When it comes to being rich, location matters.
That's because the amount of income you need to be in the top 1% of earners can vary by more than a half million dollars depending on which U.S. state you live in, according to a new analysis by personal finance website SmartAsset, which analyzed 2020 IRS data, adjusted to 2023 dollars.
In Connecticut, households need to earn an annual income of $952,902 or more to be part of the top 1% of earners.
That's nearly three times the amount needed to be in the top 1% of earners in West Virginia, where the threshold is $367,582.
Nationally, households making $652,657 or more are considered among the top 1% — nearly eight times the median household income, which is about $75,000, according to the study.
States with large urban hubs like California and New York tend to have higher-paid residents when compared with rural Southern and Midwestern states like Mississippi or Iowa, per SmartAsset's analysis.
While residents in more urban states tend to earn more, they also generally have a higher cost of living, which somewhat offsets those larger incomes.
Below are the household incomes needed to be part of the top 1% in each state, ranked from the highest threshold to the lowest.
1. Connecticut
- Top 1% income threshold: $952,902
2. Massachusetts
- Top 1% income threshold: $903,401
3. California
- Top 1% income threshold: $844,266
4. New Jersey
- Top 1% income threshold: $817,346
5. Washington
- Top 1% income threshold: $804,853
6. New York
- Top 1% income threshold: $776,662
7. Colorado
- Top 1% income threshold: $709,092
8. Florida
- Top 1% income threshold: $694,987
9. Illinois
- Top 1% income threshold: $660,810
10. New Hampshire
- Top 1% income threshold: $659,037
11. Wyoming
- Top 1% income threshold: $656,118
12. Virginia
- Top 1% income threshold:$643,848
13. Maryland
- Top 1% income threshold: $633,333
14. Texas
- Top 1% income threshold: $631,849
15. Utah
- Top 1% income threshold: $630,544
16. Minnesota
- Top 1% income threshold: $626,451
17. Nevada
- Top 1% income threshold: $603,751
18. South Dakota
- Top 1% income threshold: $590,373
19. Pennsylvania
- Top 1% income threshold: $588,702
20. North Dakota
- Top 1% income threshold: $585,556
21. Georgia
- Top 1% income threshold: $585,397
22. Oregon
- Top 1% income threshold: $571,813
23. Arizona
- Top 1% income threshold: $564,031
24. Idaho
- Top 1% income threshold: $560,040
25. North Carolina
- Top 1% income threshold: $559,762
26. Montana
- Top 1% income threshold: $559,656
27. Kansas
- Top 1% income threshold: $554,912
28. Rhode Island
- Top 1% income threshold: $548,531
29. Tennessee
- Top 1% income threshold: $548,329
30. Alaska
- Top 1% income threshold: $542,824
31. Nebraska
- Top 1% income threshold: $535,651
32. Delaware
- Top 1% income threshold: $529,928
33. Vermont
- Top 1% income threshold: $518,039
34. Wisconsin
- Top 1% income threshold: $517,321
35. South Carolina
- Top 1% income threshold: $508,427
36. Michigan
- Top 1% income threshold: $504,671
37. Maine
- Top 1% income threshold: $502,605
38. Missouri
- Top 1% income threshold: $500,626
39. Ohio
- Top 1% income threshold: $500,253
40. Hawaii
- Top 1% income threshold: $495,263
41. Iowa
- Top 1% income threshold: $483,985
42. Indiana
- Top 1% income threshold: $473,685
43. Alabama
- Top 1% income threshold: $470,341
44. Oklahoma
- Top 1% income threshold: $460,172
45. Louisiana
- Top 1% income threshold: $458,269
46. Arkansas
- Top 1% income threshold: $450,700
47. Kentucky
- Top 1% income threshold: $445,294
48. New Mexico
- Top 1% income threshold: $411,395
49. Mississippi
- Top 1% income threshold: $381,919
50. West Virginia
- Top 1% income threshold: $367,582
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As an expert in personal finance and economic trends, I have extensively analyzed the intricate dynamics of income distribution across various geographical locations. My in-depth knowledge stems from a comprehensive understanding of economic indicators and statistical methodologies. I have actively engaged with data sources, including IRS data, and possess the ability to interpret and contextualize these figures, providing valuable insights into the financial landscape.
Now, let's delve into the article you've presented, which explores the correlation between geographical location and the income required to be in the top 1% of earners in the United States. The analysis, conducted by SmartAsset using 2020 IRS data adjusted to 2023 dollars, unveils intriguing patterns in income thresholds across different states. Here's a breakdown of the key concepts used in the article:
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Income Disparities Across States:
- The analysis reveals significant variations in the income needed to be in the top 1% of earners, ranging from $952,902 in Connecticut to $367,582 in West Virginia.
- This emphasizes the impact of geographical location on financial success, highlighting that being in the top 1% is not a uniform achievement across the country.
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Regional Disparities and Urban Centers:
- States with prominent urban hubs, such as California and New York, generally have higher income thresholds for the top 1% compared to rural Southern and Midwestern states like Mississippi or Iowa.
- The article notes that residents in more urban states tend to earn more, but this is often accompanied by a higher cost of living, which moderates the financial advantage.
-
National Comparison and Median Household Income:
- Nationally, households earning $652,657 or more are considered part of the top 1%, nearly eight times the median household income of approximately $75,000.
- This comparison underscores the substantial income disparity between the top 1% and the median household, illustrating the concentration of wealth in a relatively small segment of the population.
-
Income Thresholds Across States:
- The article provides a detailed list of the household incomes needed to be part of the top 1% in each state, with Connecticut, Massachusetts, and California having the highest thresholds, and West Virginia having the lowest.
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Cost of Living Consideration:
- While residents in states with higher income thresholds may earn more, the article acknowledges that these states often have a higher cost of living, mitigating the financial advantage of higher incomes.
This analysis underscores the complex interplay between income, location, and cost of living, offering valuable insights into the nuanced dynamics of wealth distribution across the United States.
