Which states pay the most federal taxes and get the least back?
Residents in Connecticut, Massachusetts, New Jersey and New York have some of the highest tax bills in the nation. They also pay thousands more in federal taxes than their state receives back in federal funding.
| Rank | State federal district or territory | Revenue per capita (est.) |
|---|---|---|
| 1 | California | $10,408 |
| 2 | Texas | $10,204 |
| 3 | New York | $13,659 |
| 4 | Florida | $8,762 |
States with the biggest tax refund
According to Lending Tree, Wyoming had the highest average tax refund for several years in a row. This information was based on an analysis of individual income tax returns from the 2020 tax year—that's the latest tax year currently reported by the IRS's SOI information.
RESPONSE: Whether Texas pays more in federal taxes than it receives in federal spending, depends upon the fiscal year. In FY 2012, federal spending in Texas exceeded taxes paid by 43%; by FY 2013, it reversed direction, with taxes-paid exceeding spending by 21%. Basically, collections went up and spending went down.
- New York: 12.47%
- Hawaii: 2.31%
- Maine: 11.14%
- Vermont: 10.28%
- Connecticut: 9.83%
- New Jersey: 9.76%
- Maryland: 9.44%
- Minnesota: 9.41%
In 2020, the average American contributed 8.9% percent of their income in state taxes. Alaska had the lowest average overall tax burden – measured as total individual taxes paid divided by total personal income – at 5.4%, followed by Tennessee (6.3%), New Hampshire (6.4%), Wyoming (6.6%) and Florida (6.7%).
For example, according to the Tax Foundation study, California paid $8,028 per person in federal taxes, ranking the state 9th on this measure. Coupled with low per-person expenditures, California receives less in federal expenditures compared to what it pays in federal taxes relative to other states.
According to the updated MoneyGeek analysis, the most “tax friendly” state overall was Nevada, where the median family owes about 3% of its income in taxes. Meanwhile, 13 states earned either a D or F grade for tax burdens.
Minnesota, New Jersey, Delaware, Illinois and Florida are least dependent on the federal government. These states all contribute multiples more to the federal government than they receive, with residents paying at least $5 in taxes for every $1 in direct support received from the federal government.
As of 2023, nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — do not levy a state income tax.
Which states contribute more than they take?
Minnesota, New Jersey, Delaware, Illinois and Florida are least dependent on the federal government. These states all contribute multiples more to the federal government than they receive, with residents paying at least $5 in taxes for every $1 in direct support received from the federal government.
Right now, states including Utah and Connecticut are among the states that pay the most taxes and get the least back, even though all 50 states have a positive balance of payments, which means that they are all taker states, though historically, New York has been a donor state.
In 2020, Vermont, West Virginia, and Alaska received the highest proportions of federal funding relative to their overall budgets. Vermont relied on federal grants the most: 35.8% of its budget came from the federal government. West Virginia followed at 34.1%, and Alaska at 33.9%.
Yes and no. The more you earn and the higher the tax rate in your state, the more you can potentially save by moving to an income tax-free state. However, moving to a state with no income tax isn't always beneficial.
Côte d'Ivoire citizens pay the highest income taxes in the world according to a survey by World Population Review. Côte d'Ivoire citizens pay the highest income taxes in the world according to this year's survey findings by World Population Review.
The effective state & local tax rates on a median U.S. household is 12.55% for Texans, while the annual state & local taxes are $9,483. The percent difference between the state (Texas) and U.S. tax average is 14.84%. And the annual state & local taxes on a median state household are $8,643 for Texans.
Of the nine states without income taxes, Alaska has the lowest overall tax burden, at 5.4%, followed by Tennessee (6.3%), New Hampshire (6.4%), Wyoming (6.6%) and Florida (6.7%). Consequently, Alaska has the lowest tax rate in the United States.
Some states do not tax Social Security or income, which could appeal to retirees. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming stand out for their tax-friendly policies and other amenities that retirees may enjoy.
Texans sent the federal government $261 billion in taxes in 2016, and the state government received $39.5 billion in grants in return, or about 15 percent of our total federal tax tab. Those grants were the state's second-largest revenue source, providing more than a third of its net revenue in that year.
Florida's current budget
Under the American Rescue Plan, Florida will receive $8.8 billion in direct state fiscal aid and $5.7 billion in local government aid from the federal government. As of January 2022, Florida had spent part of its state ARP funds on environmental protection programs and economic development.
Do red states receive more federal aid?
Red States Lead With Federal Dependence
Democratic-leaning blue states tend to be wealthier and pay more to the federal government than they get. In contrast, Republican-leaning red states tend to have less wealth and receive more federal government funds than they pay.
California. Colorado: Previously, Colorado worked around straight up taxing Social Security by allowing $24,000 of Social Security income to be deducted from state taxes.
- Alaska.
- Florida.
- Georgia.
- Mississippi.
- Nevada.
- South Dakota.
- Wyoming.
Florida has regained its status as the best state for retirees in 2024. That's according to WalletHub's latest “Best and Worst States to Retire” study. In 2023, Virginia took the top spot and knocked Florida down to No. 2.
| Most Federally Dependent | Least Federally Dependent |
|---|---|
| 1. Alaska | 41. Nevada |
| 2. West Virginia | 42. Delaware |
| 3. Mississippi | 43. Iowa |
| 4. Kentucky | 44. Massachusetts |
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