America’s Best Cities to Start a Side Hustle 2023

Whether you’re looking to supplement your income or you’re putting the gears in motion to quit your job and start a business, side hustles are becoming an increasingly common way for Americans to bring in extra cash and help develop their passions into a career. 

But which cities provide the most ideal environments for those looking to start a side hustle? 

We analyzed key factors across more than 170 cities in order to determine the top 30 best cities to start a side hustle. 

Key Findings:

  • Overall, Arizona is the state with the most cities on our list. Six Arizona cities rank within the top 30 including Gilbert (No. 2); Scottsdale (No. 3); Chandler (No. 5); Mesa (No. 20); Tucson (No. 25), and Phoenix (No. 27). 

  • The largest city in terms of population within the top 30 list is San Jose, California, which ranks No. 17.

  • Minneapolis and St. Paul have the lowest unemployment rate (1.7%) on our list, while Fremont, Seattle, and Atlanta have the highest percentage of people who work from home. Nearly half (48.9%) of employed Fremont residents work from home, which provides a considerable amount of flexibility for those looking to start a side hustle. 

America’s best cities to start a side hustle in 2023

Our analysis included eight equally weighted metrics including affordability (LLC filing fees and income tax rates), flexibility (percent of residents who work from home, average weekly working hours, and average commute time), economic environment (unemployment rate), and accessibility factors (percent of the population with broadband internet access and the percent who own a smartphone). 

Each city within our analysis had a population of at least 150,000 or more. 

1. Salt Lake City, Utah 

With a population of slightly more than 200,000, Salt Lake City is a city that’s not too big and not too small. The city was recently ranked one of the best to start a small business and ranks No. 1 on our list of best cities to start a side hustle. 

Overall, Salt Lake City scored 78 points out of 100 due to its low unemployment rate of 2.1% (which is the fifth lowest on our list of cities) as well as the flexibility and time to work on a side hustle during the workweek. In fact, the city has the fourth-lowest average daily commute of just 18.4 minutes, making it ideal for those who want to allocate extra time for a side hustle.

Also, 95% of its residents own a smartphone which creates plenty of opportunity for those looking to jump into the gig economy, such as ride-sharing, dog walking, or making deliveries. But what really propelled Salt Lake City to the top spot is its affordability. The state’s low income tax rate of 4.95% combined with an affordable LLC filing fee gives Salt Lake City an affordability score of 23 out of 25. 

2. Gilbert, Arizona

The Metro Phoenix area has seen explosive growth within the last several years. In fact, the metro area grew by an average of 291 people every day in 2020, according to the U.S. Census Bureau. This growth, combined with affordable LLC filing fees ($50), a low income tax rate (4.5%), and the majority of the population having access to broadband internet as well as owning a smartphone, makes Gilbert a top spot for those looking to start a side hustle.

3. Scottsdale, Arizona

Believe it or not, Scottsdale is the second of six Greater Phoenix cities on our list. Similar to Gilbert, Scottsdale offers aspiring side hustlers an affordable place to get started with a side hustle. And considering more than one-third of the city’s population works from home (34.9%), there is plenty of flexibility to work on a side hustle during the day without having to go into the office (or having a boss looking over your shoulder). 

4. Madison, Wisconsin

Along with being the capital city of Wisconsin and a college town, Madison is also one of the best cities to start a side hustle. Overall, the city scored 70 points out of 100 thanks to its low unemployment rate of 2.2% and overall flexibility for workers looking to start a side hustle.

Although Wisconsin’s LLC filing fee ($130) is higher than the top three cities on our list, the city makes up for it by offering plenty of flexibility with an average commute of only 18.7 minutes. The majority of the population also has broadband internet access (92.9%), which makes it a lot easier to process all those online transactions for e-commerce side hustlers. 

5. Chandler, Arizona

We head back to Metro Phoenix to find the No. 5 best city to start a side hustle. Chandler has experienced Greater Phoenix’s growth in recent years and offers an affordable place to get started with a side hustle. The majority of the city’s population has access to broadband (96.2%) and owns a smartphone (95.8%).

Overall, six Arizona cities rank within the top 30 including Gilbert (No. 2); Scottsdale (No. 3); Chandler (No. 5); Mesa (No. 20); Tucson (No. 25), and Phoenix (No. 27).

From moonlighting as a freelancer to operating an e-commerce website in your free time, side hustles provide flexibility as well as the potential to scale into a full-time business. 

Regardless of where you live, almost anyone can start a side hustle. But these cities could help give someone a head start if they decide to take the side hustle plunge. 

Methodology

To determine our ranking, we analyzed more than 170 census-defined places with a population of 150,000 or more via the U.S. Census Bureau. We compared these cities across eight equally weighted variables: unemployment rate, percentage of population working from home, average daily commute time, average hours worked per week, percentage of population with access to broadband internet, and the percentage of population who own a smartphone. On the state level, we analyzed LLC filing fees as well as income tax rate in each state. Note: California has waived its $800 LLC filing fee tax through 2023.

Each variable was graded on a 100-point scale. To determine an overall score, each city’s weighted average was calculated across all metrics. 

Affordability

  • LLC filing fee: 12.5 points
  • Income tax rate: 12.5 points

Accessibility

  • Percent of population with broadband internet access: 12.5 points
  • Percent of population who own smartphone: 12.5 points

Flexibility

  • Percent of employed population working from home: 12.5 points
  • Average daily commute time: 12.5 points
  • Average weekly working hours: 12.5 points
Economic environment
  • Unemployment rate: 12.5 points

Sources: U.S. Census Bureau, Bureau of Labor Statistics unemployment rates by metropolitan area (released December 1, 2022), Tax Foundation, State-level Department of Corporations (DOC).  

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