Choosing where to launch a business in the United States (U.S.) is one of the most important decisions an E-2 Treaty Investor makes. The E-2 visa allows nationals of treaty countries to live and work in the U.S. through a substantial business investment. Because business expenses and personal costs vary widely across states, selecting a state with low taxes and a reasonable cost of living can make a significant difference in profitability and long-term success.
This guide focuses on three key factors that shape an investor’s bottom line: cost of living, business environment, and state tax structure. The cost of living reflects what residents spend on housing, food, healthcare, and utilities. The business environment measures a state’s economic strength, workforce quality, and infrastructure. The tax structure shows how much businesses and individuals contribute to state revenue through income or corporate taxes. Together, these details provide a clearer picture of where an investment can achieve lasting value.
Before reviewing specific states, it helps to understand what the cost of living index measures. The national average is set at 100. States with an index below 100 are cheaper than the national average, while those above 100 are more expensive. The index combines the cost of housing, groceries, utilities, transportation, and healthcare to show how far an investor’s money may go in each location.
Several U.S. states offer a balance of affordability and business opportunity, making them attractive options for E-2 visa investors. Data from the Missouri Economic Research and Information Center (MERIC) for the second quarter of 2025 identifies where housing, groceries, and essential services remain below national averages. Insights from CNBC’s 2025 Top States for Business report highlight which of these states also provide favorable conditions for entrepreneurs through strong infrastructure, workforce quality, and economic stability. Together with information from the Tax Foundation’s 2025 report on state income tax structures, these sources present a clear view of where investors can manage living costs, operate efficiently, and retain more of their earnings.
States with the Most Affordable Cost of Living
(Source: MERIC, Q2 2025)
Living expenses are a major consideration for E-2 visa investors, as personal and business costs directly affect available capital. MERIC measures each state’s cost of living across key categories, such as housing, groceries, utilities, transportation, healthcare, and miscellaneous goods. The national average index is set at 100. States scoring below this level are considered more affordable.
The following states rank among the lowest in overall cost of living as of the second quarter of 2025. Their affordability can help investors manage startup costs, maintain reasonable personal expenses, and allocate more funds toward business growth.
Oklahoma
- Cost of Living Index: 86.0
- Grocery Index: 95.3
- Housing Index: 70.7
- Utilities Index: 95.4
- Transportation Index: 89.6
- Health Index: 94.0
- Miscellaneous Index: 90.2
Mississippi
Key Data
- Cost of Living Index: 87.3
- Grocery Index: 96.3
- Housing Index: 72.8
- Utilities Index: 88.9
- Transportation Index: 89.2
- Health Index: 96.8
- Miscellaneous Index: 93.0
West Virginia
Key Data
- Cost of Living Index: 88.3
- Grocery Index: 96.7
- Housing Index: 71.5
- Utilities Index: 93.2
- Transportation Index: 96.6
- Health Index: 93.4
- Miscellaneous Index: 94.5
Alabama
Key Data
- Cost of Living Index: 88.6
- Grocery Index: 97.7
- Housing Index: 70.8
- Utilities Index: 99.6
- Transportation Index: 91.1
- Health Index: 91.0
- Miscellaneous Index: 95.6
Kansas
Key Data
- Cost of Living Index: 88.8
- Grocery Index: 95.5
- Housing Index: 76.1
- Utilities Index: 98.9
- Transportation Index: 91.3
- Health Index: 96.3
- Miscellaneous Index: 92.2
Missouri
Key Data
- Cost of Living Index: 89.0
- Grocery Index: 96.5
- Housing Index: 78.6
- Utilities Index: 96.1
- Transportation Index: 88.4
- Health Index: 94.3
- Miscellaneous Index: 91.8
Arkansas
Key Data
- Cost of Living Index: 89.6
- Grocery Index: 95.3
- Housing Index: 76.8
- Utilities Index: 92.2
- Transportation Index: 91.0
- Health Index: 85.4
- Miscellaneous Index: 97.1
Iowa
Key Data
- Cost of Living Index: 89.7
- Grocery Index: 96.1
- Housing Index: 75.9
- Utilities Index: 91.2
- Transportation Index: 97.7
- Health Index: 95.3
- Miscellaneous Index: 95.2
Michigan
Key Data
- Cost of Living Index: 90.1
- Grocery Index: 98.5
- Housing Index: 74.0
- Utilities Index: 98.3
- Transportation Index: 100.4
- Health Index: 89.5
- Miscellaneous Index: 95.0
Tennessee
Key Data
- Cost of Living Index: 90.3
- Grocery Index: 96.9
- Housing Index: 82.8
- Utilities Index: 87.4
- Transportation Index: 88.9
- Health Index: 86.9
- Miscellaneous Index: 95.2
States with Strong Business Conditions
(Source: CNBC, America’s Top States for Business 2025)
While affordability is important, E-2 visa investors also need a supportive business environment. CNBC’s 2025 Top States for Business report scored all 50 states across 135 measurable indicators in 10 categories of competitiveness, including Cost of Doing Business, Economy, Infrastructure, Workforce, and Business Friendliness.
Now in its 19th year, the study reflects the same criteria companies consider when deciding where to locate or expand. In 2025, CNBC gave the highest weight to the Economy category and introduced new measures for trade risk exposure and federal budget impacts. Data was collected from verified business and policy sources, not opinion surveys. Each state could earn up to 2,500 points, with higher totals reflecting stronger competitiveness.
The following ten states earned the highest scores overall, combining strong economies, accessible infrastructure, and reliable business support systems.
North Carolina
North Carolina ranks first overall in CNBC’s 2025 America’s Top States for Business report. CNBC attributes the state’s continued lead to its strong economy, skilled workforce, and reliable infrastructure. It also received high marks for education and access to capital, which support long-term business growth and investment stability.
Key Insights
- Economy: #3
- Infrastructure: #11
- Workforce: #4
- Cost of Doing Business: #21
- Business Friendliness: #4
- Quality of Life: #29
- Technology & Innovation: #13
- Education: #6
- Access to Capital: #8
- Cost of Living: #23
Texas
Texas ranks second overall in CNBC’s 2025 America’s Top States for Business report. It placed first in Workforce and second in Economy, earning top marks for both labor availability and economic performance based on CNBC’s measured indicators. The state also ranked second in Access to Capital, supporting business investment and expansion.
Key Insights
- Economy: #2
- Infrastructure: #26
- Workforce: #1
- Cost of Doing Business: #5
- Business Friendliness: #17
- Quality of Life: #49
- Technology & Innovation: #2
- Education: #24
- Access to Capital: #2
- Cost of Living: #39
Florida
Florida ranks third overall in CNBC’s 2025 America’s Top States for Business report. It placed first in Economy and second in Workforce, reflecting strong business activity and employment performance. CNBC also ranked Florida among the top states for Access to Capital, indicating robust financial resources for business growth.
Key Insights
- Economy: #1
- Infrastructure: #16
- Workforce: #2
- Cost of Doing Business: #22
- Business Friendliness: #23
- Quality of Life: #22
- Technology & Innovation: #12
- Education: #29
- Access to Capital: #3
- Cost of Living: #48
Virginia
Virginia ranks fourth overall in CNBC’s 2025 America’s Top States for Business report. The state scored second in Infrastructure and first in Education, reflecting reliable public systems and a well-qualified workforce. CNBC also ranked Virginia within the top ten for Business Friendliness and Access to Capital, showing consistent competitiveness across key business categories.
Key Insights
- Economy: #14
- Infrastructure: #2
- Workforce: #14
- Cost of Doing Business: #31
- Business Friendliness: #7
- Quality of Life: #8
- Technology & Innovation: #8
- Education: #1
- Access to Capital: #10
- Cost of Living: #21
Ohio
Ohio ranks fifth overall in CNBC’s 2025 America’s Top States for Business report. The state placed first in Infrastructure and second in Cost of Doing Business, indicating reliable logistics and competitive operating costs. CNBC’s data also shows Ohio performing well in Access to Capital and overall economic balance.
Key Insights
- Economy: #26
- Infrastructure: #1
- Workforce: #31
- Cost of Doing Business: #2
- Business Friendliness: #25
- Quality of Life: #17
- Technology & Innovation: #6
- Education: #27
- Access to Capital: #7
- Cost of Living: #7
Michigan
Michigan ranks sixth overall in CNBC’s 2025 America’s Top States for Business report. The state earned a top-five position in Cost of Doing Business and placed within the top fifteen for Infrastructure and Workforce. CNBC’s data shows consistent performance across multiple categories, reflecting steady economic competitiveness.
Key Insights
- Economy: #18
- Infrastructure: #15
- Workforce: #13
- Cost of Doing Business: #4
- Business Friendliness: #14
- Quality of Life: #14
- Technology & Innovation: #17
- Education: #41
- Access to Capital: #13
- Cost of Living: #9
Georgia
Georgia ranks seventh overall in CNBC’s 2025 America’s Top States for Business report. The state earned top ten positions in Economy, Infrastructure, and Workforce, reflecting strong logistics and employment conditions. CNBC’s rankings show Georgia maintaining steady competitiveness across multiple business factors.
Key Insights
- Economy: #9
- Infrastructure: #4
- Workforce: #3
- Cost of Doing Business: #18
- Business Friendliness: #17
- Quality of Life: #45
- Technology & Innovation: #22
- Education: #15
- Access to Capital: #16
- Cost of Living: #30
Tennessee
Tennessee ranks eighth overall in CNBC’s 2025 America’s Top States for Business report. The state scored within the top ten for Cost of Doing Business, Infrastructure, and Business Friendliness, showing a competitive environment for investors. CNBC’s data reflects Tennessee’s continued strength in operational efficiency and regulatory stability.
Key Insights
- Economy: #21
- Infrastructure: #9
- Workforce: #10
- Cost of Doing Business: #10
- Business Friendliness: #3
- Quality of Life: #50
- Technology & Innovation: #24
- Education: #18
- Access to Capital: #28
- Cost of Living: #18
Indiana
Indiana ranks ninth overall in CNBC’s 2025 America’s Top States for Business report. The state scored among the top five for Cost of Doing Business and Business Friendliness, confirming its reputation for operational efficiency and regulatory stability. CNBC’s data also shows Indiana performing strongly in Infrastructure, supporting both manufacturing and logistics sectors.
Key Insights
- Economy: #19
- Infrastructure: #6
- Workforce: #33
- Cost of Doing Business: #3
- Business Friendliness: #5
- Quality of Life: #48
- Technology & Innovation: #17
- Education: #46
- Access to Capital: #22
- Cost of Living: #2
Minnesota
Minnesota ranks tenth overall in CNBC’s 2025 America’s Top States for Business report. The state performed strongly in Infrastructure, Education, and Quality of Life, reflecting balanced development and workforce support. CNBC’s data places Minnesota among the most stable environments for long-term business growth.
Key Insights
- Economy: #28
- Infrastructure: #5
- Workforce: #30
- Cost of Doing Business: #34
- Business Friendliness: #21
- Quality of Life: #4
- Technology & Innovation: #14
- Education: #12
- Access to Capital: #18
- Cost of Living: #33
States with Favorable Tax Climates
(Source: Tax Foundation, State Income Tax Rates and Brackets for 2025)
Taxes directly affect profitability and reinvestment potential for E-2 visa investors. Each state sets its own tax policies, which can significantly influence overall business expenses and individual earnings. The Tax Foundation evaluates and compares state income tax systems across the United States, considering rate structures, thresholds, and special conditions such as flat taxes or exemptions.
As of 2025, nine states do not levy a broad-based individual income tax, while others apply flat rates. Understanding these structures helps investors determine where their business income may go further.
States with No Income Tax (2025)
According to the Tax Foundation, the following states do not impose a personal income tax:
- Alaska
- Florida
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
(New Hampshire taxes only interest and dividends, not earned income.)
For E-2 investors, these states present clear advantages by reducing the tax burden on both personal and pass-through business income. Florida, Texas, and Tennessee, which also appear in CNBC’s 2025 top business rankings, offer strong environments for entrepreneurs seeking affordability and regulatory simplicity.
States with Flat Income Tax Systems
A growing number of states have adopted flat tax structures where all income is taxed at a single rate. This simplifies compliance and provides greater predictability for investors. As of 2025, the following states levy a flat tax on personal income:
- Arizona – 2.5 percent
- Colorado – 4.4 percent
- Georgia – 5.39 percent
- Idaho – 5.8 percent
- Illinois – 4.95 percent
- Indiana – 3 percent
- Iowa – 3.8 percent
- Kentucky – 4 percent
- Louisiana – 3 percent
- Michigan – 4.25 percent
- Mississippi – 4.4 percent
- North Carolina – 4.25 percent
- Pennsylvania – 3.07 percent
- Utah – 4.55 percent
Flat taxes simplify planning for E-2 investors by creating consistent expectations for both business owners and employees. States such as North Carolina, Indiana, and Michigan, which also ranked highly for business competitiveness, offer a balanced tax structure and manageable overall costs.
Conclusion
For E-2 visa investors, choosing where to build a business is a financial and strategic decision. The right state can lower expenses, protect profits, and make long-term planning simpler. Taxes, everyday costs, and the local economy all play a part in shaping how much an investment can truly grow.
States that offer affordable living and stable business conditions give investors room to expand. Predictable taxes and manageable costs mean capital goes further, while reliable infrastructure and a skilled workforce create steady ground for operations. These factors together determine whether a business simply survives or thrives.
Location shapes outcomes. Investors who choose states that balance affordability with opportunity position their ventures for growth and lasting value in the U.S. market.
Sources
- Missouri Economic Research and Information Center (MERIC). Cost of Living Data Series, Second Quarter 2025. Missouri Department of Economic Development. https://meric.mo.gov/data/cost-living-data-series
- CNBC. America’s Top States for Business 2025: Full Rankings. https://www.cnbc.com/2025/07/10/top-states-for-business-americas-2025-the-full-rankings.html
- Tax Foundation. State Individual Income Tax Rates and Brackets for 2025. https://taxfoundation.org/data/all/state/state-income-tax-rates/