Only a small fraction of Americans can claim membership in the top 1% of earners. It’s a coveted status, but what does it really take to get there?
The answer isn’t as straightforward as you might think, because the income required to be in the top 1% varies significantly depending on the state you call home.
To put these figures in perspective, the national average to be a top 1% earner is $652,657 annually. That’s more than eight times the median household income in the U.S., which stands at approximately $74,580. This disparity highlights the significant income inequality present in the country.
State-by-State Breakdown of Income Thresholds
The amount of money it takes to be in the top 1% club varies wildly based on the state Americans live in. Below is a detailed breakdown of the income thresholds and effective tax rates for the top 1% in each state, starting with the lowest income required and moving to the highest.
- West Virginia: $367,582
- Effective tax rate: 23.26%
- Mississippi: $381,919
- Effective tax rate: 23.04%
- New Mexico: $411,395
- Effective tax rate: 23.35%
- Kentucky: $445,294
- Effective tax rate: 24.14%
- Arkansas: $450,700
- Effective tax rate: 21.11%
- Louisiana: $458,269
- Effective tax rate: 24.8%
- Oklahoma: $460,172
- Effective tax rate: 23.68%
- Alabama: $470,341
- Effective tax rate: 23.82%
- Indiana: $473,685
- Effective tax rate: 24.55%
- Iowa: $483,985
- Effective tax rate: 24.09%
- Hawaii: $495,263
- Effective tax rate: 24.12%
- Ohio: $500,253
- Effective tax rate: 25.09%
- Missouri: $500,626
- Effective tax rate: 24.93%
- Maine: $502,605
- Effective tax rate: 24.04%
- Michigan: $504,671
- Effective tax rate: 25.01%
- South Carolina: $508,427
- Effective tax rate: 24.4%
- Wisconsin: $517,321
- Effective tax rate: 24.9%
- Vermont: $518,039
- Effective tax rate: 23.63%
- Delaware: $529,928
- Effective tax rate: 25.37%
- Nebraska: $535,651
- Effective tax rate: 24.1%
- Alaska: $542,824
- Effective tax rate: 25.38%
- Tennessee: $548,329
- Effective tax rate: 25.12%
- Rhode Island: $548,531
- Effective tax rate: 25.26%
- Kansas: $554,912
- Effective tax rate: 25.03%
- Montana: $559,656
- Effective tax rate: 24.46%
- North Carolina: $559,762
- Effective tax rate: 25.31%
- Idaho: $560,040
- Effective tax rate: 23.17%
- Arizona: $564,031
- Effective tax rate: 25.22%
- Oregon: $571,813
- Effective tax rate: 24.66%
- Georgia: $585,397
- Effective tax rate: 25.06%
- North Dakota: $585,556
- Effective tax rate: 24.76%
- Pennsylvania: $588,702
- Effective tax rate: 24.95%
- South Dakota: $590,373
- Effective tax rate: 22.99%
- Nevada: $503,751
- Effective tax rate: 25.19%
- Minnesota: $626,451
- Effective tax rate: 25.53%
- Utah: $630,544
- Effective tax rate: 23.77%
- Texas: $631,849
- Effective tax rate: 25.83%
- Maryland: $633,333
- Effective tax rate: 25.94%
- Virginia: $643,848
- Effective tax rate: 26.11%
- Wyoming: $656,118
- Effective tax rate: 24.79%
- New Hampshire: $659,037
- Effective tax rate: 26.25%
- Illinois: $660,810
- Effective tax rate: 26.35%
- Florida: $694,987
- Effective tax rate: 25.82%
- Colorado: $709,092
- Effective tax rate: 25.86%
- New York: $776,662
- Effective tax rate: 28.29%
- Washington: $804,853
- Effective tax rate: 25.99%
- New Jersey: $817,346
- Effective tax rate: 28.01%
- California: $844,266
- Effective tax rate: 26.95%
- Massachusetts: $903,401
- Effective tax rate: 27.15%
- Connecticut: $952,902
- Effective tax rate: 28.4%
Key Trends and Observations
Several trends emerge when analyzing the income thresholds and tax rates across different states.
Regional Disparities
Southern states generally have the lowest income thresholds to be in the top 1%. Six of the ten states with the lowest top 1% income thresholds are located in the Southeast.
This suggests that the cost of living and overall economic landscape in these states differ significantly from other parts of the country.
Tax Rate Correlation
Generally, there is a correlation between the income threshold and the effective tax rate. States with higher income thresholds tend to have higher effective tax rates for the top 1%. For example, Connecticut has the highest income threshold ($952,902) and the highest effective tax rate (28.4%).
Outlier States
Nevada is listed out of order at $503,751, which is lower than South Dakota at $590,373.
Additional Considerations
While the data provides a clear picture of the income required to be in the top 1% by state, there are other factors to keep in mind:
Household Income
The figures represent household income, not individual income. This means that in many cases, both partners in a household contribute to reaching the top 1% threshold.
Cost of Living
The cost of living varies significantly from state to state. An income that places a household in the top 1% in West Virginia might not provide the same standard of living as it would in New York or California.
Tax Laws
Tax laws are subject to change, which can impact the effective tax rates for the top 1%. It’s essential to stay informed about any changes in state and federal tax policies.
Alicia Richards