Montana Ranks 10th Nationally in Economic Freedom Index

HELENA — Montana secured the 10th place ranking nationally in a new economic freedom index, reflecting the state’s significant tax relief measures and regulatory reforms that have positioned it as a leader for business startups.

Schweitzer Engineering Laboratories (SEL) recently released its 2025 Freedom Index Rankings, which evaluates states based on government efficiency, regulatory freedom, and energy resiliency. The report utilizes data from the American Legislative Exchange Council, the Cato Institute, and various government agencies to identify optimal business environments nationwide.

Montana’s strong showing comes alongside major tax relief enacted this year. The various income tax changes adopted are expected to save taxpayers more than $750 million over the next four years, according to the Mountain States Policy Center.

“Montana was also ranked as the best state for business startups this year,” the report noted. “It is home to the highest percentage of business startups per 100,000, and the highest rate of survival from 10-year-old startups.”

The state’s regulatory reform efforts have also contributed to its favorable ranking. In 2021, Montana created the Red Tape Relief Task Force, which has successfully amended or repealed 25% of the state’s regulations.

“Montana will likely move up in future SEL rankings if it continues this progress,” according to the Mountain States Policy Center analysis.

The top five states in SEL’s rankings were South Dakota, Wyoming, Utah, Idaho, and North Dakota. Wyoming ranked second nationally, benefiting from its lack of state income tax and low regulatory burden. Idaho came in fourth after enacting the largest tax cut in the state’s history, lowering corporate and individual tax rates from 5.695% to 5.3%.

By contrast, Washington State remained stagnant at 35th place for the second consecutive year. Washington legislators enacted substantial tax increases this year, including business and occupation tax rate increases, sales tax expansion, and additional taxes on luxury items and electric vehicle credits.

“The current climate is increasingly unfavorable, particularly for small businesses, manufacturers, and technology firms,” SEL warned regarding Washington’s business environment.

The report reveals stark differences in tax and regulatory priorities across the Mountain States region. While Wyoming, Idaho, and Montana continue working to lower taxes and reduce regulatory burdens, Washington has moved in the opposite direction with increased taxation and regulation.

“As demonstrated by the SEL Freedom Index, Idaho, Montana and Wyoming are making their business environments more politically and economically free, while Washington is heading in the opposite direction,” the Mountain States Policy Center concluded.