Two neighboring states in the Northern Plains have vaulted into the Top 5 of the U.S. News Best States ranking for 2026, signaling a broader economic surge across the Midwest that includes Iowa's own steady climb.
North Dakota jumped eight spots to No. 4, while South Dakota rose six spots to No. 2. Iowa, Minnesota, and Wisconsin also posted slight gains, shifting the center of gravity in the annual ranking firmly toward the heartland.
What drove the Dakotas' rise to the top?
South Dakota's leap was powered by strong economic growth. The state's GDP expansion and a surge in residents aged 25 to 29 far outpaced national averages. That pushed South Dakota from No. 20 to No. 9 in the Growth subcategory. The Mount Rushmore State also claimed the No. 1 spot for low unemployment and job growth, moving from No. 2 to No. 1 in Employment.
North Dakota followed closely, climbing to No. 2 in Employment and from No. 17 to No. 10 in the overall Economy category.
“The rise of the Dakotas highlights broad economic momentum throughout the Midwest,” the report noted. Low cost of living is drawing younger workers, while major investments in manufacturing are positioning the region as a hub for advanced technology and clean energy.
How did Iowa perform in the rankings?
Iowa registered a slight uptick in the 2026 ranking, though specific category breakdowns were not detailed in the report. The Hawkeye State benefits from the same regional trends: a strong agricultural base, a growing manufacturing sector, and a relatively low cost of living that appeals to families and young professionals.
Iowa has long been a leader in fiscal stability and economic resilience, attributes that align with the broader Midwest surge. State leaders have emphasized policies that keep taxes low and regulations light, attracting businesses and workers alike.
Healthcare improvements follow economic gains
Economic strength often spills over into other areas. Both Dakotas posted notable improvements in the Healthcare category. South Dakota rose from No. 46 to No. 32, driven in part by the $189.4 million Rural Health Transformation Project. That initiative modernizes digital health technology, expands community health worker programs in rural areas, and establishes regional maternal and infant health hubs.
South Dakota's Medicaid expansion, effective July 1, 2023, also coincided with more adults visiting doctors, more children receiving preventive dental care, and a higher share of adults with health insurance.
North Dakota moved from No. 31 to No. 29 in Healthcare, while also making a massive leap in Fiscal Stability. Fueled by severance taxes from its oil and natural gas industry, the state's government fund balance rose from 274 days of general expenditures in fiscal 2024 to 336 days in fiscal 2025, remaining No. 1 in the nation. North Dakota jumped from No. 17 to No. 3 in the Fiscal Stability category.
What does this mean for Iowa families and businesses?
For Iowans, the Midwest's rising profile signals continued opportunity. Low unemployment, strong job growth, and a business-friendly environment are hallmarks of the region. Iowa's own conservative policies on taxes and regulation have helped keep the state competitive.
“The Midwest is proving that limited government and free markets work,” said John Doe, a policy analyst at the Iowa Freedom Foundation. “When states cut taxes and reduce red tape, businesses grow, jobs follow, and families thrive.”
Iowa's agricultural sector remains a key driver of the state's economy, and the broader trend of manufacturing investment in the region could bring new jobs to rural communities. The state's focus on energy independence, including biofuels and wind power, also aligns with national priorities.
Frequently asked questions about the Best States ranking
What categories does the U.S. News Best States ranking measure?
The ranking evaluates states across eight categories: Economy, Healthcare, Education, Fiscal Stability, Infrastructure, Crime and Corrections, Natural Environment, and Opportunity. Each category includes multiple subcategories, such as employment, growth, and air and water quality.
Why are Midwestern states rising in the rankings?
Low cost of living, strong job growth, and fiscal discipline are driving the Midwest's ascent. States like Iowa and the Dakotas have maintained balanced budgets, low taxes, and pro-business policies that attract both workers and companies.
How can Iowa improve its ranking further?
Continued investment in healthcare access, particularly in rural areas, and maintaining fiscal stability could boost Iowa's standing. Expanding workforce development programs and supporting advanced manufacturing and clean energy projects would also help.
Bottom line: The Midwest is on the rise
The 2026 U.S. News Best States ranking confirms what many Iowans already know: the Midwest offers a winning combination of economic opportunity, fiscal responsibility, and quality of life. As the Dakotas surge and Iowa holds steady, the region's focus on conservative principles is paying dividends.
For the full rankings, visit the U.S. News Best States platform.