Only Rhode Island is Worse – by Carol Hughes
Jan 21, 2026
Every year, WalletHub releases its ranking of the best and worst states to start a business, and every year, Maryland earns its usual spot near the bottom, rubbing shoulders with Connecticut, Rhode Island, and New Jersey in a contest no state should want to win. The 2026 report is no different. Maryland clocks in at 49 out of 50, and rather than ask why, Annapolis pretends it is a fluke. Any honest entrepreneur can see the truth. Maryland is one of the most suffocating places in America for launching a business because policymakers treat job creators like a nuisance rather than the backbone of the economy.
WalletHub evaluates business environment, business costs, and access to resources. Maryland fails on all three. Start with cost. Office space, labor, compliance, and taxes all come with price tags that rival New York’s, but without its economic dynamism. Studies show Maryland’s labor costs are among the highest in the country. This is not because Maryland workers are not valuable. They are. The problem is that state and local policies pile on additional costs for employers. Add Maryland’s high cost of living, and suddenly, the small startup that wants to hire a team must compete with the salary inflation caused by housing shortages and sky-high living expenses.
Even worse is the state’s regulatory maze, where every new business needs not only a state license but often a county or city license as well. Some industries require additional professional certifications, inspections, or approvals. It is not unusual for a business owner to spend weeks navigating the labyrinth before opening their doors. Maryland’s usual response is to create a task force or study the problem. This is political speak for acknowledging that the regulations are broken but refusing to fix them.
Then there is the tax environment. Maryland officials love to say the tax system is competitive, but small businesses know better. Even when Annapolis does not pass a tax, it threatens to. The proposed tech services tax is a perfect example. It would have slapped small tech firms, consultants, and startups with new levies. The Maryland Chamber of Commerce warned it would devastate Maryland’s competitiveness and send tech jobs straight to Virginia. The threat alone chilled investment. When a state routinely floats new taxes to fill budget holes, businesses take notice. Entrepreneurs need certainty, not lawmakers treating them like ATMs.
One might assume that Maryland’s highly educated workforce would offset these disadvantages. The state has universities, federal labs, and smart young workers. But even here, WalletHub finds Maryland lagging. This is not because the talent is lacking. It is because hiring is too expensive. High wages, driven by state economic conditions and housing scarcity, push new businesses into an impossible math. States such as Florida, Texas, and Utah, which have the top of the list, offer warm and supportive startup ecosystems that help offset costs. Maryland does not.
The state also falls behind in industry diversity. WalletHub has consistently shown that Maryland ranks low in small business growth and in the variety of economic sectors. Too much of Maryland’s economic engine depends on government, federal contracting, and heavily regulated industries. This might be great for Beltway firms, but it is terrible for entrepreneurs with new ideas who need cross-industry support, investor networks, and a culture that encourages risk-taking. When places like Florida can offer everything from tourism to tech to logistics to aerospace, Maryland struggles to escape bureaucratic gravity.
In short, Maryland is not simply mediocre for business. It is actively hostile. Other states are cutting taxes, loosening regulations, and building connected entrepreneurial communities. Maryland is debating new fees, expanding regulation, and adding layers of compliance. If you wanted to design a state that scares off innovation, you could not do much better than this.
WalletHub’s ranking is neither an accident nor a shock. It is a mirror. Until Maryland leaders stop admiring themselves in it and start doing the hard work of streamlining regulations, eliminating bad tax proposals, prioritizing affordability, and treating small businesses like partners instead of piggy banks, the Old-Line State will remain exactly where it is. It will sit near the bottom, wondering why anyone who wants to build something chooses to cross the river into Virginia.
Endnotes
- WalletHub, “Best and Worst States to Start a Business,” https://wallethub.com/edu/best-states-to-start-a-business/36934
- MyMCMedia, “Maryland ranks among worst states due to labor and office costs,” https://www.mymcmedia.org/study-maryland-ranks-4th-worst-state-to-start-a-business
- Maryland SBDC, “Regulatory and licensing burdens,” https://www.marylandsbdc.org/resources/business-law-and-regulations
- Maryland Chamber of Commerce, “Tech tax proposal impacts,” https://www.mdchamber.org/2025/03/20/tech-services-tax-impacts
- Maryland Chamber of Commerce, “Competitiveness vs. VA and PA,” https://www.mdchamber.org/2025/08/19/2025-competitiveness-data-preview
- MoCo Show, “Maryland’s weak growth and industry variety ranking,” https://mocoshow.com/2025/01/20/maryland-is-2025s-5th-worst-state-to-start-a-business-per-study
Carol Hughes is a contributor for Direct Line News. She can be reached at Carol.Hughes@mcgopclub.com