Index score: 26.36
South Dakota stands out for its lack of taxes. It has no personal income, corporate income, capital gains or estate taxes. (Election Day may change the landscape a bit: On the ballot are proposals to eliminate the state's cellphone tax and increase cigarette taxes.) Health regulations are relatively light, and crime rates are second-lowest in the country (lowest is neighbor North Dakota). It's a beautiful state, with lots of land, a low cost of living, good economic growth, and little unemployment, says Karen Kerrigan, CEO and president of the Small Business & Entrepreneurship Council, a nonprofit group in Washington, D.C., that advocates for reduced government taxes and regulations on small business. Small business owners "tend to do well there," Kerrigan says. Unfortunately, the state's cold climate may give entrepreneurs thinking about moving there the shivers.