OVERVIEW:

  • Top 5 states for self-employment in 2025: California, Texas, Florida, New York, Washington
  • Solo sector size: $1.5 trillion, approximately 6 percent of U.S. GDP
  • Incorporated self‐employment 7 percent above 2019, ≈400,000 more owner-operators
  • Business-formation filings up 37 percent from Q4 2019 to Q4 2023
  • 62 percent of solo workers report being “very satisfied” with their work setup
  • Women run 42.7 percent of nonemployer firms
  • Hispanic self-employment rate: 10 percent overall, 14.1 percent among foreign-born Hispanics
  • Immigrants comprise 21.5 percent of self-employed population
  • Gen Z freelancers: 53 percent of skilled young workers are freelancing

Thinking about going full-time with your side business or independent work? Where you choose to live could impact your earnings, expenses, and long-term growth.

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This article explores the top states for self-employed workers in 2025, along with current trends, key drivers, and what makes certain locations more attractive for freelancers, consultants, and solo business owners.

Table of contents

Top 5 States Where Self-Employed Workers Are Thriving Most

Fresh data from 2025 highlights five states that continue to stand out for self-employed workers. These states generally offer stronger income potential, friendlier policies, and robust ecosystems that support freelancers, consultants, and independent business owners. 

Below, we explore what makes each of these states appealing for solo professionals and what kind of support structures help them succeed.

1) California: Legal Protections and a Large Creative Economy

California remains one of the most attractive states for self-employed professionals, particularly those working in creative and tech-related fields. The state is home to an estimated 2.2 million self-employed workers, which makes up 11.5 percent of its workforce. Many are concentrated in areas like Hollywood, Los Angeles, and Silicon Valley, where independent work in entertainment, design, and software is common.

What sets California apart is its Freelance Worker Protection Act, which requires businesses to provide written contracts and pay freelancers within 30 days. This kind of legal support is rare across most states and gives independent workers a level of reliability and protection that’s often missing elsewhere.

Combined with access to large markets, high-paying clients, and well-established networks, California remains a top destination for digital and creative entrepreneurs pursuing full-time self-employment.

2) Texas: Low Taxes and a Fast-Growing Business Climate

Texas has long been considered one of the most business-friendly states in the U.S., and that reputation continues to hold true for self-employed professionals. One of the most notable advantages is the absence of a personal income tax, which can translate to meaningful savings for independent earners. Additionally, Texas maintains relatively low franchise and business filing fees, making it easier for individuals to operate as formal business entities.

Over the past decade, the number of registered businesses in Texas has nearly doubled to 2.9 million, signaling steady entrepreneurial activity. Fast-growing metro areas like Austin and Dallas have become hubs for independent work, thanks to strong population growth, expanding tech sectors, and high demand for specialized services.

The state also benefits from a steady influx of skilled workers. In recent years, Texas saw a net gain of 62,000 college-educated professionals, many of whom contribute to the rise in consulting, tech contracting, and other forms of solo work. This combination of low taxes, population growth, and a vibrant job market creates an environment where self-employment has room to grow.

3) Florida: High Rate of Incorporated Solo Businesses

Florida leads the nation in the share of residents who operate incorporated solo businesses. As of 2025, 6.4 percent of the state’s population is running an incorporated self-employed venture—the highest rate in the country.

Like Texas, Florida has no state income tax, which makes it an appealing option for entrepreneurs and remote workers seeking to keep more of their earnings. Beyond tax advantages, Florida has seen rapid growth in its tech and creative sectors, particularly in cities like Miami and Tampa. These regions have become attractive hubs for freelance marketplaces, small agencies, and remote-first teams.

The state is also seeing strong revenue growth among nonemployer businesses (those without any W-2 employees). Many solo professionals are seeing double-digit revenue growth, as the demand for digital services, marketing support, and remote business solutions continues to rise. Florida’s economic growth, combined with a relatively low cost of living compared to other major hubs, gives self-employed individuals a promising place to establish and grow their business.

4) New York: Strong Creative Economy Despite Higher Costs

New York can be a challenging place to live due to high housing and business costs, but for many self-employed workers, the tradeoff is worth it. The state—particularly New York City—offers access to one of the largest creative economies in the country, with high demand in fields like publishing, advertising, film, design, and fashion.

Freelancers in creative sectors report average annual earnings of around $146,000, about 28 percent higher than the citywide average. That earning potential helps offset some of the higher living expenses. Additionally, New York offers a number of community resources specifically designed for freelancers. For example, Freelancers Hub provides access to free coworking space, legal and tax clinics, and benefits assistance like health insurance.

The state’s dense network of clients, agencies, and cultural institutions offers abundant opportunity—but also requires solo professionals to be strategic with their pricing and time. For those who can navigate the environment, New York can be a rewarding location for high-value, creative self-employment.

5) Washington: Business Growth and High Independent Earnings

Washington ranks #1 on SimplifyLLC’s 2025 entrepreneur scorecard, thanks to its high business formation rate and favorable tax structure. The state does not levy a corporate income tax, which helps lower the financial barriers for those starting or expanding a solo business.

In the past year alone, Washington recorded a 110.8 percent increase in new business filings—one of the highest in the country. Cities like Seattle, Redmond, and Bellevue have become magnets for tech and digital services, attracting self-employed professionals in software development, UX design, and digital consulting.

One standout metric: the average income for small-business owners in Washington is $144,941, among the highest reported nationwide. This is largely driven by demand for tech and specialized consulting services, which command higher rates. Combined with strong economic growth and quality-of-life factors like public services and natural surroundings, Washington continues to be a leading destination for self-employed individuals looking to build sustainable income.

Why These States Stand Out

While each state has its own strengths, several common themes explain why California, Texas, Florida, New York, and Washington consistently rank high for self-employed workers. Here are the key factors driving their appeal:

Supportive Legal Protections for Freelancers

✅ California’s Freelance Worker Protection Act (SB 988) mandates written contracts and payment within 30 days, reducing the risk of delayed or missed payments.

✅ New York’s Freelance Isn’t Free Act applies to contracts worth $800 or more and enforces timely payment with penalties for non-compliance. Freelancers can also access free legal support through the city’s Department of Consumer and Worker Protection.

📝 Note: These laws offer self-employed individuals legal backing that’s more commonly seen in traditional employment. They’re also becoming models for similar efforts in other states.

Tax Advantages and Business-Friendly Policies

✅ Texas, Florida, and Washington have no state income tax, helping sole proprietors keep more of their earnings.

✅ Corporate tax structures are minimal or simplified:

  • Texas uses a low franchise tax.
  • Washington applies only a gross receipts tax.
  • Both states offer streamlined business registration and reporting processes.

✅ Business formation is booming:

✅ Lower cost of living in many non-coastal cities allows freelancers to operate more affordably while staying competitive on pricing.

Strong Industry Ecosystems and Talent Networks

✅ California: Creative and tech contract work thrives along the Hollywood–Silicon Valley corridor.

✅ Washington: Home to AI, cloud, and clean-tech clusters centered in cities like Seattle and Redmond.

✅ Texas: Austin and Dallas are magnets for fintech and e-commerce opportunities.

✅ New York: A global hub for media, publishing, and the performing arts.

✅ Florida: The Miami–Tampa region is seeing rapid growth in remote-first digital services. Florida also leads in incorporated self-employment, with 6.4 percent of its workforce operating as formal solo businesses.

Incomes are trending high: Washington’s small-business owners average $144,941 per year, the highest among states reviewed.

📝 Note: These ecosystems attract funding, generate steady contract demand, and create communities where independent workers can thrive.

Industry and Demographic Insights

Self-employment in 2025 continues to expand across a wide range of industries and demographic groups. The latest data shows that this trend isn’t limited to one profession or population. Instead, a few key sectors and worker profiles are shaping the momentum behind solo businesses nationwide.

Top Industries With High Self-Employment Activity

These sectors have become major engines of solo business growth, offering strong earning potential and increasing demand for independent talent.

✅ Professional, Scientific, & Technical Services

  • Makes up 13.5 percent of all nonemployer firms in the U.S.
  • Represents 4.0 million solo businesses generating $229 billion in receipts.
  • Includes consultants, software engineers, and designers, especially in the NAICS-54 sector.

✅ Arts, Entertainment & Recreation

  • Ranks second in the number of solo businesses reporting $5 million or more in annual sales.
  • Shows strong income potential for content creators, performers, and creative professionals.

✅ Information & Technology

Who Is Leading the Shift to Self-Employment?

Several demographic groups are driving the move toward independent work which reflect a broad shift in how people across different backgrounds approach careers.

✅ Women Entrepreneurs

  • Women now run 42.7 percent of all nonemployer firms, or about 12.7 million businesses.
  • These businesses generate more than $411.6 billion in annual revenue.

✅ Hispanic Workers

  • In 2023, the Hispanic self-employment rate reached 10 percent, consistently above the rate for non-Hispanic workers.
  • Among foreign-born Hispanics, the rate climbs to 14.1 percent, showing strong interest in business ownership.

✅ Immigrant Business Owners

  • Immigrants make up 21.5 percent of the U.S. self-employed population.
  • Many play key roles in high-growth startup activity and regional economies.

✅ Gen Z Freelancers

Why This Matters & What’s Next

The rise of solo businesses continues to reshape how Americans work and how governments respond. What started as a flexible alternative to traditional jobs is now a growing segment of the economy with lasting impact on tax policy, digital access, and social benefits.

Solo Businesses Now Contribute $1.5 Trillion Annually

  • The total economic output of self-employed individuals has reached $1.5 trillion, placing it ahead of entire sectors like construction and information.
  • Solo businesses now make up approximately 6 percent of U.S. GDP, according to the 2025 Self-Employment Market Report.

Self-Employment Growth Has Outlasted the Pandemic

  • The number of incorporated self-employed workers remains 7 percent higher than in 2019, with about 400,000 more owner-operators today.
  • From late 2019 to late 2023, business formation activity increased by 37 percent, indicating steady interest in independent work.
  • Surveys show that 62 percent of solo workers say they are “very satisfied” with their work setup—more than among full-time employees.

This level of satisfaction helps explain why many who tried freelancing during the pandemic have continued with it full time.

Policy is Catching Up

  • The House passed a bill that would reverse the planned $600 threshold for 1099-K reporting, aiming to ease the burden on freelancers and marketplace sellers.
  • Federal broadband grants are directing billions toward improving internet access in rural and Tribal regions. These programs support remote work and digital entrepreneurship, which are critical for independent workers who operate across state lines.
  • Some states are testing portable benefit systems that offer paid leave or retirement plans to self-employed individuals. Programs in Washington and New York serve as early examples.

Looking Ahead: What the Rise of Self-Employment Means for 2025 and Beyond

Self-employment continues to grow across industries, age groups, and regions. This shapes a workforce that is more flexible, decentralized, and digitally connected. But while the appeal of independence is clear, it also comes with new challenges around income stability, taxes, and access to benefits.

As more Americans turn to solo business models, states that support this shift with clear legal protections, digital infrastructure, and business-friendly policies are likely to see continued growth. For individuals considering self-employment, where you live may increasingly affect your long-term success.

📌 To explore more about taxes, contributions, and tools for independent workers, check out these guides:

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