How States Are Shaping Up for Business in 2025
As we approach the release of the 2025 rankings for America’s Top States for Business, it’s clear that the business landscape is evolving rapidly. The relationship between states and the federal government has transformed significantly, driven by policy shifts and global economic dynamics. These changes have ushered in fresh challenges and opportunities for states vying to attract companies and jobs.
Tariffs, Trade, and Their Impact on State Economies
The introduction of tariffs has reshaped the competitive environment. While tariffs have introduced short-term costs that vary widely among states, they may also motivate foreign companies to establish operations within the U.S., creating long-term prospects. Companies are actively scouting for tariff-exempt locations, prompting states to ramp up their incentives and infrastructure readiness.
However, for states deeply tied to international trade—especially with China—tariffs pose significant risks, complicating what was once a straightforward economic engine.
Federal Spending Cuts and State-Level Consequences
Budget tightening at the federal level has uneven effects across states. Regions that historically depended heavily on federal employment, spending, and research funding are navigating an uncertain future, while those less reliant on federal dollars may find newfound advantages.
The Rising Role of Innovation and Infrastructure Demands
New frontiers in technology such as artificial intelligence and quantum computing continue to expand rapidly, increasing the demand for reliable power, expansive real estate, and robust data networks. Readiness to accommodate these needs—be it through certified industrial sites or infrastructure capacity—has never been more critical.
Methodology: A Record-Setting Evaluation with 135 Metrics
Now in its 19th year, the comprehensive study assesses states across ten core categories involving 135 unique metrics — the most ever incorporated. These categories reflect the priorities companies consider when choosing where to invest or expand.
The ranking process is data-driven and focuses on measurable performance rather than opinions. States are scored up to a maximum of 2,500 points and graded to show their relative standing.
Key Categories and Their Weightings
- Economy (445 points, 17.8%): Evaluates GDP growth, fiscal health, real estate market conditions, entrepreneurial activity, and risks linked to tariffs and federal dependence.
- Infrastructure (405 points, 16.2%): Measures transportation efficiency, power grid reliability, broadband access, water utilities, site readiness, and climate resiliency.
- Workforce (335 points, 13.4%): Assesses skill levels, education attainment, talent attraction, training programs, and worker productivity.
- Cost of Doing Business (295 points, 11.8%): Reviews tax climate, wages, utility costs, property-casualty insurance expenses, and incentive offerings.
- Business Friendliness (270 points, 10.8%): Considers legal environment, regulations, land use policies, and support for emerging sectors like AI and cryptocurrency.
- Quality of Life (265 points, 10.6%): Includes crime, healthcare, childcare availability, worker protections, inclusiveness, and reproductive rights.
- Technology & Innovation (255 points, 10.2%): Focuses on patents, research grants, R&D support, semiconductor presence, and AI leadership.
- Education (110 points, 4.4%): Measures K-12 performance, higher education institutions, and career training resources.
- Access to Capital (60 points, 2.4%): Analyzes venture capital, bank lending, state-backed programs, and foreign investment.
- Cost of Living (60 points, 2.4%): Evaluates affordability indices, housing costs, and insurance expenses.
What Sets This Year Apart?
For 2025, special attention is paid to new risks like trade war exposure and shrinking federal funding, alongside enhanced infrastructure metrics evaluating power and computing capacity. With inflation and recession concerns on many minds, cost measures and economic stability have risen in prominence.
The study also reflects evolving workforce demands by recognizing credentials beyond traditional college degrees and measuring success in attracting workers.
Data Sources and Integrity
The rankings are built on robust, publicly available data supplemented by specialized datasets on real estate costs, climate risk, talent migration, and site readiness. Measures are intended to balance state sizes by including per capita and GDP-relative calculations, ensuring fair competition.
Looking Ahead
The forthcoming 2025 rankings promise to spotlight which states have adapted best to today’s complex business environment—from geopolitical impacts and economic shifts to the relentless pace of technological change. Keep an eye out on July 10 for the full unveiling of America’s Top States for Business, and discover the leaders setting the pace for the future.
