March 19, 2026, 4:39 a.m. ET
New York state is great for many reasons, but the ability to start a successful business there may not be one of them. According to a WalletHub study, the Empire State is among the worst states to start a business in 2026.
However, starting a business can have its difficulties anywhere. According to the U.S. Bureau of Labor Statistics, more than one-fifth of all startups usually don’t make it past one year of operation, and almost half that do, don’t survive to see their fifth anniversary.
WalletHub stated that choosing the right location is critical to starting a business, as it can determine access to capital, talent options and affordable real estate, among other things.
“It’s crucial to establish your business in a state that will maximize your chances of success,” WalletHub analyst Chip 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.”
To determine the best and worst states to start a business, WalletHub compared all 50 states across 25 indicators of startup success, like working-age population, office space affordability and the growth of average business revenues.
Here’s what to know about NY’s rank.
Why is NY a bad state to start a business?
New York ranked among the 10 worst states to start a business, coming in at No. 41 with an overall score of 39.25. The Empire State has the third-highest business costs, one of the lowest average growth rates in the number of small businesses and it is tied with California and Alaska for the most expensive office rent, according to WalletHub.
Despite these poor scores, New York placed No. 5 in the access to resources ranking.
WalletHub’s 10 best states to start a business
- Florida
- Utah
- Texas
- Oklahoma
- Idaho
- Mississippi
- Georgia
- Indiana
- Nevada
- California
WalletHub’s 10 worst states to start a business
- No. 41: New York
- No. 42: New Hampshire
- No. 43: Alaska
- No. 44: West Virginia
- No. 45: Pennsylvania
- No. 46: New Jersey
- No. 47: Connecticut
- No. 48: Hawaii
- No. 49: Maryland
- No. 50: Rhode Island
How WalletHub assessed startup success
To assess startup success, WalletHub compared all 50 states across three metrics: business environment, access to resources and business costs. Those metrics were evaluated using 25 relevant metrics:
The business environment category analyzed these factors:
- Average length of work week (in hours)
- Share of engaged workers
- Growth in number of small businesses
- Startups per capita
- Growth of average business revenues
- Five-year business survival rate
- Industry variety
- Industry-cluster strength
- Entrepreneurship index
- Share of fast-growing firms
- “Digital states” survey grade
- Job growth
- GDP growth
The access to resources category analyzed these factors:
- Financing accessibility
- Venture investment amount per capita
- Human-capital availability
- Higher-education assets
- Share of college-educated population
- Working-age population growth
The business costs category analyzed these factors:
- Office-space affordability
- Labor costs
- Average annual single insurance premium per enrolled employee
- Corporate taxes
- Total effective state and local tax rates on mature corporate headquarters
- Cost of living
Data used to create the ranking was collected as of Dec. 19, 2025 and the information was sourced from multiple entities, such as the Bureau of Labor Statistics, the Center for Digital Government, National Venture Capital Association and Indeed.com.
— Madison Scott is a journalist with the Democrat and Chronicle who covers breaking and trending news for the Finger Lakes Region. She has an interest in how the system helps or doesn’t help families with missing loved ones. She can be reached at MDScott@gannett.com.
