States Ranked by Business Climate: What the Major Raters Agree On
A synthesis of the two most-cited business climate scorecards, CNBC's America's Top States for Business 2025 and the Tax Foundation's 2026 State Tax Competitiveness Index, with every judgment attributed to its rater.
How this ranking works
No government agency ranks states for business. What exists instead is a small set of heavily used private scorecards, and this report synthesizes the two most influential, naming the rater for every claim. The first is CNBC's America's Top States for Business 2025, the latest complete edition and the 19th in the series, which scored all 50 states on 135 metrics across 10 categories including workforce, infrastructure, economy, and cost of doing business (CNBC, 2025). The second is the Tax Foundation's 2026 State Tax Competitiveness Index, which grades the structure of each state's tax code across more than 150 variables covering individual, corporate, sales, property, and unemployment insurance taxes (Tax Foundation, 2025).
The two raters measure different things and often disagree, which is the point of reading them together. CNBC rewards broad execution: talent, infrastructure, and economic momentum. The Tax Foundation rewards tax design regardless of outcomes. A state that both raters place near the top is strong across the board; a state they split on has a specific, identifiable trade-off, and the narrative names it.
The composite rank here averages a state's standing across the two systems, then checks the result against hard federal data cited in the blurbs and evidence: nonfarm jobs and unemployment from the Bureau of Labor Statistics, real GDP by state from the Bureau of Economic Analysis, and net domestic migration from the Census Bureau. Each entry carries subscores oriented so a fuller meter means a better business climate. CNBC standing and Tax Foundation standing are both expressed on a 0 to 50 scale where 50 is a rank of first and 1 is a rank of 50th, so that both raters read in the same direction. Jobs, growth, and migration subscores are drawn straight from the federal releases. Every value traces to a source in the list below.
The composite is analytical and ordinal, and every underlying rating is attributed. The framework does not care which party governs a state, and neither rater's methodology asks. Deliberately ignored: press releases, incentive announcements, and every ranking that does not publish its methodology.
1TexasCNBC 2025: No. 2 | No income tax95.6
Second on CNBC's 2025 Top States for Business and a perennial top-10 finisher with the Tax Foundation thanks to zero personal income tax (CNBC, 2025; Tax Foundation, 2026). It backs the ratings with 67,299 net domestic migrants and the nation's most residential building permits (Census Bureau, 2025-2026).
The receipts: Texas ranked second on CNBC's 2025 board, up from a low of sixth in 2023, and levies no individual income tax, which keeps it in the Tax Foundation's upper tier (CNBC, 2025; Tax Foundation, 2026). It added 67,299 net domestic migrants in the year ending July 2025, second only to North Carolina, and its $2.9 trillion economy grew a real 2.5 percent in 2025 (Census Bureau, Vintage 2025; BEA, 2026).
2North CarolinaCNBC 2025: No. 1, third win in four years95.1
CNBC's top state for business in 2025, its third win in four years, on workforce and economic strength (CNBC, 2025). One of only two states with significant job growth in the year through May 2026, up 61,800 jobs (BLS, 2026).
The receipts: North Carolina won CNBC's overall title in 2025 for the third time in four years, led by its economy and workforce categories (CNBC, 2025). Federal data confirms it: North Carolina and Nevada were the only two states with statistically significant over-the-year job gains through May 2026, with North Carolina up 61,800 jobs, and it led every state in net domestic migration at 84,064 (BLS, 2026; Census Bureau, Vintage 2025).
3FloridaCNBC 2025: No. 3 | No income tax93.8
Third on CNBC's 2025 list (CNBC, 2025) and structurally strong with the Tax Foundation as one of the no-income-tax states (Tax Foundation, 2026). Tied for the fastest state GDP growth of 2025 at 3.1 percent (BEA, 2026).
The receipts: Florida ranked third on CNBC's 2025 board, up from a low of 17th in 2021, and levies no individual income tax (CNBC, 2025; Tax Foundation, 2026). Its real GDP grew 3.1 percent in 2025, tied with South Carolina for the fastest in the country, though its net domestic migration cooled to 22,517 and eighth nationally, down sharply from pandemic-era highs (BEA, 2026; Census Bureau, Vintage 2025).
4TennesseeCNBC 2025: No. 8 | Tax Foundation 2026: No. 892.9
The consistency champion: eighth with CNBC and eighth with the Tax Foundation, after fully repealing its Hall tax on interest and dividend income in 2021 (CNBC, 2025; Tax Foundation, 2026).
The receipts: Tennessee ranked eighth on both scorecards, the only state to match its position exactly on CNBC and the Tax Foundation (CNBC, 2025; Tax Foundation, 2026). It reached that tax standing after phasing out and fully repealing the Hall income tax on interest and dividends in 2021, leaving it with no tax on wage or investment income, and it gained 42,389 net domestic migrants in 2025 (Tennessee Department of Revenue; Census Bureau, Vintage 2025).
5OhioCNBC 2025: No. 5 | New flat tax91.4
Fifth on CNBC's 2025 rankings (CNBC, 2025), and on January 1, 2026 its individual income tax moved to a flat 2.75 percent, a structural change the Tax Foundation's index rewards (Tax Foundation, 2026).
The receipts: Ohio ranked fifth overall on CNBC's 2025 board (CNBC, 2025). On January 1, 2026, its individual income tax collapsed to a flat 2.75 percent on nonbusiness income over $26,050, adding it to the roster of flat-tax states the Tax Foundation credits for neutral structure (Tax Foundation, 2026 State Tax Changes).
6GeorgiaCNBC 2025: No. 7 | Flat 5.19 percent tax90.6
Seventh with CNBC in 2025, powered by logistics and workforce (CNBC, 2025), with a flat income tax of 5.19 percent on a legislated downward path (Tax Foundation, 2026).
The receipts: Georgia ranked seventh on CNBC's 2025 board on the strength of logistics and workforce (CNBC, 2025). It converted to a flat individual income tax now at 5.19 percent, with statute scheduling further cuts toward 4.99 percent, and it continued to draw net domestic migrants in 2025 (Tax Foundation, 2026; Census Bureau, Vintage 2025).
7IndianaCNBC 2025: No. 9 | Rate cut in 202689.5
Ninth on CNBC's 2025 list (CNBC, 2025) and one of eight states that cut individual income tax rates on January 1, 2026 (Tax Foundation, 2026 State Tax Changes). A long-standing top-10 structural performer.
The receipts: Indiana ranked ninth on CNBC's 2025 board (CNBC, 2025). It was one of eight states cutting individual income tax rates on January 1, 2026, continuing a decade-long march down a flat rate that keeps it a top-10 structural performer with the Tax Foundation (Tax Foundation, 2026 State Tax Changes).
8VirginiaCNBC 2025: No. 4, then a federal shock88.2
Fourth on CNBC's 2025 rankings, published before the scale of federal downsizing was clear (CNBC, 2025). BLS data now shows Virginia as the only state with a significant 12-month job loss, down 52,200 (BLS, May 2026). The rating and the reality are diverging.
The receipts: CNBC ranked Virginia fourth in July 2025 on workforce and education (CNBC, 2025). By May 2026, Virginia was the only state with a statistically significant over-the-year job loss, down 52,200 jobs, or 1.2 percent, as federal workforce cuts hit a state heavily exposed to Washington (BLS, 2026). The scorecard and the federal data now point in opposite directions.
9MichiganCNBC 2025: No. 687.4
Sixth on CNBC's 2025 Top States for Business, its best showing in years, on infrastructure and cost competitiveness (CNBC, 2025).
The receipts: Michigan ranked sixth on CNBC's 2025 board, one of its strongest finishes in the series, credited to infrastructure and a competitive cost of doing business (CNBC, 2025). The Tax Foundation places its tax structure in the middle of the pack, so its standing rests mainly on CNBC's broader execution metrics (Tax Foundation, 2026).
10South DakotaTax Foundation 2026: No. 286.8
Second-best tax structure in America, with no individual or corporate income tax (Tax Foundation, 2026). CNBC ranks it mid-pack on workforce depth, the classic small-state trade-off (CNBC, 2025).
The receipts: South Dakota holds the second-best tax structure in the nation, with no individual and no corporate income tax (Tax Foundation, 2026). It also carried the lowest unemployment rate of any state in May 2026 at 2.1 percent, though CNBC scores its small labor pool mid-pack, the standard small-state trade-off (BLS, 2026; CNBC, 2025).
11WyomingTax Foundation 2026: No. 186.1
The best-structured tax code in the nation for the 2026 index: no corporate or individual income tax, a competitive 4 percent sales tax, and no estate or inheritance tax (Tax Foundation, 2026). CNBC scores its tiny labor pool much lower (CNBC, 2025).
The receipts: Wyoming ranked first on the Tax Foundation's 2026 index, with no corporate or individual income tax, a nationally competitive 4 percent sales tax rate, and no estate or inheritance tax (Tax Foundation, 2026). CNBC scores its very small workforce and economy far lower, which is why the best tax code in America does not sit atop the composite (CNBC, 2025).
12MinnesotaCNBC 2025: No. 1084.9
Tenth with CNBC on education, health, and quality-of-life metrics (CNBC, 2025), despite a tax code the Tax Foundation has long graded near the bottom third (Tax Foundation, 2026). The two raters disagree about Minnesota more than almost any state.
The receipts: Minnesota ranked tenth with CNBC on education, health, and quality of life, one of the highest finishes of any Northern state (CNBC, 2025). The Tax Foundation grades its tax structure in the bottom third for high individual and corporate rates, one of the larger rater disagreements on the board (Tax Foundation, 2026).
13ColoradoCNBC 2025: No. 1184.0
Just outside CNBC's 2025 top ten at No. 11 (CNBC, 2025), with a flat income tax the Tax Foundation credits structurally. Census data shows it newly losing domestic migrants, a warning light (Census Bureau, Vintage 2025).
The receipts: Colorado ranked 11th with CNBC, just outside the top ten, and levies a low flat individual income tax the Tax Foundation credits (CNBC, 2025; Tax Foundation, 2026). Census data now shows the state shedding domestic migrants after years of gains, a shift worth watching against its strong scorecard standing (Census Bureau, Vintage 2025).
14New HampshireTax Foundation 2026: rising, no income or sales tax83.3
Improved on the Tax Foundation's 2026 index after completing the repeal of its interest and dividends tax, leaving it with neither an income tax nor a sales tax (Tax Foundation, 2026).
The receipts: New Hampshire climbed on the Tax Foundation's 2026 index after finishing the phaseout of its interest and dividends tax, leaving it with no tax on wage or investment income and no general sales tax (Tax Foundation, 2026). CNBC scores it well on quality of life but lower on the scale of its economy, keeping the composite in the mid-teens (CNBC, 2025).
15MassachusettsCNBC 2025: No. 20, Most Improved82.1
CNBC's Most Improved State of 2025, climbing 18 spots to No. 20 on innovation and workforce strength (CNBC, 2025). The Tax Foundation grades its tax structure far less kindly, especially the millionaire surtax (Tax Foundation, 2026).
The receipts: Massachusetts was CNBC's Most Improved State of 2025, jumping 18 places to No. 20 on innovation, education, and workforce (CNBC, 2025). The Tax Foundation grades its tax structure well down the board, citing the voter-approved 4 percent millionaire surtax stacked on the flat income tax, a clean example of the two raters splitting on one state (Tax Foundation, 2026).
41ConnecticutHigh costs on both scorecards45.3
Long graded near the bottom of the Tax Foundation's index for stacked income, property, and estate taxes (Tax Foundation, 2026), with unemployment of 5.1 percent in May 2026, among the nation's highest (BLS, 2026).
The receipts: Connecticut sits near the bottom of the Tax Foundation's 2026 index for its stacked individual income, property, and estate taxes (Tax Foundation, 2026). Its unemployment rate was 5.1 percent in May 2026, among the highest in the nation, reinforcing a weak reading on both the code and the outcomes (BLS, 2026).
42WashingtonTax Foundation 2026: No. 45 | CNBC 2025: No. 1444.1
The sharpest split decision in America: CNBC ranks Washington 14th on economy and innovation, while the Tax Foundation ranks its tax structure 45th, citing the business and occupation gross receipts tax and recent tax increases (CNBC, 2025; Tax Foundation, 2026).
The receipts: Washington ranks 14th with CNBC on the strength of its tech economy and innovation, but 45th with the Tax Foundation, which faults its business and occupation gross receipts tax and recent tax increases (CNBC, 2025; Tax Foundation, 2026). Its 5.2 percent unemployment rate in May 2026 was among the highest of any state, tempering the CNBC standing (BLS, 2026).
43MontanaCNBC 2025: No. 48 | Tax Foundation 2026: No. 642.7
The reverse split: the Tax Foundation ranks Montana's tax structure sixth best, while CNBC ranks the state 48th overall with the worst workforce score in the nation (Tax Foundation, 2026; CNBC, 2025). Good tax design cannot conjure workers.
The receipts: Montana holds the sixth-best tax structure in the nation with the Tax Foundation, yet CNBC ranks it 48th overall with the nation's weakest workforce score (Tax Foundation, 2026; CNBC, 2025). It also cut its individual income tax rate on January 1, 2026, deepening the paradox of a well-designed code attached to a thin labor market (Tax Foundation, 2026 State Tax Changes).
44VermontCNBC 2025: No. 4741.4
47th on CNBC's 2025 rankings, weighed down by cost of doing business and a small, aging labor pool (CNBC, 2025).
The receipts: Vermont ranked 47th on CNBC's 2025 board, dragged by a high cost of doing business and a small, aging labor pool (CNBC, 2025). The Tax Foundation likewise grades its tax structure in the bottom tier for high individual income and property taxes (Tax Foundation, 2026).
45Rhode IslandCNBC 2025: No. 4640.6
46th with CNBC, which scores it the fifth-most-expensive state to do business in and 46th for business friendliness (CNBC, 2025).
The receipts: Rhode Island ranked 46th overall with CNBC, scored among the five most expensive states to do business in and near the bottom for business friendliness (CNBC, 2025). The Tax Foundation also places its tax structure in the bottom quarter, so both raters agree it is a hard place to operate (Tax Foundation, 2026).
46CaliforniaBottom tier of the Tax Foundation index38.9
The Tax Foundation places California's tax structure near the bottom of its 2026 index, and the state carried a 5.3 percent unemployment rate in May 2026, highest of any state (Tax Foundation, 2026; BLS, 2026). Scale and venture capital keep it from ranking lower.
The receipts: California's tax structure ranks near the bottom of the Tax Foundation's 2026 index for its top-in-the-nation individual income tax rate (Tax Foundation, 2026). Its 5.3 percent unemployment rate in May 2026 was the highest of any state, though its $4.25 trillion economy, the largest in the country, and its venture-capital base keep it out of the true basement (BLS, 2026; BEA, 2026).
47New JerseyTax Foundation 2026: No. 49 | CNBC 2025: No. 3037.2
Second-worst tax structure in the nation: the highest-rate corporate income tax, among the highest property and individual income taxes, plus an inheritance tax (Tax Foundation, 2026). CNBC is kinder at No. 30 on workforce and location (CNBC, 2025; NJBIA, 2025).
The receipts: New Jersey ranks 49th on the Tax Foundation's 2026 index, hampered by the highest-rate corporate income tax, some of the highest property taxes in the country, a high individual income tax, and an inheritance tax (Tax Foundation, 2026; NJBIA, 2025). CNBC is notably kinder at No. 30, crediting its workforce depth and Northeast location, another split-decision state (CNBC, 2025).
48New YorkTax Foundation 2026: No. 5035.8
The worst-structured tax system in America for the 2026 index, cited for high individual and corporate rates and heavy combined sales taxes (Tax Foundation, 2026). It still posted the second-fastest GDP growth of 2025, proof that ratings and output are different questions (BEA, 2026).
The receipts: New York holds the worst-structured tax system in the nation on the Tax Foundation's 2026 index, described as burdensome and highly nonneutral for its high individual and corporate rates and heavy combined sales taxes (Tax Foundation, 2026). Yet its real GDP grew 2.9 percent in 2025, second fastest of any state, showing that a bad tax structure and a strong output year can coexist (BEA, 2026).
49HawaiiCNBC 2025: No. 4934.1
CNBC scores Hawaii 49th with the highest cost of doing business in America and the second-highest cost of living (CNBC, 2025). Distance and housing costs do the rest.
The receipts: Hawaii ranked 49th overall with CNBC, scored with the highest cost of doing business in the country and the second-highest cost of living (CNBC, 2025). Geographic isolation and housing costs compound a tax structure the Tax Foundation also grades below average (Tax Foundation, 2026).
50AlaskaCNBC 2025: No. 5032.5
CNBC's worst state for business in 2025, last in the Economy category as North Slope crude fell about 12 percent in a year (CNBC, 2025). The Tax Foundation, judging tax structure alone, has long scored Alaska near the top, the widest disagreement on the board (Tax Foundation, 2026).
The receipts: Alaska ranked 50th overall with CNBC in 2025, last in its Economy category as oil prices sagged (CNBC, 2025). The Tax Foundation, which judges only tax structure, has long scored Alaska near the top for having no individual income tax and no state sales tax, making Alaska the single widest rater disagreement on the entire board (Tax Foundation, 2026).
Click any entry to open its full scorecard, sub-scores, and the receipts.
CNBC America's Top States for Business 2025, top 10 (1 = best)
Two rulers, deliberately different
This report synthesizes two named raters and attributes every judgment. CNBC's America's Top States for Business 2025, the 19th edition of the series, measured all 50 states on 135 metrics in 10 categories, its largest methodology ever, and crowned North Carolina for the third time in four years, followed by Texas, Florida, Virginia, and Ohio. The bottom five, in order from 46th: Rhode Island, Vermont, Montana, Hawaii, and Alaska (CNBC, July 2025).
The Tax Foundation's 2026 State Tax Competitiveness Index asks a narrower question: how well is the tax code built? It scores more than 150 variables across individual, corporate, sales, property, and unemployment insurance taxes. Wyoming ranked first, South Dakota second. New York ranked last at 50, with New Jersey 49th (Tax Foundation, October 2025).
The two systems are not measuring the same thing, and that is the reason to read them together rather than pick one. CNBC rewards execution: whether a state actually has the workers, the roads, the airports, the university pipelines, and the economic momentum a company needs. The Tax Foundation rewards design: whether the tax code is simple, neutral, and low-friction, regardless of what the wider economy does with it. A company deciding where to build a plant cares about both, but the two answers can diverge sharply for a single state.
Where both rulers point the same way, the conclusion is strong. Texas, Florida, and Tennessee score in the top tier of both systems. Tennessee is the cleanest case in the country: eighth with CNBC, eighth with the Tax Foundation. No other state matches its rank on both boards, and it earned the tax standing the hard way, by fully repealing its Hall tax on interest and dividend income in 2021 and leaving itself with no tax on wages or investment income (Tennessee Department of Revenue).
The split decisions tell you more than the agreements
Four states expose exactly what each rater measures. Washington ranks 14th with CNBC on the strength of its tech economy, and 45th with the Tax Foundation, which faults its business and occupation gross receipts tax and recent tax increases (CNBC, 2025; Tax Foundation, 2026). A gross receipts tax hits revenue rather than profit, which the Tax Foundation treats as one of the least neutral tax designs available, yet it has done nothing to slow Amazon, Microsoft, or the wider Puget Sound economy that lifts Washington into CNBC's top fifteen. Both readings are true at once.
Montana is the mirror image: sixth-best tax structure in the nation, 48th with CNBC, which scores its workforce dead last (Tax Foundation, 2026; CNBC, 2025). Montana even cut its individual income tax rate again on January 1, 2026 (Tax Foundation, 2026 State Tax Changes). None of that conjures workers into a state of just over a million people spread across the fourth-largest land area in the country. Good tax design cannot manufacture a labor pool, and the CNBC score says so bluntly.
Alaska is the widest gap on the board. CNBC ranked it the worst state for business in America in 2025, last in the Economy category, as North Slope crude prices sagged (CNBC, 2025). The Tax Foundation has long scored Alaska's tax structure among the nation's best, because the state levies no individual income tax and no statewide sales tax (Tax Foundation, 2026). Both are measuring honestly. One measures the code; the other measures the consequences of depending on one commodity for the state's fortunes.
Minnesota completes the set: 10th with CNBC on education, health, and quality of life, bottom third with the Tax Foundation on tax design (CNBC, 2025; Tax Foundation, 2026). The state graduates a deep, well-trained workforce and keeps its people healthy, which CNBC counts heavily, while carrying high individual and corporate rates the Tax Foundation counts against it. Neither rater is wrong; they are answering different questions about the same place. A reader who sees only one scorecard for any of these four states is being told half a story. The composite in this report exists precisely to keep both halves in view and to name the trade-off out loud rather than average it into silence, which is why Washington sits at 42, Montana at 43, Minnesota at 12, and Alaska at 50 rather than at whichever single number one rater assigned.
Does the federal data back the raters?
Ratings are opinions with methodologies. Federal data is the check, and here the report leans on three independent government series: nonfarm jobs and unemployment from the Bureau of Labor Statistics, real GDP by state from the Bureau of Economic Analysis, and net domestic migration from the Census Bureau. None of the three is a ranking. Each is a count.
The counts mostly confirm the top. North Carolina, CNBC's No. 1, was one of only two states, with Nevada, to post a statistically significant over-the-year job gain through May 2026, up 61,800 jobs, and it led the nation in net domestic migration at 84,064 (BLS, 2026; Census Bureau, Vintage 2025). Texas pairs its No. 2 CNBC rank with the second-most migrants in the country, 67,299, and Florida pairs its No. 3 rank with the fastest 2025 real GDP growth of any state, 3.1 percent, tied with South Carolina (Census Bureau, Vintage 2025; BEA, 2026). When the raters and the federal counts agree, the reader can bank it.
The check also catches the raters aging badly. CNBC ranked Virginia fourth in July 2025, before the scale of federal downsizing was clear. By May 2026, Virginia was the only state in America with a statistically significant 12-month job loss, down 52,200 jobs, or 1.2 percent, as cuts to the federal workforce hit the state most exposed to Washington (BLS, 2026). A scorecard published in July cannot see a shock that lands the following spring, which is why this report checks every rating against fresher federal numbers rather than treating a rank as a fact.
The check cuts the other way too. New York, ranked dead last by the Tax Foundation, grew real GDP 2.9 percent in 2025, second fastest in the nation (BEA, 2026; Tax Foundation, 2026). A bad tax structure and a strong output year can coexist, because output is driven by finance, technology, and scale that a nonneutral tax code slows without stopping. The record shows both. So this report does too, and it does not pretend the tax rank alone tells you what the New York economy did last year.
The jobs and unemployment picture underneath the scores
Business climate scorecards are annual snapshots. The labor market moves monthly, and in mid-2026 it tells a sharper story than either rater's calendar allows. Over the year through May 2026, the Bureau of Labor Statistics found nonfarm employment statistically unchanged in 47 states, up significantly in only North Carolina and Nevada, and down significantly in only Virginia and the District of Columbia (BLS, 2026). That is a frozen national labor market with a few loud exceptions, and the exceptions map onto the rankings in revealing ways.
North Carolina's gain validates its CNBC crown. Virginia's loss undercuts its No. 4 finish. And the unemployment map complicates several other placements. California carried the highest state unemployment rate in May 2026 at 5.3 percent, with Washington and Oregon tied just behind at 5.2 percent (BLS, 2026). Two of those three, California and Washington, post strong CNBC economy and innovation scores, which shows that a large, dynamic economy and a soft labor market can run side by side. Connecticut's 5.1 percent rate, by contrast, reinforces a state that grades poorly on both the tax code and the outcomes.
At the other end, South Dakota recorded the lowest unemployment rate of any state at 2.1 percent (BLS, 2026). That is the same South Dakota the Tax Foundation ranks second for tax structure and CNBC ranks only mid-pack for the size of its workforce. A tight labor market is good for workers and hard for employers who need to hire at scale, which is exactly the small-state trade-off the two raters capture from opposite directions. The unemployment data does not overturn the rankings. It fills in the texture the annual scores flatten out.
The structural direction is one-way
Whatever weight a reader gives each rater, the policy direction underneath them is not ambiguous. Ohio moved its individual income tax to a flat 2.75 percent on January 1, 2026, joining the roster of flat-tax states (Tax Foundation, 2026 State Tax Changes). Eight states cut individual income tax rates that same day: Indiana, Kentucky, Mississippi, Montana, Nebraska, North Carolina, Ohio, and Oklahoma (Tax Foundation, 2026 State Tax Changes). New Hampshire finished abolishing its interest and dividends tax and climbed the index, leaving it with neither an income tax nor a sales tax (Tax Foundation, 2026).
The pattern is not new, but it has accelerated. Over the past several years a growing number of states have flattened or cut income taxes, and almost none have raised them, which is why the Tax Foundation's top tier has filled with no-income-tax and flat-tax states while high-rate progressive states have sunk toward the bottom. Georgia converted to a flat tax and legislated further cuts toward 4.99 percent (Tax Foundation, 2026). Tennessee reached the top ten after killing its last income tax in 2021 (Tennessee Department of Revenue). The competitive logic feeds on itself: each cut raises the pressure on neighbors.
Movement at the top of the CNBC table tracks the same geography. The 2025 top ten contains six Southern and Midwestern states, and the top three, North Carolina, Texas, and Florida, are all Sun Belt (CNBC, 2025). The migration data runs in the same channel: North Carolina, Texas, South Carolina, and Tennessee led the nation in net domestic gains in 2025, all Southern, while the South accounted for nine of the fifteen states with the largest migration gains (Census Bureau, Vintage 2025). Capital and people are moving in the same direction the tax codes are moving.
The framework here pays no attention to which party produced any of it. It reports what the raters scored and what the federal data shows. Republican-led Texas and Democratic-led North Carolina finish first and second on this composite for the same reason: both back their scorecards with jobs, migration, and growth the federal government counts independently. If the pattern produces discomfort, the discomfort belongs to the reader, not the data.
What the composite can and cannot tell you
This ranking is a synthesis, not an oracle. It tells a reader where two serious, published, methodology-transparent raters land on each state, and whether independent federal counts back those judgments up. It does not claim that a high rank causes investment or that a low rank repels it. That causal question is genuinely open, and neither CNBC nor the Tax Foundation resolves it. A state can rank high because it is already winning, not win because it ranks high, and the direction of that arrow is exactly what the published methodologies leave unanswered.
The honest limits are worth stating plainly. CNBC's category weights shift from year to year, which means part of any state's year-over-year move is methodological rather than real (CNBC, 2025). The Tax Foundation measures the structure of a tax code, not its overall level or its economic outcomes, which is how a state can rank 50th and still post the second-fastest GDP growth in the country, as New York did in 2025 (BEA, 2026). Neither rater measures whether a business that relocates actually performs better after the move.
What the composite does deliver is discipline. It forces every claim to name its source, it checks every rating against a federal count, and it refuses to let a single scorecard stand in for the whole picture of a state. Where the two raters and the federal data all agree, the reader gets a firm floor. Where they diverge, the reader gets the trade-off named instead of buried. That is the most an honest business-climate ranking can promise, and it is more than most deliver. The states that finish highest here, North Carolina and Texas, do so because two independent raters and three independent federal counts all point the same way at once. The states that finish lowest, New York and Alaska, do so for opposite reasons that the report names rather than blends: one for a tax code the raters fault even as its economy grows, the other for an economy the raters fault even as its tax code scores well. When the signals converge, trust the rank. When they split, read the trade-off. That distinction is the whole value of reading two rulers instead of one.
Tax Foundation 2026 State Tax Competitiveness Index, selected ranks (1 = best)
How the business-climate map has moved
The story of the past five years is a steady migration of capital, people, and tax policy toward the same corner of the map. When Tennessee began phasing out its Hall tax on interest and dividend income, it climbed from the middle of the Tax Foundation's board into the top ten, finishing the repeal in 2021 and landing at eighth on the 2026 index, matching its eighth-place CNBC finish exactly (Tennessee Department of Revenue; Tax Foundation, 2026; CNBC, 2025). No other state matches its rank on both scorecards, and it got there by subtraction, not incentives.
The tax competition has only intensified. Ohio flattened its income tax to 2.75 percent on January 1, 2026, and joined the flat-tax roster; Georgia converted to a flat tax with further cuts legislated; New Hampshire finished killing its interest and dividends tax; and eight states cut individual income tax rates on the same January day (Tax Foundation, 2026 State Tax Changes). The direction is one-way. States are flattening and cutting, not raising, and the Tax Foundation's top tier has filled accordingly with no-income-tax and flat-tax states while high-rate states have sunk toward the bottom.
The people followed the same compass. North Carolina led the nation in net domestic migration in 2025 at 84,064, ahead of Texas at 67,299, South Carolina at 66,622, and Tennessee at 42,389, all Southern states (Census Bureau, Vintage 2025). Florida, long the migration champion, cooled sharply to 22,517 and eighth place, a reminder that even the strongest trends decelerate. The South took nine of the fifteen largest migration gains, tracking the same geography as CNBC's Sun Belt top three (Census Bureau, 2026; CNBC, 2025).
What moved most recently is the gap between a rating and the ground truth. CNBC ranked Virginia fourth in July 2025; by May 2026 it was the only state with a significant 12-month job loss, down 52,200, after federal downsizing hit the Washington-adjacent economy (CNBC, 2025; BLS, 2026). That divergence is the clearest signal on the board that scorecards are annual snapshots and federal counts are the live wire. This report will re-score the map when CNBC's 2026 edition lands in July and the next round of federal data confirms or overturns what the raters saw.
CNBC 2025 bottom five states (50 = worst)
Net domestic migration, top gainers, year ending July 2025
Over-the-year change in nonfarm jobs, the two significant movers, May 2026
What the evidence settles
Beyond argument: North Carolina was CNBC's top state for business in 2025, its third win in four years, and Wyoming holds the best-structured tax code in the Tax Foundation's 2026 index while New York holds the worst. Texas, Florida, and Tennessee rank in the top tier of both scorecards, and the federal jobs, migration, and growth data point the same direction for all three. North Carolina led every state in net domestic migration at 84,064 and posted one of only two significant job gains in the year through May 2026, while Virginia posted the nation's only significant job loss. Alaska ranked last with CNBC in 2025, driven by oil dependence.
What remains contested
How much any of this is causal remains contested. Critics of CNBC note its category weights shift yearly, making year-over-year moves partly methodological. Critics of the Tax Foundation note its index measures tax design, not tax levels or outcomes, which is how bottom-ranked New York posted the nation's second-fastest 2025 GDP growth. Whether business climate rankings predict investment or merely describe places already winning is an open empirical question that neither rater's methodology resolves.
Questions people ask
What is the best state for business in 2026?
By synthesis of the major raters, Texas: No. 2 with CNBC in 2025 and structurally strong with the Tax Foundation as a no-income-tax state. CNBC's own No. 1 for 2025 was North Carolina, its third win in four years. CNBC's 2026 edition is due in July 2026.
Which state has the best tax code for business?
Wyoming, ranked first on the Tax Foundation's 2026 State Tax Competitiveness Index. It levies no corporate or individual income tax, a competitive 4 percent sales tax, and no estate or inheritance tax. South Dakota ranks second.
Why do the rankings disagree about states like Washington and Montana?
They measure different things. CNBC scores 135 metrics on workforce, economy, and infrastructure; the Tax Foundation scores only tax structure. Washington is 14th with CNBC but 45th with the Tax Foundation; Montana is 6th with the Tax Foundation but 48th with CNBC, which scores its workforce last.
What is the worst state for business?
CNBC ranked Alaska 50th in 2025, last in its Economy category amid falling oil prices. For tax structure specifically, the Tax Foundation ranks New York 50th, citing high individual and corporate rates and heavy combined sales taxes.
Does the federal data back up the business climate rankings?
Mostly at the top. North Carolina, CNBC's No. 1, led the nation in net domestic migration at 84,064 and posted one of only two significant job gains through May 2026 (Census Bureau; BLS). But the data also caught Virginia, ranked No. 4 by CNBC, posting the only significant state job loss, down 52,200, after federal downsizing.
Which states cut income taxes in 2026?
Eight states cut individual income tax rates on January 1, 2026: Indiana, Kentucky, Mississippi, Montana, Nebraska, North Carolina, Ohio, and Oklahoma. Ohio moved to a flat 2.75 percent tax, and New Hampshire completed the repeal of its interest and dividends tax (Tax Foundation, 2026).
Sources
- CNBC, America's Top States for Business 2025: The full rankings https://www.cnbc.com/2025/07/10/top-states-for-business-americas-2025-the-full-rankings.html
- CNBC, North Carolina is America's Top State for Business in 2025 https://www.cnbc.com/2025/07/10/north-carolina-top-state-for-business-america.html
- CNBC, Alaska is America's worst state for business in 2025 https://www.cnbc.com/2025/07/10/alaska-worst-state-for-business-america.html
- CNBC, How we are choosing America's Top States for Business in 2025 (methodology) https://www.cnbc.com/2025/06/11/how-we-are-choosing-americas-top-states-for-business-in-2025.html
- Tax Foundation, 2026 State Tax Competitiveness Index, full study https://taxfoundation.org/research/all/state/2026-state-tax-competitiveness-index/
- Tax Foundation, Movers and Shakers in the 2026 State Tax Competitiveness Index https://taxfoundation.org/blog/best-state-tax-rankings-most-improved/
- Tax Foundation, 2026 State Tax Changes Taking Effect January 1st https://taxfoundation.org/research/all/state/2026-state-tax-changes/
- Tax Foundation, 2026 Tennessee Tax Rates and Rankings https://taxfoundation.org/location/tennessee/
- U.S. Bureau of Labor Statistics, State Employment and Unemployment Summary, May 2026 https://www.bls.gov/news.release/laus.nr0.htm
- U.S. Bureau of Labor Statistics, Unemployment Rates for States https://www.bls.gov/web/laus/laumstrk.htm
- U.S. Bureau of Economic Analysis, GDP by State (2025 annual and Q1 2026) https://www.bea.gov/data/gdp/gdp-state
- U.S. Census Bureau, Vintage 2025 State Population Estimates https://www.census.gov/newsroom/press-releases/2026/population-growth-slows.html
- U.S. Census Bureau, County Domestic Migration Trends, 2025 https://www.census.gov/library/stories/2026/03/county-domestic-migration-trends.html
- Tennessee Department of Revenue, Hall Income Tax https://www.tn.gov/revenue/taxes/hall-income-tax.html
- NJBIA, NJ Ranks 49th in the 2026 State Tax Competitiveness Index https://njbia.org/scraping-the-bottom-nj-ranks-no-49-of-50-states-in-tax-competitiveness/
Parker, T. E. (2026). States Ranked by Business Climate: What the Major Raters Agree On. US Political Rank. https://uspoliticalrank.com/rankings/states-by-business-climate<iframe src="https://uspoliticalrank.com/embed/states-by-business-climate" width="100%" height="520" style="border:1px solid #ddd;border-radius:8px" title="States Ranked by Business Climate: What the Major Raters Agree On" loading="lazy"></iframe>Keep reading
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