The Runway Number

The Runway Number is what it costs one person to leave a salaried job and give themselves six months to get a business going, in each state.

It has three parts and nothing else.

• Six months of living costs. The national average of what a household spends in a year, minus the health insurance line so it is not counted twice, adjusted to that state's own price level, then halved.
• Six months of health cover. The state's benchmark marketplace premium for the 2026 plan year. A benchmark premium is the second cheapest silver plan sold in a county, which is the plan the subsidy formula is built around. This is the full sticker price before any subsidy, which is what somebody who has just walked away from an employer plan sees first.
• The first year cost of the business itself. The state filing fee, plus any first year extra, plus a flat franchise tax where the state charges one, plus the annual report. A franchise tax here means a flat annual charge for the privilege of being registered, not a tax on profit.

Six months is a choice rather than a finding. For a year, double the first two parts and leave the third alone, because registering a business is a one off.

Cheapest first. The three component columns add across to the number on the right.

^* Arizona, Nebraska and New York require a new LLC to publish a legal notice in a newspaper. No reliable national price exists for that, so it is left out and those three states are understated.

Living costs do almost all of the work. The gap between Iowa and California is $9,774, and $8,550 of it is the living cost column on its own. Health cover accounts for $414 of the gap and the business registration for $810.

That is worth saying plainly, because the advice a founder usually reads is about the third column. Registering a business costs $35 in Montana and $1,000 in Massachusetts, and that $965 difference is real money, but it is roughly a tenth of what the price of living in those two states does to the same six months. In 43 of the 50 states the registration cost is under one percent of the whole number.

Health cover is where the pattern breaks. Vermont sits 29th on the price index, so it is an unremarkable place to live on cost, and it is the 48th most expensive state in the country to quit in. Six months of benchmark cover there is $7,794 against a national $3,750. Wyoming and West Virginia are the same story, cheap places to live carrying the second and third dearest premiums in America.

The national benchmark premium was $497 a month for the 2025 plan year and is $625 for 2026, a rise of 25.7 percent. In runway terms that added $768 to the cost of quitting a job, and health cover is now 9.1 percent of the whole number.

The rise is very uneven and that is the part worth looking at locally. Six months of cover costs an Arkansan $1,896 more than it did a year ago. Wyoming rose $1,314, Tennessee $1,170, Washington $1,068, and Mississippi and Connecticut $1,062 each. At the other end Vermont rose $132 and New York $162. Alaska is the only state in the country where the premium fell, by $78 over six months.

Here is the comparison that surprised us. In 42 of the 50 states, the one year rise in what six months of health cover costs was larger than the entire first year cost of registering the business. The line item nobody writes about moved more than the line item every guide is about.

Arkansas is the sharpest example of both halves. It is the eighth cheapest state in America to quit a job and start a business, and it is also the state where quitting got most expensive this year. Both come out of the same table.

Four sources, each read at its publisher and dated. Nothing here is bought, modelled or estimated by us beyond the arithmetic described.

1. Living costs. Bureau of Labor Statistics Consumer Expenditure Survey for 2024, average annual expenditures for all consumer units, $78,535, released 19 December 2025. We subtract that survey's own health insurance line of $4,055 before doing anything else, because the marketplace premium replaces it and we are not counting it twice. That leaves a national living base of $74,480 a year. The rest of the survey's healthcare spending, $2,142 for medical services, drugs and supplies, stays in, because somebody on a silver plan still pays deductibles and copays.
2. State price level. Bureau of Economic Analysis Regional Price Parities, all items, 2024 vintage, released 19 February 2026. A regional price parity is an index where 100 is the national average, so California at 110.7 means the same basket costs about eleven percent more there. We multiply the living base by each state's parity and halve it for six months.
3. Health cover. KFF State Health Facts, marketplace average monthly benchmark premium for the 2026 plan year, a 40 year old, weighted by county plan selections. Multiplied by six. The 2025 column was read in the same pass, which is where the year on year comparison comes from.
4. First year business cost. Our own fifty state fee table, which carries a source link, an effective date and a verification date on every row, with a history table behind it. The formula is the state filing fee plus any first year extra, plus a flat franchise tax where one exists, plus the annual report. The fifty state mean is $236.

The fee layer was re-read against every state's own office and re-stamped on 25 August 2026. All fifty values were unchanged from the previous pass on 21 August.

Every one of these cuts against the number in some direction, and they are here rather than in a footnote because a reader deciding something real needs them.

• The consumer expenditure survey is a national average household for 2024, not a median founder and not a state estimate. All the state variation in this model comes from the price index, not from how people in that state actually spend.
• The price index adjusts everything uniformly. It does not know that somebody on a runway stops commuting.
• Premiums are for a 40 year old individual before any subsidy. Real cost moves with age, household size and income, and somebody with little income during a runway year may qualify for a large subsidy that cuts this column sharply. Check your own state marketplace rather than this table.
• The health insurance line we subtract from the survey includes employer contributions and Medicare across all households, so swapping it for a full price marketplace premium is not a like for like trade. It is the closest honest treatment available from free data and we would rather say so than bury it.
• Mandatory newspaper publication is excluded in Arizona, Nebraska and New York because no reliable price exists for it. Those three states are understated.
• State income tax is excluded, because there is no income during a runway. A registered agent is excluded, because it is optional if you act as your own.
• Six months is a chosen length, not a recommendation.

The figures on this page are free to quote and republish with a link back. The underlying arithmetic is described above in enough detail to reproduce.

One sentence that carries the finding: quitting a job to start a business takes about $41,000 in savings, ranging from $35,769 in Iowa to $45,542 in California, according to StartupOwl's Runway Number analysis.

This page is editorial. It carries no partner links and no recommendation of any service, and nothing on it earns us anything. Every figure is dated 25 August 2026 and the fee layer is re-checked on a fortnightly cadence. Journalists who want the fifty state file, a single state breakdown, or a question answered about the method can reach the author through the StartupOwl contact page.