Alabama’s Business Landscape is Improving
Alabama is making strides in its business climate. According to recently released rankings by CNBC regarding the 2025 Top States for Business, the state has moved up to 19th place overall. While this isn’t a huge jump, it’s significant, especially when considering it was recognized as the “most improved” last year. The ranking evaluates all 50 states across ten categories that influence business success, such as workforce, infrastructure, education, and quality of life.
The most notable improvement for Alabama is in the workforce category, where it rose to 16th place. This boost reflects the benefits from recent investments in career technology programs, vocational training, and apprenticeships. Additionally, the state’s cost of living has significantly improved, currently ranking sixth in the nation; this makes it more affordable for both businesses and workers in a challenging economic landscape.
In terms of business familiarity, Alabama holds steady at 13th place, and education is also relatively strong at 16th. This suggests that ongoing efforts to enhance K-12 and higher education systems are beginning to show positive results.
“These improvements indicate that when we invest in our people, we see results,” noted an economic development official familiar with the ranking process. “It’s not solely about low taxes; it’s about fostering places where people want to live and where businesses want to succeed.”
Despite these gains, Alabama continues to face structural challenges. The state has seen a sharp decline in the infrastructure category, dropping from 8th to 28th place. This decline highlights issues related to public investments in roads, bridges, and broadband; however, state leaders are optimistic that recent legislative actions will help reverse this trend.
This year, Governor Kay Ivey signed into law the Alabama Energy Infrastructure Bank under the Power Ring Growth Act of 2025. This $1 billion funding initiative, overseen by the state’s Office of Industrial Development, aims to modernize and expand Alabama’s energy grid to support industrial growth. With $50 million allocated from the 21st-century fund, the bank will offer loans and bonds for energy transmission projects by 2030, targeting at least 40% of the funding towards rural areas. The intent here is to facilitate permit acquisitions, improve tracking technology, and ensure a reliable power supply, which is expected to generate new job opportunities throughout Alabama.
Even with these advancements, quality of life remains one of Alabama’s persistent weaknesses. Ranked 44th for this aspect, the state battles issues such as limited medical access, high crime rates, and poor health outcomes. Additionally, access to capital has dwindled, now sitting at 40th place, complicating growth for small and medium-sized businesses as well as startups.
Overall, Alabama has a cumulative score of 1,337, with most grades falling between C and B-. The state maintains a corporate tax rate of 6.5%, a maximum personal income tax rate of 5%, and an unemployment rate of 3.3% as of May 2025, all of which suggest a stable business environment.
Governor Ivey’s administration continues to focus on three main pillars: workforce development, tax competitiveness, and infrastructure. There is still significant work to be done in Alabama, particularly in healthcare, public safety, and capital access. Nevertheless, the foundation is solid. Progress is happening. It may not be swift or particularly flashy, but there are clear signs of focus, investment, and steady, measurable growth.
