Starting a business is not for the faint of heart. About 20% of new businesses fail within one year.
Business and economic conditions can vary from state to state, and while some states embark on aggressive campaigns to attract companies from other other states and try to keep taxes and other costs low, others impose higher taxes that can place onerous burdens on business. New Jersey falls into the latter category.
According to personal-finance company WalletHub’s 2026 “Best & Worst States to Start a Business” report, New Jersey ranks fifth-worst for small business.
WalletHub compared the 50 U.S. states across 25 key indicators of startup success. The data set ranges from financing accessibility to labor costs to office-space affordability.
According to the WalletHub report, New Jersey ranked 48th in labor cost, 45th in office-space affordability, 42nd in cost of living, 39th in average growth in small business number, 36th in average work week length and 32nd in industry variety.
New Jersey has the highest top marginal corporate tax rate in the nation at 11.5%. The standard corporation business rate is 9% adjusted entire net income for most corporations, 7.5% for corporations with income of $100,000 or less and 6.5% for corporations with income of $50,000 or less. New Jersey and New Mexico were the only two states that raised corporate tax burdens for 2025, according to data released by the Tax Foundation.
The top income tax rate for both single filers and married couples filing jointly with income above $1 million is 10.75%, which affects business owners and high‑earning employees.
The state has one of highest percentages in the nation for property taxes as a percentage of personal income at 4.76%.
New Jersey has one of the highest minimum wages in the nation at $15.92 per hour and maximum unemployment insurance tax contributions per employee are also among the most generous in the country. Higher labor costs can be a barrier for small businesses, restaurants and retail operations.
Other cost considerations for doing business in New Jersey include the state’s combined sales tax rate (state + average local) of 6.61% and the gasoline tax, which rose by 4.2 cents per gallon starting on Jan. 1, 2026. That increase is the result of the 2024 law that gradually raises the state’s Highway Fuel Cap from fiscal year 2025 through fiscal year 2029.
Florida, Utah and Texas are the most business-friendly states, according to WalletHub.
