Most and least federally dependent states

Written by:
March 16, 2018
Kenneth C. Zirkel // Wikimedia Commons

Most and least federally dependent states

Though all Americans pay taxes on the same federal rates, state tax rates vary considerably across the country. California taxes its citizens the most, with the highest income tax rate coming in at 13.3%, while Pennsylvania taxes its citizens at a flat rate of just 3.07%. Seven states—Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska—don’t levy a personal income tax at all. But what accounts for that discrepancy?

Sure, every state’s economy is different, but a study from WalletHub revealed that funding from the federal government might also have something to do with it. To find out what role federal funding played in each state’s economy, WalletHub ranked all 50 states using two metrics: “State Residents’ Dependency,” which is a combination of return on taxes paid to the federal government and share of federal jobs, and “State Government’s Dependency,” which is simply federal funding as a share of the state’s revenue. WalletHub then averaged these two scores to determine the final ranking for each state. Read on to see how your home state fared.

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Yassie // Wikimeida Commons

#50. Delaware

- Total dependency score: 21.32
States residents' dependency rank: #50
- States government's dependency rank
: #42

Though Delaware isn’t far from the nation’s capital in Washington, D.C., the state comes in last place as the least federally dependent state. According to WalletHub, Delaware also received the lowest amount of federal contracts, second lowest amount of federal grants, and lowest amount of other aid from the federal government.

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Wikipedia

#49. Minnesota

- Total dependency score: 23.09
- States residents' dependency rank
: #43

- States government's dependency rank
: #44

Minnesota’s highest tax bracket pays personal income taxes at a rate of 9.85%. The low cost of living, low jobless rate, high median household income, and highly educated population point toward a very healthy state economy. 

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Smallbones // Wikimedia Commons

#48. New Jersey

- Total dependency score: 23.84
- States residents' dependency rank
: #49

- States government's dependency rank
: #39

New Jersey’s tax rate caps at 8.97% for the highest income bracket. The state’s residents relied very little on federal funding (49th place) while the state government received a bit more money from the federal government (39th place).

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Meagan Davis // Wikimedia Commons

#47. Illinois

- Total dependency score: 23.96
- States residents' dependency rank
: #48

- States government's dependency rank
: #41

The state of Illinois charges very little in income tax: Individuals must pay a flat rate of 4.95% of their net income. Interestingly, it also isn’t very dependent on the federal government, coming it at 47th place overall.

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daveynin // Flickr

#46. California

- Total dependency score: 25.36
- States residents' dependency rank
: #41

- States government's dependency rank
: #43

With a tax rate of 13.3% for individuals making more than $1,000,000, the Golden State takes first place in the state with the highest income tax rate. Its low position on this list also supports WalletHub’s logic that states that don’t receive as high a proportion of federal funding turn to taxes to generate revenue.

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Aviper2k7 // Wikimedia Commons

#45. Kansas

- Total dependency score: 25.39
- States residents' dependency rank
: #39

- States government's dependency rank
: #45

Not only did Kansas recently raise its tax rates to 5.2% for the highest income bracket, but tax rates will also climb again in 2018. State lawmakers made the decision to increase rates in order to raise $1.2 billion over two years to balance the state’s budget. As it’s not very reliant on federal funding, the state has to make up that money somewhere.

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Amadscientist // Wikimedia Commons

#44. Nevada

- Total dependency score: 26.94
- States residents' dependency rank
: #25

- States government's dependency rank
: #47

Nevada is one of seven U.S. states without income taxes. Instead, Nevada relies on a higher-than-average sales tax and gambling taxes levied on casinos. The federal government certainly isn’t bankrolling the state, as the state government came in 47th place for federal dependency. 

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Daderot // Wikimedia Commons

#43. Massachusetts

- Total dependency score: 27.36
- States residents' dependency rank
: #46

- States government's dependency rank
: #37

Massachusetts levies a flat tax rate of just 5.1% on personal income, a relatively low number. The state also isn’t very dependent on the federal government, with residents’ dependency ranking 46th and the state government’s dependency ranking a little higher at 37th.

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jglazer75 // Wikimedia Commons

#42. Connecticut

- Total dependency score: 27.80
- States residents' dependency rank
: #22

- States government's dependency rank
: #48

Connecticut is the nation’s richest state by per capita income, but it still uses a relatively low tax rate of 6.99% for individuals earning more than $500,000. It’s not very dependent on federal funding, either, although that might not be a good thing in this case. With a deficit of nearly $2 billion, dramatically under-funded pensions and some of its biggest towns verging on bankruptcy, the state is in trouble.

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AlexiusHoratius // Wikimedia Commons

#41. New Hampshire

- Total dependency score: 31.11
- States residents' dependency rank
: #37

- States government's dependency rank
: #36

New Hampshire not only doesn’t have an income tax, but it also doesn’t have sales taxes. The Granite State clearly isn’t relying very heavily on federal funding, either. Instead, New Hampshire uses taxes on property, beer and liquor, tobacco, insurance and a meals and rooms tax on hotel stays and restaurant visits to generate money.

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Mangoman88 // Wikimedia Commons

#40. Utah

- Total dependency score: 33.28
- States residents' dependency rank
: #28

- States government's dependency rank
: #35

Doing your taxes in Utah is relatively simple: All citizens pay a flat 5% income tax, no matter how much they earn. The state also doesn’t rely too much on federal funding, though its residents were a bit more dependent than the government itself.

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Carol M. Highsmith // Wikimedia Commons

#39. Nebraska

- Total dependency score: 33.78
- States residents' dependency rank
: #47

- States government's dependency rank
: #29

The highest earners in Nebraska only pay 6.84% in income tax, while individuals who make below $3,090 per year pay only 2.46%. It’s not very dependent on the federal government, but a recent report from the Bureau of Economic Analysis showed that Nebraska had the worst-performing economy in the country in early 2017.

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Jim Bowen // Wikimedia Commons

#38. Virginia

- Total dependency score: 34.43
- States residents' dependency rank
: #12

- States government's dependency rank
: #49

You’ll need to think back to high school algebra to calculate your taxes in Virginia: Three out of four of the state’s tax brackets require you to pay a percent of the amount of income you earned over a certain threshold. Interestingly, Virginia’s state government ranked as one of the least dependent on federal funding, while its citizens were one of the most dependent.

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Onetwo1 // Wikimedia Commons

#37. Colorado

- Total dependency score: 35.20
States residents' dependency rank: #29
- States government's dependency rank
: #34

All Colorado citizens pay a 4.63% tax rate on their income, regardless of how much they make. Neither its citizens nor its state government was particularly dependent on the federal government—both ranked near the middle of the pack.

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Bluedisk // Wikimedia Commons

#36. Washington

- Total dependency score: 35.32
- States residents' dependency rank
: #30

- States government's dependency rank
: #33

There’s no personal income tax in Washington, although businesses have to pay taxes on business occupation and public utilities. Since Washington’s state government also doesn’t depend very much on federal funding, the state relies heavily on a higher than average sales tax.

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LoneStarMike // Wikimedia Commons

#35. Texas

- Total dependency score: 36.81
- States residents' dependency rank
: #42

- States government's dependency rank
: #28

Texas also doesn’t levy a personal income tax against its citizens at all, choosing instead to charge a variety of other taxes on everything from tobacco to cement production to oyster sales. The state doesn’t receive much federal funding, however.

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Matt H. Wade // Wikimediad Commons

#34. New York

- Total dependency score: 37.65
- States residents' dependency rank
: #44

- States government's dependency rank
: #24

The highest earners in the state of New York pay up to 8.82% in personal income tax, one of the highest tax rates in the country. While New Yorkers aren’t very dependent on the federal government, the state government is significantly more reliant—it ranks 20 places higher than its citizens on federal dependency.

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Pixabay

#33. Michigan

- Total dependency score: 40.43
- States residents' dependency rank
: #35

- States government's dependency rank
: #27

Doing your taxes is fairly simple in Michigan: All residents must pay 4.25% of their income. The state’s residents and government aren’t very far apart on the federal dependency meter, coming in at #35 and #27, respectively.

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Bobak Ha'Eri // Wikimedia Commons

#32. North Dakota

- Total dependency score: 40.46
- States residents' dependency rank
: #1

- States government's dependency rank
: #50

North Dakotans pay very little in state income taxes. The lowest tax bracket pays only 1.1% of their income to the state, while the highest tax bracket caps at 2.9%. Interestingly, North Dakotans themselves are the most dependent on the federal government, while the state’s government is the least dependent.

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Teemu008 // Flickr

#31. Wisconsin

- Total dependency score: 41.09
- States residents' dependency rank
: #16

- States government's dependency rank
: #38

With a sliding scale of tax rates ranging from 4% to 7.65%, depending on your tax bracket, Wisconsin has one of the country’s highest income tax rates. Wisconsin’s state government was not very dependent on the federal government, but its citizens ranked significantly higher.

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Iqkotze // Wikimedia Commons

#30. Iowa

 - Total dependency score: 41.38
- States residents' dependency rank
: #33

- States government's dependency rank
: #26

Iowa’s income tax rate of 8.98% for people making more than $70,785 per year earns it fourth place as one of the highest income tax rates in the country. Residents don’t see a huge return on their federal taxes or receive a lot of federal jobs, but the state government comes in at the middle of the pack for its reliance on federal funding.

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Jim Bowen // Flickr

#29. Hawaii

- Total dependency score: 41.63
- States residents' dependency rank
: #9

- States government's dependency rank
: #46

Hawaiian citizens who make above $48,000 pay 8.25% in state income taxes, making Hawaii one of the states with the highest income tax. Residents also receive a high return on federal taxes and a good share of federal jobs, making them much more dependent on the federal government than the state government.

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Bz3rk // Wikimedia Commons

#28. North Carolina

Total dependency score: 41.63

States residents' dependency rank: #32

States government's dependency rank: #25

North Carolina levies a flat tax rate of 5.499% against its residents, regardless of their income. Its citizens are actually less dependent on federal funds than its government, which comes in exactly at the middle of the pack.

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Nicolas Henderson // Flickr

#27. Arkansas

- Total dependency score: 42.12
- States residents' dependency rank
: #38

- States government's dependency rank
: #21

Its 6.9% income tax rate for earners who make more than $35,100 per year makes Arkansas fairly average in terms of state income tax. Neither its citizens nor its government was very reliant on federal funds, either.

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Urban~commonswiki // Wikimedia Commons

#26. Ohio

- Total dependency score: 42.25
- States residents' dependency rank
: #45

- States government's dependency rank
: #13

Like many other states, Ohio taxes its citizens on a sliding scale based on how much money they make; the highest earners pay a flat rate plus 4.997% of income earned over $213.350. Though residents of the Buckeye State did not receive a high return on federal taxes or a lot of federal jobs, the federal funding did make up a substantial part of the state’s revenue. 

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Michael Rivera // Wikimedia Commons

#25. Florida

- Total dependency score: 43.84
- States residents' dependency rank
: #27

- States government's dependency rank
: #22

Residents of the Sunshine State also do not pay any personal income tax. Instead, Florida generates revenue by charging state sales taxes, excise taxes, and corporate taxes. Neither the citizens nor the state government was especially dependent on federal funds. 

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Kenneth C. Zirkel // Wikimedia Commons

#24. Rhode Island

- Total dependency score: 45.05
- States residents' dependency rank
: #36
States government's dependency rank: #16

Rhode Island’s highest earners pay personal income taxes of 5.99%, making it fairly similar to most states. The Ocean State also relied on federal funds for a good amount of its revenue, although its citizens themselves were less dependent.

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Kimberly Vardeman // Wikimedia Commons

#23. Alaska

- Total dependency score: 45.81
- States residents' dependency rank
: #10

- States government's dependency rank
: #40

Instead of generating revenue from state income taxes, Alaska levies a severance tax on the removal of non-renewable resources. However, this revenue has recently begun to decline as fuel prices drop and fuel production slows. It also charges a personal income tax. Though these revenue streams have kept its government from becoming very dependent on federal funds, Alaskans do rely heavily on federal jobs and return on federal taxes paid. 

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Kumar Appaiah // Flickr

#22. Pennsylvania

- Total dependency score: 46.15
- States residents' dependency rank
: #17

- States government's dependency rank
: #30

Pennsylvania’s 3.07% tax rate on personal income makes it one of the states with the lowest income taxes in the nation. The Keystone State’s government isn’t very dependent on federal funding, either; its residents are another story.

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Serge Melki // Wikimedia Commons

#21. Oklahoma

- Total dependency score: 47.78
- States residents' dependency rank
: #21

- States government's dependency rank
: #18

Anyone making more than $7,200 per year in Oklahoma pays 5% of his or her income in taxes to the state government. The state’s residents and government both showed a similar level of dependence on federal funding.

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Martin Falbisoner // Wikimedia Commons

#20. Maryland

- Total dependency score: 48.18
- States residents' dependency rank
: #11

- States government's dependency rank
: #32

Maryland charges a maximum 5.75% tax rate on personal income for the highest earners in the state. While Maryland state government didn’t rely much on federal funding for its revenue, its citizens received a high return on their federal taxes and a decent share of federal jobs. Its location next to the nation’s capital might have something to do with the high share of jobs.

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Cogdogblog // Wikimedia Commons

#19. Wyoming

- Total dependency score: 48.80
- States residents' dependency rank
: #26

- States government's dependency rank
: #12

Like Alaska, Wyoming also uses severance taxes on natural resources to make up the revenue it loses by not collecting a personal income tax. The state’s sales tax is also a major source of revenue. However, Wyoming’s state government is much more dependent on federal funds for revenue than Alaska: Wyoming ranked as the 12th most dependent state government while Alaska came in 40th place.

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Metalle-w // Wikimedia Commons

#18. Vermont

- Total dependency score: 49.56
- States residents' dependency rank
: #18

- States government's dependency rank
: #20

Vermont residents pay a base tax plus a certain percent of their income—up to 8.95% for the state's top earners. Both the residents and state government ranked very similarly for their dependency on federal funds.

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Maxbatt // Wikimedia Commons

#17. Idaho

- Total dependency score: 49.64
- States residents' dependency rank
: #19

- States government's dependency rank
: #19

Idaho’s residents and state government both ranked at exactly the same spot for their dependence on federal funding. The state’s personal income tax rate ranges from 1.6 to 7.4%, depending on how much you earn.

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Ken L. // Wikimedia Commons

#16. Georgia

- Total dependency score: 49.81
- States residents' dependency rank
: #34

- States government's dependency rank
: #8

Georgia’s tax rates range from 1% for earners making less than $750 in income to 6% for incomes of $7,000 or more. Although its residents received a below average return on their federal taxes and low share of federal jobs, the state government relied heavily on federal funding for its revenue.

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Wikipedia

#15. Oregon

- Total dependency score: 51.51
- States residents' dependency rank
: #23

- States government's dependency rank
: #10

Oregon has the second highest personal income tax rate in the country at 9.9%, but doesn’t charge any sales tax at all. Still, the state government is still one of the most 10 reliant on federal funding for its revenue.

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Jim Bowen // Wikimedia Commons

#14. Missouri

- Total dependency score: 52.66
States residents' dependency rank: #31
- States government's dependency rank
: #6

Missourians who make more than $9,072 per year pay a flat fee plus 6% of anything they make over $9,072 in state income taxes. The residents don’t receive a high return on their federal taxes or many federal jobs, but the state government does rely heavily on federal funding for revenue.

 

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Jake DeGroot // Wikimedia Commons

#13. South Dakota

- Total dependency score: 53.57
- States residents' dependency rank
: #24

- States government's dependency rank
: #7

South Dakota also does not charge its residents personal income taxes, instead relying on sales tax for a whopping 58% of its tax revenue. However, that must not be a big share of the state’s overall revenue, as it is the seventh most dependent on federal funding.

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Stuart Seeger // Flickr

#12. Louisiana

- Total dependency score: 55.39
- States residents' dependency rank
: #40

- States government's dependency rank
: #2

Louisiana charges an income tax of 6% to its top earners, making the state about average in terms of taxation. However, the state government is the second most reliant on federal funding for its revenue. Louisianans themselves do not depend on federal programs or jobs—they ranked #40. 

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Wars // Wikimedia Commons

#11. Arizona

- Total dependency score: 59.08
- States residents' dependency rank
: #15

- States government's dependency rank
: #11

Arizona’s highest earners pay 4.54% in income taxes. Residents of the Grand Canyon State also receive a relatively high return on federal taxes paid and high share of federal jobs. The state government is even more dependent on federal funding, coming in at #11 on this list. 

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Daniel Schwen // Wikimedia Commons

#10. Indiana

- Total dependency score: 59.18
- States residents' dependency rank
: #7

- States government's dependency rank
: #23

All residents of Indiana pay 3.3% in income taxes regardless of how much they earn. The people of the Hoosier State are also very dependent on federal jobs and receive a high return on their taxes, although the state government is about average in terms of how much it depends on federal government.

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Albany NY // Wikimedia Commons

#9. Maine

- Total dependency score: 61.02
- States residents' dependency rank
: #13

- States government's dependency rank
: #9

Maine tax rates range from 5.8% for those who make less than $21,100 to a flat fee of $3,175 plus 7.15% for those who make more than $50,000. That income must not be enough to keep the state government afloat, however: It ranks as the ninth most dependent on federal funding. 

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Kaldari // Wikimedia Commons

#8. Tennessee

- Total dependency score: 61.76
- States residents' dependency rank
: #20

- States government's dependency rank
: #3

Although Tennessee doesn’t have a personal income tax, it does levy a 6% tax on interests and dividends. It also charges a 7% sales tax. The residents don’t receive very high returns on federal tax returns or very many federal jobs, but federal funding does make up a large share of the state government’s revenue. 

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Martin Kraft // Wikimedia Commons

#7. Montana

- Total dependency score: 65.91
- States residents' dependency rank
: #14

- States government's dependency rank
: #4

Montanans pay income taxes of up to 6.9% depending on how much they earn. There's no state tax in Montana, however. The state government is the fourth most reliant on federal money, although its citizens scored slightly better on independence from the national government.

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Jim Bowen // Flickr

#6. South Carolina

- Total dependency score: 68.17
- States residents' dependency rank
: #2

- States government's dependency rank
: #31

If you make less than $2,930 in South Carolina, you won’t pay any personal income taxes. Tax rates increase as wages increase to $14,650 per year when the tax rate tops out at 7%. That must be sufficient for the state government, as it’s not very dependent on federal funding. South Carolinians themselves, however, are the second most reliant on federal jobs and return on their federal taxes in the country.

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David Wilson // Wikimedia Commons

#5. West Virginia

- Total dependency score: 68.97
- States residents' dependency rank
: #5

- States government's dependency rank
: #15

West Virginia’s tax rate tops out at 6.5% for the state's highest earners. Its residents are the fifth most dependent on federal jobs and the return they receive their federal income taxes, while the state government is only the 15th most dependent. It did receive one of the highest levels of grants received per federal taxes paid, as well. 

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Jim Bowen // Wikimedia Commons

#4. Alabama

- Total dependency score: 72.45
- States residents' dependency rank
: #4

- States government's dependency rank
: #14

Alabama’s personal income taxes cap at 5% for people who make more than $3,000. Both its residents and the state government are very dependent on federal funding: Alabama receives one of the highest amounts of federal contracts and other assistance, in addition to having one of the lowest gross domestic products per capita. 

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Mr.TinDC // Flickr

#3. New Mexico

- Total dependency score: 73.88
- States residents' dependency rank
: #3

- States government's dependency rank
: #17

Residents of the Land of Enchantment pay up to 4.9% in personal income taxes. New Mexico gets among the most federal contracts and grants, contributing to the state’s dependence on the federal government. 

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CHUCK KELLY // Wikimedia Commons

#2. Mississippi

- Total dependency score: 75.59
- States residents' dependency rank
: #7

- States government's dependency rank
: #1

Mississippians pay up to 5% in state income taxes,depending on how much they earn. Mississippi has the lowest gross domestic product per capita of any state, so it makes sense that federal funding would make up an outsized portion of the state’s revenue. 

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Kittugwiki // Wikimedia Commons

#1. Kentucky

- Total dependency score: 76.16
- States residents' dependency rank
: #6

- States government's dependency rank
: #5

Overall, Kentucky is the most dependent on the federal government for state revenue, federal jobs and return on federal taxes paid. The state government receives a high amount of federal assistance. Residents pay anywhere from 2% to 6% in personal income taxes to the state.

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