location
Focusing only on state income tax
States with no income tax often compensate with higher property taxes, sales taxes, or gross receipts taxes. Texas has no income tax but high property taxes. A low-income-tax state can still be expensive for businesses depending on your cost structure.
Ignoring labor market quality
Low-cost states may have shallow talent pools for specialized roles. A $20,000/yr savings on real estate can evaporate if you need to pay 15% more in salary to attract qualified candidates in a market with fewer skilled workers.
Not checking for state-specific regulations
California, New York, and Massachusetts have significantly more employee-protective regulations (mandatory PTO, specific leave laws, strict non-compete rules). These add compliance costs that don't show up in tax rate comparisons.
Choosing based on where you live, not where your customers are
If 80% of your revenue comes from California customers, being based in Wyoming doesn't eliminate California's economic nexus requirements. Understand where your tax obligations actually arise before using location as a tax strategy.
Data Sources
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