Income Needed to be in the Top 1% in Each U.S. State

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Income inequality in the United States is a complex and persistent issue with profound implications for the nation’s economy, society, and politics. It refers to the unequal distribution of income among individuals and households, where some earn significantly more than others.

Historically, the United States has experienced periods of both higher and lower income inequality. The decades following World War II were characterized by relatively low levels of income inequality due to factors like strong labor unions, progressive tax policies, and increased access to education. However, since the late 1970s, income disparities have grown.

One of the contributing factors to income inequality is wage stagnation for many American workers. While productivity and the cost of living have risen, real wages for the majority of workers have remained relatively flat. This means that many workers are not experiencing significant income growth.

Technological changes and automation have transformed the job market. While technology has created high-paying jobs in certain sectors, it has also displaced workers in traditional industries, contributing to wage disparities.

Education is another critical factor. Individuals with higher levels of education tend to earn more than those with less education. As a result, disparities in educational attainment can exacerbate income disparities.

Racial and gender disparities in earnings are also significant contributors to income inequality. Historically, racial and gender discrimination in the workplace has limited opportunities and wage growth for marginalized groups.

Income inequality is closely tied to wealth inequality, which includes assets like real estate, investments, and savings. The wealthiest Americans often accumulate substantial wealth that generates income, further exacerbating the gap between the rich and the rest.

A significant portion of income growth has been concentrated among the top earners, particularly the highest 1% and 0.1% of income earners. This group has seen substantial increases in income, often driven by factors like executive compensation, capital gains, and investment income. The financial sector has also played a role in income disparities.

Previously, the howmuch.net team made a map that shows the ratio between what the top 1% earns and what the bottom 99% earns. In 2023, the team created the map that shows income needed to be in the top 1% in each U.S. state.

This map was based on a new analysis by the personal finance website SmartAsset, which analyzed 2020 IRS data, adjusted to 2023 dollars.

According to the data, the income required to be part of the top 1% of earners can vary significantly depending on the U.S. state in which you reside. For example, households in Connecticut need to earn an annual income of $952,902 or more to be among the top 1% of earners. This figure is nearly three times the threshold required in West Virginia, where the top 1% income threshold is $367,582.

On a national scale, households earning $652,657 or more are considered part of the top 1%, which is nearly eight times the median household income of approximately $75,000, as indicated by the study’s findings.

States with prominent urban centers, such as California and New York, tend to have higher-earning residents compared to more rural states in the South and Midwest, such as Mississippi or Iowa, based on SmartAsset’s analysis. While residents in these urban states generally earn more, it’s important to note that they also face a higher cost of living, which can partially offset the advantage of higher incomes.

The following list ranks each state based on the household incomes required to be part of the top 1%, from states with the highest income threshold to those with the lowest.

Rank	U.S. State	Top 1% income threshold
1	Connecticut	$952,902
2	Massachusetts	$903,401
3	California	$844,266
4	New Jersey	$817,346
5	Washington	$804,853
6	New York	$776,662
7	Colorado	$709,092
8	Florida	$694,987
9	Illinois	$660,810
10	New Hampshire	$659,037
11	Wyoming	$656,118
12	Virginia	$643,848
13	Maryland	$633,333
14	Texas	$631,849
15	Utah	$630,544
16	Minnesota	$626,451
17	Nevada	$603,751
18	South Dakota	$590,373
19	Pennsylvania	$588,702
20	North Dakota	$585,556
21	Georgia	$585,397
22	Oregon	$571,813
23	Arizona	$564,031
24	Idaho	$560,040
25	North Carolina	$559,762
26	Montana	$559,656
27	Kansas	$554,912
28	Rhode Island	$548,531
29	Tennessee	$548,329
30	Alaska	$542,824
31	Nebraska	$535,651
32	Delaware	$529,928
33	Vermont	$518,039
34	Wisconsin	$517,321
35	South Carolina	$508,427
36	Michigan	$504,671
37	Maine	$502,605
38	Missouri	$500,626
39	Ohio	$500,253
40	Hawaii	$495,263
41	Iowa	$483,985
42	Indiana	$473,685
43	Alabama	$470,341
44	Oklahoma	$460,172
45	Louisiana	$458,269
46	Arkansas	$450,700
47	Kentucky	$445,294
48	New Mexico	$411,395
49	Mississippi	$381,919
50	West Virginia	$367,582

Income inequality can have far-reaching social consequences. It can lead to social unrest, limit economic mobility, and negatively impact social cohesion. Addressing income inequality remains a challenging and multifaceted issue that requires comprehensive solutions, including reforms in areas like taxation, education, and labor rights, to create a more equitable society in the United States.

To learn more about the economics, have a look at the following books:

• Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail
• Basic Economics: A Common Sense Guide to the Economy
• Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics