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HVAC rewards going where the licenses are hard and the competition is thin. Mechanical-contractor density runs from 5 firms per 100,000 residents in District of Columbia to 63 in Montana, and average payroll per contracting firm — a good proxy for how much billable work each firm supports — varies almost fourfold across states.
This index scores all 50 states and DC on market saturation, payroll per firm, technician labor cost, and the pace of new business formation. One honest note on the data: the Census industry category for this trade combines plumbing, heating, and air-conditioning contractors, so the competition numbers describe the full mechanical-trades market you’d actually be bidding in.
The Top 10 States
| Rank | State | Establishments | Firms per 100k | Payroll per firm | Pay per employee | New biz apps per 1k* |
|---|---|---|---|---|---|---|
| 1 | District of Columbia† | 37 | 5.3 | $3,593k | $75,030 | 22.5 |
| 2 | Delaware* | 344 | 32.7 | $983k | $71,640 | 58.0 |
| 3 | Nevada | 909 | 27.8 | $1,476k | $78,163 | 21.1 |
| 4 | Mississippi | 709 | 24.1 | $589k | $60,964 | 20.9 |
| 5 | Georgia | 3,101 | 27.7 | $735k | $68,562 | 24.8 |
| 6 | Florida | 9,353 | 40.0 | $617k | $60,792 | 30.3 |
| 7 | New Mexico | 691 | 32.4 | $573k | $59,905 | 20.5 |
| 8 | Tennessee | 1,899 | 26.3 | $878k | $66,028 | 15.9 |
| 9 | Texas | 8,966 | 28.6 | $823k | $69,843 | 18.8 |
| 10 | South Carolina | 1,685 | 30.8 | $697k | $63,740 | 18.7 |
Deep-dive guides for the leaders: how to start in Delaware · how to start in Nevada · how to start in Mississippi · how to start in Georgia.
How We Ranked the States
Each state is scored on four factors, standardized as z-scores and weighted. Higher is better for revenue and momentum; lower is better for competition and labor cost.
- Market saturation (30%) — establishments per 100,000 residents in NAICS 238220 (Plumbing, Heating, and Air-Conditioning Contractors), U.S. Census Bureau County Business Patterns, 2023. Fewer competitors per capita scores higher.
- Payroll per establishment (25%) — annual payroll divided by establishment count, same source. A proxy for how much paid work the average firm supports.
- Labor cost (20%) — annual payroll per employee in the industry, same source. Cheaper labor scores higher for a new owner-operator.
- New-business momentum (25%) — business applications per 1,000 residents, Aug-2025 through Jul-2026, U.S. Census Bureau Business Formation Statistics. Values are capped at the 5th–95th percentile before scoring (see footnotes).
Population denominators use Census Bureau 2024 state population estimates. The weights are editorial judgment — we publish every underlying number in the table so you can re-rank by whichever factor matters most to your HVAC business.
Footnotes: *Wyoming and Delaware business-application counts are heavily inflated by non-resident LLC filings routed through registered agents; we cap their momentum factor before scoring and show the raw number in the table. †District of Columbia is a city-scale market and behaves unlike full states on density and payroll measures.
All 51 States and DC, Ranked
| Rank | State | Establishments | Firms per 100k | Payroll per firm | Pay per employee | New biz apps per 1k* |
|---|---|---|---|---|---|---|
| 1 | District of Columbia† | 37 | 5.3 | $3,593k | $75,030 | 22.5 |
| 2 | Delaware* | 344 | 32.7 | $983k | $71,640 | 58.0 |
| 3 | Nevada | 909 | 27.8 | $1,476k | $78,163 | 21.1 |
| 4 | Mississippi | 709 | 24.1 | $589k | $60,964 | 20.9 |
| 5 | Georgia | 3,101 | 27.7 | $735k | $68,562 | 24.8 |
| 6 | Florida | 9,353 | 40.0 | $617k | $60,792 | 30.3 |
| 7 | New Mexico | 691 | 32.4 | $573k | $59,905 | 20.5 |
| 8 | Tennessee | 1,899 | 26.3 | $878k | $66,028 | 15.9 |
| 9 | Texas | 8,966 | 28.6 | $823k | $69,843 | 18.8 |
| 10 | South Carolina | 1,685 | 30.8 | $697k | $63,740 | 18.7 |
| 11 | Ohio | 2,970 | 25.0 | $904k | $71,083 | 15.5 |
| 12 | Arizona | 2,567 | 33.9 | $889k | $70,941 | 20.4 |
| 13 | Kentucky | 1,379 | 30.1 | $739k | $64,364 | 16.6 |
| 14 | West Virginia | 406 | 22.9 | $408k | $55,494 | 10.4 |
| 15 | Virginia | 2,765 | 31.4 | $860k | $68,796 | 16.9 |
| 16 | Missouri | 1,915 | 30.7 | $930k | $75,349 | 18.5 |
| 17 | Utah | 1,443 | 41.2 | $735k | $67,958 | 23.8 |
| 18 | Michigan | 2,661 | 26.2 | $871k | $75,894 | 16.5 |
| 19 | Maryland | 1,986 | 31.7 | $1,138k | $77,068 | 17.3 |
| 20 | Colorado | 2,620 | 44.0 | $664k | $71,914 | 27.5 |
| 21 | North Carolina | 3,973 | 36.0 | $702k | $61,905 | 17.9 |
| 22 | Alabama | 1,647 | 31.9 | $644k | $62,186 | 15.0 |
| 23 | Louisiana | 1,623 | 35.3 | $540k | $62,512 | 17.7 |
| 24 | Indiana | 2,008 | 29.0 | $1,008k | $76,427 | 14.2 |
| 25 | Wyoming* | 315 | 53.6 | $482k | $61,269 | 145.0 |
| 26 | Oklahoma | 1,592 | 38.9 | $471k | $56,154 | 16.9 |
| 27 | Washington | 2,242 | 28.2 | $1,322k | $89,508 | 14.7 |
| 28 | Arkansas | 1,145 | 37.1 | $572k | $60,463 | 14.6 |
| 29 | Kansas | 1,028 | 34.6 | $777k | $70,020 | 14.4 |
| 30 | Idaho | 904 | 45.2 | $692k | $63,100 | 18.2 |
| 31 | California | 11,686 | 29.6 | $929k | $85,543 | 15.3 |
| 32 | Iowa | 1,108 | 34.2 | $948k | $71,742 | 11.6 |
| 33 | Oregon | 1,337 | 31.3 | $1,000k | $85,283 | 14.9 |
| 34 | Wisconsin | 1,944 | 32.6 | $951k | $78,674 | 13.3 |
| 35 | Pennsylvania | 4,154 | 31.8 | $810k | $75,469 | 12.8 |
| 36 | New Jersey | 3,454 | 36.4 | $691k | $78,801 | 18.2 |
| 37 | Illinois | 4,070 | 32.0 | $858k | $84,926 | 15.6 |
| 38 | New York | 7,061 | 35.5 | $740k | $79,163 | 16.2 |
| 39 | Minnesota | 1,816 | 31.4 | $989k | $84,396 | 13.2 |
| 40 | South Dakota | 401 | 43.4 | $673k | $61,955 | 14.3 |
| 41 | Hawaii | 403 | 27.9 | $831k | $84,947 | 12.9 |
| 42 | Montana | 712 | 62.6 | $418k | $66,827 | 28.4 |
| 43 | Alaska | 264 | 35.7 | $628k | $85,454 | 17.2 |
| 44 | Nebraska | 837 | 41.7 | $844k | $71,034 | 12.1 |
| 45 | Connecticut | 1,318 | 35.9 | $685k | $82,312 | 14.8 |
| 46 | North Dakota | 336 | 42.2 | $713k | $71,104 | 12.2 |
| 47 | Vermont | 303 | 46.7 | $535k | $67,833 | 12.8 |
| 48 | Rhode Island | 494 | 44.4 | $680k | $76,137 | 11.3 |
| 49 | Massachusetts | 3,069 | 43.0 | $884k | $91,449 | 11.9 |
| 50 | Maine | 781 | 55.6 | $406k | $66,252 | 10.7 |
| 51 | New Hampshire | 776 | 55.1 | $563k | $77,932 | 14.0 |
What the Numbers Don’t Capture
No dataset measures licensing difficulty, insurance mandates, or fee structures — and those vary enormously by state. Our state-by-state guides cover exactly that layer: click any state in the table for its full startup walkthrough, or see the overall Best States to Start a Business index and the monthly business formation statistics this index draws on.
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Wherever you land, the first filing is the same
Every state on this list starts a HVAC business the same way: form the business entity. Bizee files your LLC — you pick the package and pay the state fee in any of the 51 jurisdictions ranked here.
Frequently Asked Questions
What is the best state to start a HVAC business in 2026?
By our four-factor Census-data index, the top five are District of Columbia (#1), Delaware (#2), Nevada (#3), Mississippi (#4), Georgia (#5). District of Columbia leads on the combination of market saturation, payroll per firm, labor cost, and new-business momentum.
Which state has the least HVAC business competition?
District of Columbia has the thinnest market, with 5.3 establishments per 100,000 residents in NAICS 238220 — versus 62.6 in Montana, the most saturated.
Where does this data come from?
Every number is from the U.S. Census Bureau: County Business Patterns 2023 for establishments, employment, and payroll; Business Formation Statistics (Aug-2025 through Jul-2026) for new business applications; and 2024 population estimates for per-capita rates.
Sources
| Data | Source | Vintage |
|---|---|---|
| Establishments, employment, payroll by industry and state | U.S. Census Bureau, County Business Patterns | 2023 |
| Business applications by state | U.S. Census Bureau, Business Formation Statistics | Aug-2025 through Jul-2026 |
| State population | U.S. Census Bureau, Population Estimates (NST-EST2024) | 2024 |