Wyoming, Delaware, and Montana are the most entrepreneurial states of 2024 so far. It might be due to business-friendly taxes.
Wyoming, Delaware, and Montana lead the US in new business formations this year. Cheap costs and favorable taxes are driving the boom.
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- Wyoming, Delaware, and Montana have had the most new businesses per 100,000 residents open this year, per Census Bureau data
- Wyoming leads the nation in number of new businesses with 283 per 100,000 residents
- Small businesses openings are booming, but the viability of lasting in the long term is less certain
Business is booming out West, even in the country's least populated state.
Wyoming leads the nation for most new business openings per 100,000 residents since the start of 2024, according to Census Bureau data and Business Insider's analysis of population data.
Delaware and Montana are second and third in new business openings per 100,000 residents since the start of 2024.
Wyoming has seen 1,657 new businesses open since the start of the year, according to the Census Bureau. In Delaware, 1,583 have opened. And in Montana, 1,207. All of those states are particularly tax-friendly for new entrepreneurs.
The boom in business translates to 283 new businesses per 100,000 residents in Wyoming, 153 in Delaware, and 106 in Montana.
As many Americans face high costs of living and seek out new opportunities, states like Wyoming and Montana have seen a surge in economic activity. Wyoming also led the nation in new business applications per capita in 2023, according to the Chamber of Commerce. And the number of new business applications in Wyoming in 2022 was seven times greater than in 2005, according to data from the St. Louis Fed.
According to Census Bureau data, Wyoming was the least populated state in the nation as of 2023, with 584,057 residents. Yet, Wyoming's population is steadily growing, increasing 1.2% from 2020 to 2023.
In Montana, the population increased by 4.5% from 2020 to 2023, according to Census Bureau data.
It's yet another sign that the economy is heading away from traditional coastal hubs, and more South and West. The pandemic shifted workers and money away from stalwarts like New York City and San Francisco, with many opting for wide open (cheaper) spaces in areas like Wyoming. And while pandemic-era population and job shifts may have slowed, it looks like business is still booming in Wyoming — perhaps showcasing a more permanent trend.
Business is bustling in some states, but many new ones won't make it
While business is booming, it's important to recognize that about a quarter of all new private businesses in the US fail within their first year, according to an April report by LendingTree, a loan service. Within five years, that number climbs to nearly half.
According to the Chamber of Commerce, small businesses make up 99.9% of all businesses in the US. As the Fed holds interest rates at 20-year highs and inflation cools slightly, many new business owners may struggle to find their footing.
But the Bureau of Labor Statistics does have its own measure to approximate just how many new businesses actually came of those applications; BLS splices data on past new businesses with their forecast of new businesses to yield a measure showing what actual formations might look like. And according to that measure, Wyoming and its Western counterparts — along with Delaware — are due to have businesses with some staying power.
In fact, the St. Louis Fed listed Wyoming and Delaware as the two states with the largest growth rates in number of business applications from 2005 to 2022.
Business-friendly taxation
Wyoming, Delaware, and Montana are all particularly attractive to new business owners due to their tax laws. It's a reason that entrepreneurship might stay strong.
Wyoming is one of three states alongside South Dakota and Nevada that does not impose a corporate income tax, according to the Tax Foundation, a Washington D.C. based think tank.
Furthermore, Wyoming does not impose an individual income tax, another appeal for potential business owners.
Delaware is known for its business-friendly tax structure. About 68% of all Fortune 500 companies were incorporated in Delaware as of 2022, according to the state's Division of Corporations.
More recently, the Economic Innovation Group found that as of 2023, a "startup surge" in new businesses has been led by "two clear belts of states in the Mountain West and Southeast." For places like Wyoming and Delaware, EIG attributes the surge in applications partly to favorable state corporate laws.
"The startup suge is both powered and shaped by numerous local forces and policies that will affect its long-term economic impact on communities, as well," EIG found.
And so, if you're looking for a small business to frequent — or have an idea you want to make a reality — you too might want to head West.
Are you a new small-business owner in Wyoming, Delaware, or Montana? Contact these reporters at jtowfighi@businessinsider.com and jkaplan@businessinsider.com.