Why New Jersey Keeps Making Entrepreneurship as Hard as Possible
New Jersey Homeowners & Business Owners Want to Escape From New Jersey
Starting a business is never easy. According to the U.S. Bureau of Labor Statistics, more than 20 percent of startups fail in their first year, and nearly half never make it to year five. That is during normal times.
In 2026, add elevated costs, stubborn inflation, high interest rates, expensive real estate, rising insurance premiums, and a labor market that looks fine on paper but feels tight in real life. Suddenly, where you start a business matters almost as much as what you start.
That is exactly what the latest 2026 rankings from WalletHub set out to measure. They compared all 50 states across 25 data points tied to startup survival, growth, and cost. The results explain a lot about why so many people are not just leaving New Jersey, but taking their businesses, jobs, and future plans with them.
The Headline Nobody in New Jersey Wants to Frame
New Jersey ranked 46th out of 50 as a place to start a business in 2026.
That puts it ahead of only Connecticut, Hawaii, Maryland, and Rhode Island. This is not a near miss. This is bottom-tier performance in a national ranking focused on the exact factors that determine whether a business survives its first few years.
This is not a talent problem. It is not an education problem. It is not a motivation problem.
It is a cost problem.
The Best States to Start a Business in 2026
Here are the top 10 states overall according to WalletHub’s scoring:
Florida
Utah
Texas
Oklahoma
Idaho
Mississippi
Georgia
Indiana
Nevada
California
Florida takes the top spot thanks to strong small-business growth, a high percentage of adults engaged in entrepreneurship, and relatively low corporate taxes. Utah and Texas follow closely, supported by job growth, population inflows, and easier access to financing.
California makes the top 10 for one reason, scale. Venture capital, industry clusters, and access to funding keep it competitive, even though it ranks near the bottom for business costs. California works if you already have capital. It is far less forgiving if you are trying to bootstrap from scratch.
The Worst States, Featuring a Familiar Cluster
Now look at the bottom of the rankings:
New York
New Hampshire
Alaska
West Virginia
Pennsylvania
New Jersey
Connecticut
Hawaii
Maryland
Rhode Island
High-cost states dominate the bottom. The Northeast makes a strong showing here, just not the kind most residents would brag about.
Why New Jersey Finished 46th, According to the Data
WalletHub evaluated each state across three categories: Business Environment, Access to Resources, and Business Costs.
New Jersey’s results tell the story clearly:
Access to Resources: 8th
Business Environment: 35th
Business Costs: 50th, dead last
That last ranking is the anchor dragging everything else down.
New Jersey ranked last in business costs due to:
Extremely expensive commercial office space
High labor costs driven by overall cost of living
Elevated employer health insurance premiums
Heavy state and local tax exposure
One of the highest costs of living in the country
In plain terms, the meter starts running before your first customer shows up. Even strong ideas struggle when fixed costs eat cash faster than revenue can stabilize.
Red States, Blue States, and the Part Everyone Avoids Saying Out Loud
The WalletHub study is not political, but the results reflect policy outcomes.
Many of the top-ranked states lean red or purple. Many of the worst-ranked states lean deep blue. This is not about ideology. It is about math.
States like Florida, Texas, Utah, and Idaho reduce friction. Lower taxes, cheaper real estate, lighter regulation, and faster working-age population growth give startups a fighting chance during their most fragile years.
Blue states often excel in education, talent, and access to capital, but they also raise the break-even point so high that many small businesses fail before they ever scale. California survives on venture funding. New Jersey charges similar costs without offering the same upside.
Startups fail early far more often than they fail late. States optimized for survival tend to win these rankings. States optimized for fees, complexity, and high overhead do not.
Outbound Migration Is Not a Coincidence
New Jersey routinely ranks near the top nationally for outbound migration. People are not leaving because they dislike seasons, pizza, or bagels. They are leaving because the economics no longer make sense.
Entrepreneurs feel this faster than most. When Florida ranks first, Texas ranks third, and New Jersey ranks 46th, the decision stops being emotional and becomes purely rational.
Lower-cost states offer:
Lower startup debt
Slower cash burn
More room for mistakes
Better odds of surviving the first five years
When businesses leave, jobs leave. When jobs leave, the tax base shrinks. When the tax base shrinks, rates rise. The cycle feeds itself.
The Feedback Loop Nobody Wants to Fix
High costs push people out.
Out-migration shrinks the base.
Shrinking bases raise taxes.
Higher taxes push more people out.
WalletHub did not create this problem. They just measured it. New Jersey’s 46th-place ranking is a symptom of a system that makes it increasingly hard to build anything new without paying a premium just for showing up.
The Bottom Line
New Jersey did not land near the bottom because its residents lack ambition or intelligence. It landed there because it is one of the most expensive and least forgiving places in the country to start from zero.
In 2026, entrepreneurs are more mobile than ever. They can choose where to live, where to hire, and where to pay taxes. More and more are choosing not to do that in New Jersey.
If you are wondering why your neighbors keep heading south or west, this ranking explains it better than any political talking point ever could.
Thinking About Turning Your NJ House Into a One-Way Ticket Out?
New Jersey makes it hard to start a business, hard to keep one alive, and very good at collecting taxes while you try. At some point, the question stops being “How do I make this work here?” and becomes “Why am I still here?”
If your plan involves cashing out your New Jersey equity and relocating to a state where starting a business does not feel like a punishment, Escape From New Jersey was built for exactly that. We help homeowners sell in NJ and connect them with agents in states where opportunity actually scales.
Thinking about turning your NJ house into a one-way ticket out? Learn how to escape.
