Best & Worst States For Business: The New World Re-Order

When Ravi Bhatt took a trip to Bloomington, Indiana, in 2021 to scout potential office space for his new AI-driven software company, Folia, he wasn’t planning to move. He’d spent 17 years building software businesses in Chicago and was dug in there. But as an Indiana University alum, he knew firsthand about IU’s strong academic reputation in AI, machine learning and cognitive science. He wanted an office nearby that would allow for easy collaboration and give him access to both the latest research and top tech talent, including IU’s 50,000 students.

“Moving wasn’t even a thought,” he recalls. “Then I called my wife on the way back and I’m like, ‘Hey, how crazy of an idea would it be to move down here?’”

As it turned out, not so crazy. Bloomington’s smaller college-town feel and more affordable lifestyle was a big draw. “Here, I can pop over to talk to a faculty member on campus, come back to my office in the tech corridor, grab lunch at a great restaurant and then be able to spend time with my family—and do it all in the same day in a way that’s not possible in a larger city.”

Bhatt’s decision was prescient, reflecting a broader shift now taking place across corporate America. Increasingly untethered from traditional, big-city economic centers, companies are gravitating more and more toward states that offer that trifecta of business friendliness, workforce readiness and a better, less expensive quality of life.

The 2025 Chief Executive Best & Worst States for Business rankings show that states that have found that secret sauce are moving up toward the top of the list. Georgia and Utah are examples, both inching up two spots to No. 5 and No. 7, respectively. Virginia climbed three spots to break into the top 10 for the first time in a decade, its success at least partly owed to the an intentional, broader geographic approach to high-tech growth beyond the already-bustling northern corridor near Washington D.C. “Our aim is tech-driven economic expansion throughout the state, not just concentrated in Northern Virginia,” says Jason El Koubi, CEO of the Virginia Economic Development Partnership.

The middle of the list found some noteworthy status changes, as well. Iowa shot up nine spaces to No. 14, and Montana rose six places to No. 15. Wisconsin gained nine to reach No. 21, and Alabama climbed eight to No. 24. In the negative column, Delaware tumbled 10 spots to No. 25, likely owed to tax hikes and changes in litigation policies making the state less attractive for business incorporations.

Arizona sank six spots to No. 10, though its recent challenges may be due in part to its success. “The state has grown so much from a population standpoint and has had so much investment coming in over the last 10 to 15 years, they’re a little bit behind now on infrastructure,” says Larry Gigerich, executive managing director of the Ginovus economic development consultancy, who adds that for the first time since 2009, Arizona has a Democratic governor and a Republican legislature, raising the specter of policy gridlock. “It’s a little muddy there right now. Corporate CEOs like stability and predictability.”

Indeed, they do. And more of them are willing to consider a move: 54 percent of respondents said they were “more open to examining new locations” for their businesses, up from 49 percent last year. Forty-two percent said they were “considering opening or expanding new operations or facilities in a new state,” with 42 percent mulling a headquarters shift to a new state.

The competition among states to win over these CEOs has reached unprecedented levels at a time when the world of business is undergoing seismic changes, thanks to a transformed global trade environment, shifting regulatory frameworks and massive demographic and technological shifts. With the new administration’s policies poised to reshape economic priorities, states are adjusting their strategies to remain competitive, focusing on fostering innovation, attracting skilled workers and driving economic expansion. Below we unpack three drivers of the new world re-order.

Policy Reset: In Search of Stability

Amid all the uncertainty at the federal level and global geopolitical instability, states are increasingly touting their relative calm. Georgia, as part of its pitch to business at home and abroad, points to the fact that, “over the last 50 years, whether we’ve been Democrat or Republican, we’ve been pro-business. That’s something that resonates in the world right now,” says Pat Wilson, commissioner of the Georgia Department of Economic Development, adding, “You don’t necessarily have to be driving change to be competitive. Sometimes consistency is just as important.”

Part of that, of course, is leaning into lower corporate taxes and fewer regulations. Four states—Louisiana, Nebraska, North Carolina and Pennsylvania—reduced their corporate tax rate as of Jan. 1, 2025, according to the Tax Foundation.

Others are working on it. Gov. Kim Reynolds of Iowa, for example, signed five tax reform bills into law since taking office in 2018. “Our corporate [tax rate] was one of the highest in the country at 12 percent,” she says. “We’ve taken that down, and we’re on our way to 5.5 percent.” Individual income tax also came down from nearly 9 percent to a flat 3.8 percent this year.

Reynolds plans to make Iowa a shining example of deregulation. She cut 1,200 rules in her first year, and each subsequent year, more cuts have been made. “We have a five-year rolling review so that every regulation has to be justified to remain on the books—if not, it automatically sunsets,” she says. It’s those moves that put Reynolds at the top of the Cato Institute’s 2024 Fiscal Policy Report Card.

Perennial favorites like Texas, Tennessee and Florida got plenty of shoutouts from CEO respondents for reducing regulation. Josip Rupena, CEO of Milo, a fintech company based in Miami, says companies in his industry have been flocking to the city, creating a burgeoning hub, partly because CEOs see deregulation creating opportunities for innovation. “Not all innovation is good or lasting, but you need room for new ideas to develop,” he says.

Incentives don’t hurt, either. Early on, Milo received a grant from the Miami Downtown Development Authority aimed at encouraging hiring in the local area. The state has also helped formalize partnerships between startups and state universities to create opportunities for internships and recruitment, says Rupena. Now that the area is reaching a critical mass for fintech, it’s easier to recruit senior leadership to the area. “The quality of talent has increased significantly.”

Talent and Training Rule

A business-friendly climate and lower cost of operations are both key, but talent is clearly the new chief concern: In last year’s poll, taxes trumped talent; this year, access to talent ranked highest with just over three out of four CEOs naming it as their top priority.

“There are cost-related factors CEOs should and do contemplate, but if you don’t have the workforce you need, it’s more irrelevant what the rest of [the offer] is,” says Mark Schweitzer, former senior leader at the Federal Reserve Bank of Cleveland and an economics professor at Case Western University.

“Talent is everything,” says Terry Lutz, chair of McClure Co., an integrated mechanical construction, engineering, maintenance and energy services firm based in Des Moines, Iowa, who says one of his state’s key strengths is talent, thanks in part to a “phenomenal” education system that boasts one of the country’s highest percentages of high school graduates and four-year degrees.

Larry O’Connor, the CEO of Other World Computing, also praised Iowa for its “very skilled IS and computer science workforce, along with reasonable real estate tax, income tax and cost of living.”

Given the ongoing skills shortage, savvy states aren’t taking a passive approach to workforce development. To woo more employers, they’re getting involved on the ground floor. Georgia’s Quick Start program, for example, is a state-run workforce training program designed to support businesses by providing customized, free job training for new and expanding companies in Georgia. Managed by the Technical College System of Georgia, Quick Start helps businesses—especially in manufacturing, logistics, biotech and IT—train employees efficiently and effectively. Now that graduates have solid career opportunities, they don’t need to leave. “For years, we lost academic talent to the West Coast, to the Northeast,” says Wilson. “Now those brilliant students who are graduating from our university system are staying home.”

Ohio and Indiana are another pair of states that have been leaders in workforce education and programs designed to fill critical manufacturing roles, as a generation of skilled workers retire. “They’re basically saying, ‘We’re going to look at it in real time and then predict over the next five and 10 years where our biggest shortages are going to be,’” says Gigerich. “Then they’re creating credential and certification programs to create a pipeline for some of these at-risk areas.”

The Virginia Talent Accelerator Program, for another example, aims to take the headache out of hiring by offering fully customized recruitment and training “to make sure these new employees are ready to go, day one,” says El-Koubi. To date the program has secured more than 13,000 jobs for companies such as LEGO Group, Tyson Foods, Church & Dwight and Northrop Grumman.

Tech needed an individual boost, says Greg Fairchild, professor of business administration at the University of Virginia’s Darden School of Business and dean and CEO of UVA, Northern Virginia. “Even before Amazon came in, there was a recognition that the state of Virginia has a number of technology firms but lacked the labor pool in tech that you might find in Seattle or San Francisco or even North Carolina.” In 2018, the state launched an unprecedented, statewide $1.1 billion performance-based Tech Talent Investment Program, which ultimately became the centerpiece of Virginia’s successful Amazon HQ2 bid. Of the commitment to double tech talent in the state, El-Koubi says, “We’re ahead of schedule.”

The state’s focus on higher ed has given Hanbury Design, an architecture and design firm based in Norfolk, Virginia, a competitive edge, with Virginia Tech and UVA providing a steady stream of fresh talent. “We hire them and then we grow them up,” says CEO David Keith. “The combination of those two feeder schools has enabled us to really measure up to some of the national firms.”

Hanbury’s focus on developing young talent has had an additional benefit: retention. “Almost everybody stays,” Keith says. “It’s very seldom people want to leave once they’ve had a chance to work with us.”

AI and the High-Tech Spread

Tech firms have been migrating away from traditional tech strongholds for some time, but the biggest recent driver has been the rapid rise of AI, which has required companies to seek locations that provide affordable, reliable sources of energy and a workforce skilled in AI-driven applications. One of the states doing “a phenomenal job” of getting ahead of the trend is North Carolina, which landed big data centers from Google, Microsoft and Apple, and in 2024 added American Tower and PowerHouse Data Centers. “They’ve been leveraging that into life sciences and healthcare R&D and manufacturing.”

Utah’s “Silicon Slopes,” encompassing areas around Salt Lake City and Provo, has also been seeing more tech investment: In March 2025, CIM Group and Novva Data Centers announced a new 100-acre AI data center in West Jordan, Utah, set to be one of the largest direct-to-chip cooled AI data centers globally. The area also features an Adobe Systems 164,570-square-foot campus in Lehi and DataBank’s newly expanded SL6 data center in Bluffdale.

With major AI-driven data centers from Big Tech—including Google’s 2024 investment of $1 billion to expand its facility in Council Bluffs—Iowa is becoming an AI processing hub. “We were doing data centers before data centers were a thing,” says Gov. Reynolds, pointing out that Iowa has one of the lowest costs of energy in the country. “One aspect that’s appealing to a lot of CEOs and companies is the fact that 62 percent of Iowa’s power comes from renewables. It’s something that we’ve been very strategic in building out, and we’ve been working at it for a long time.”

Louisiana is another state to watch, thanks to investment in AI and virtual reality software technology. Governor Jeff Landry has focused on actively developing the technology corridor between Baton Rouge and New Orleans, with the goal of leveraging the robust research capabilities of Louisiana State University in Baton Rouge to attract young, well-educated tech talent. A significant milestone in this initiative is Meta Platforms’ announcement in December 2024 that it will construct a $10 billion AI data center in Richland Parish, Louisiana, which Gov. Landry called “a new chapter” for the Bayou State.

As states compete for emerging industries like AI and automation, the calculus for relocation goes well beyond tax incentives. For CEOs like Jenny Zhan of Beyond International, who recently moved her alternative investment management firm from Irvine, California, to Houston, Texas, that decision is less about the perks and more about longterm strategy. She cautions other CEOs to carefully consider their reasons for relocation.

“It’s not an easy thing to do, so you really need to look at the complete picture and how it can improve your business,” she says. “For us, talent was a big factor. Talent is always seeking opportunities for long-term growth, and Houston is providing those opportunities for young talent, so we have to go wherever the talent is.”