SALT LAKE CITY — Utah ranks as the second-best state in the nation to start a business in 2026, according to a new report released by WalletHub, even as inflation and rising costs continue to challenge entrepreneurs nationwide.
The report comes as more than 20% of new businesses fail within their first year and roughly half do not survive five years, underscoring the importance of location when launching a startup.
WalletHub compared all 50 states across 25 indicators of startup success, including access to financing, labor costs, office-space affordability and growth in the number of small businesses.
Utah finished second overall, earning high marks for business growth and access to capital. The state ranked second nationally for average growth in the number of small businesses and sixth for startups per capita. Utah also tied for first place for accessible financing, reflecting strong availability of business loans.
Utah’s overall score was 55.24, ranking sixth for business environment and second for access to resources, though it placed 31st for business costs. The report cited higher office-space costs and cost of living as continuing challenges for entrepreneurs in the state.
“Around half of all new businesses don’t survive five years, so the idea of becoming a business owner can be daunting, especially with the current high cost of living,” WalletHub analysts wrote. “That’s why it’s crucial to establish your business in a state that will maximize your chances of success.”
WalletHub analysts credited Utah’s strong job market as a major advantage. The state posted year-over-year employment growth of more than 3%, one of the highest rates in the country. Analysts also noted that Utah business owners benefit from relatively lower employee health insurance premiums, which rank 22nd nationwide.
The report also highlighted Utah’s recognition in the Center for Digital Government’s “Digital States Survey,” which evaluates how effectively states use technology to improve government efficiency and support businesses.
“Having the necessary capital makes it much easier for a business to get off the ground, and a strong job growth rate indicates that existing businesses are doing well,” the analysis said.
Regionally, neighboring states also performed well. Idaho ranked fifth overall, Nevada ninth and Wyoming 28th.
Florida topped the list as the best state to start a business in 2026, driven by rapid growth in entrepreneurship and one of the highest numbers of startups per capita.
“Florida is the best state for starting a business in 2026,” said Chip Lupo, a WalletHub analyst. “There are plenty of good reasons why so many people start businesses in Florida, including the fact that it has the 15th-lowest corporate taxes.”
Experts quoted in the report said taxes matter, but are often outweighed early on by demand, labor availability and regulatory clarity.
“State tax rates certainly matter, but the research shows that their influence becomes more important as companies age,” said Dr. Brent B. Clark, a professor at the University of Nebraska at Omaha. “At least initially, strong demand for their products, strong labor markets, and fair zoning and permitting rules tend to outweigh tax rates.”
Philip Greenwood, a senior lecturer at the University of Wisconsin–Madison, said quality of life also plays a key role.
“Quality of life is important too – commute time, affordability,” Greenwood said.
WalletHub said states hoping to attract new businesses should focus on policy stability, workforce development and streamlined permitting to remain competitive.