Alabama is inching forward—slowly but steadily. In CNBC’s just-released 2025 Top States for Business rankings, the state climbed from 20th to 19th overall. It’s a modest gain, but a meaningful one—especially after being named “most improved” just last year. The rankings assess all 50 states across ten categories that shape business success, including workforce, infrastructure, education and quality of life.
Alabama’s biggest leap came in workforce, where it rose eight spots to 16th. That improvement reflects a growing return on recent investments in career tech programs, job training and apprenticeships. Cost of living also saw a significant jump—now ranked 6th in the nation—offering businesses and workers greater affordability in an increasingly expensive economy.
The state held its ground in business friendliness at 13th, and education remained relatively strong at 16th, suggesting that continued efforts to strengthen K–12 and higher education are gaining traction.
“These improvements show that when we invest in people, we get results,” said one economic development official familiar with the rankings. “It’s not just about low taxes—it’s about creating a place where people want to live and companies want to grow.”
But beneath those gains, Alabama still faces structural hurdles.
The state dropped sharply in the infrastructure category, falling 20 spots from 8th to 28th. That decline appears at odds with public investments in roads, bridges and broadband—but state leaders hope a newly enacted law will turn that trend around.
Signed into law by Governor Kay Ivey earlier this year, the Alabama Energy Infrastructure Bank was created under the Powering Growth Act of 2025. The $1 billion financing program—administered by the State Industrial Development Authority—is designed to modernize and expand the state’s energy grid to meet the demands of industrial growth. Seeded with $50 million from the 21st Century Fund, the bank will offer loans and bonds for energy transmission projects, with at least 40 percent of funding directed to rural areas through 2030. The goal is to streamline permitting, fast-track equipment purchases, and ensure that reliable power is in place for new job-creating developments across Alabama.
Despite that forward momentum, quality of life remains one of Alabama’s most persistent weaknesses. Ranked 44th—earning an “F”—the state continues to struggle with healthcare access, high crime rates and chronic health outcomes. Access to capital also worsened, dropping to 40th, making it harder for small businesses and startups to scale or compete.
Overall, Alabama earned a total score of 1,337, with most category grades falling between a C and B-plus. The state maintains a top corporate tax rate of 6.5 percent, a maximum individual income tax rate of 5 percent, and a 3.3 percent unemployment rate as of May 2025—all indicators of a generally stable business climate.
Governor Ivey and her administration have consistently focused on three core pillars: workforce development, tax competitiveness and infrastructure.
Alabama still has work to do—especially in healthcare, public safety and access to capital. But the foundation is taking shape. The state is moving forward. Not fast. Not flashy. But with focus, investment and signs of steady, measurable progress.
