South Carolina Ranks 18th for Business—Here’s How to Compete with the Top States

North Carolina, Texas, and Florida are winning with pro-growth policies. South Carolina should follow their lead—and do more.

The CNBC Top States for Business 2025 rankings are out, and once again, the message is clear: economic freedom wins. North Carolina took the top spot, followed by Texas at number 2 and Florida at number 3. South Carolina landed at #18 overall—good, but far from great—and behind key regional competitors like Georgia (#7) and Tennessee (#8).

What’s driving the divide?

CNBC ranks all 50 states using 128 metrics across 10 categories, including cost of doing business, infrastructure, workforce, education, and business friendliness. Each category is weighted based on how states market themselves to attract business and investment.

South Carolina’s strengths are real. It ranks #10 in economy, buoyed by its growing GDP and strong export profile. It also ranks #12 for workforce, boasting a high labor force participation and robust technical training initiatives. But it falls behind where it counts: #28 in cost of doing business, #30 in access to capital, #14 in education, and #28 in business friendliness.

That’s a problem, especially when neighboring states prioritize freedom.

What Are Top States Doing Right?

The states leading the pack have a common playbook:

North Carolina offers a business-friendly tax code, reliable infrastructure, and is phasing in the lowest flat income tax rate in the country. It ranks #3 in economy, #4 in workforce, and #6 in education.
Texas boasts no personal income tax, a world-class energy sector, and rapid population growth. It ranks #1 in workforce and #2 in economy, even though it struggles with education ($24) and cost of living (#39).
Florida keeps taxes low, regulations minimal, and has led the nation in school choice expansion. It ranks #1 in economy, #2 in workforce, and #3 in access to capital, despite higher living costs (#48).

These states aren’t perfect, but they’ve embraced policies that unlock growth, reward work, and attract capital.

Where South Carolina Falls Behind

Despite its pro-business reputation, South Carolina still has room for improvement. Its individual income tax tops out at 6%, which is high for the Southeast. Recent reforms are steps in the right direction, but other states are outpacing them with bolder moves, like North Carolina’s income tax phaseout.

The state also suffers from complex and costly regulations, especially for small businesses. And while it has taken some steps toward expanding education freedom, its efforts pale in comparison to Florida’s universal ESAs or Arizona’s open enrollment systems.

Perhaps most concerning is the lack of access to capital for entrepreneurs and innovators—ranking #30—and a burdensome tax structure that keeps South Carolina at #28 in cost of doing business.

What Must South Carolina Do to Climb the Rankings?

Cut and Flatten Taxes
South Carolina should follow the example of its neighbors and phase out the personal income tax entirely. Combine that with a simplified, sales-based corporate tax system that rewards investment and productivity, rather than cronyism.
Expand School Choice and Technical Training
South Carolina must go beyond pilot programs and adopt universal education savings accounts. It also needs to integrate trade skills and apprenticeships into high school and post-secondary tracks to match workforce growth with job demand.
Reduce Regulatory Barriers
A full review and repeal of outdated licensing laws and zoning restrictions is overdue. The Legislature should enact a sunset rule for all new regulations and tie agency growth to performance metrics and ROI for taxpayers.
Cap Government Growth
South Carolina should adopt a spending cap based on population growth plus inflation. This aligns government size with the taxpayer’s ability to pay, keeps spending predictable, and ensures budget surpluses are returned to the people.

South Carolina Can Lead the Southeast

Being ranked 18th isn’t failure, but it’s not leadership either. The Palmetto State has the talent, resources, and location to emerge as the Southeast’s next economic powerhouse. But that means moving beyond tinkering and embracing bold, free-market reforms.

Limit spending. Cut taxes. Shrink red tape. Unleash innovation. And make sure the state’s future belongs to the people, not the bureaucracy.

This report may be republished in whole or in part, provided that proper credit is given to the author(s) and the South Carolina Policy Council.