A new study found Massachusetts is the No. 5 most expensive state to start a business in 2025.

An unprecedented 25.6 million Americans have started their own businesses over the last five years according to the Census Bureau’s Business Formation Statistics. Historically, about 20% of businesses fail within the first year, but startups in 2025 are facing a unique challenge with higher operating expenses following historic inflation. The economic landscape has changed across the country and choosing a location where wages, rent, utilities, and taxes are reasonable could mean the difference between success and failure.

Simplify LLC today released a study on the Most and Least Expensive States to Start a Business in 2025 using the most recent data from the Bureau of Labor Statistics, Federal Reserve of St. Louis, Tax Foundation, Energy Information Administration, and others.

The rankings were determined by analyzing nine key factors such as taxes, business filing fees, commercial rent and utilities, labor costs, regulations, and small business lending.

Key Findings:

• No. 5 Massachusetts: Massachusetts charges business owners $500 to register an LLC, which is the highest LLC fee in the country. Near-top wages of $91,512 (#50), a high corporate tax rate of 8% (#44), an $894.06 monthly electricity bill (#43) and 182,758 regulations (#43), make Massachusetts a difficult environment to start a business.
• 10 Least Expensive: Utah, South Dakota, Colorado, Wyoming, Montana, Idaho, Nebraska, Kansas, Nevada, and North Dakota.
• 10 Most Expensive: California, New York, Hawaii, Tennessee, Massachusetts, Alabama, New Jersey, D.C. Illinois, and West Virginia.