Business & Money

Location Matters: The Top 1% Differs By State

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Bolanle Media – Recent analysis conducted by the personal finance website SmartAsset has shed light on the significant role location plays in determining financial success in the United States. The study, which analyzed 2020 IRS data adjusted to 2023 dollars, reveals that “Location Matters: The Top 1% Differs By State,” as the income needed to be part of the top 1% of earners can vary by over half a million dollars depending on which U.S. state individuals reside in.

Connecticut takes the lead with the highest threshold, requiring households to earn an annual income of $952,902 or more to join the top 1%. In stark contrast, West Virginia has the lowest threshold, with residents needing an income of $367,582 or more to be considered part of the nation’s wealthiest elite.

Nationwide, households making $652,657 or more are classified within the top 1%, which is nearly eight times the median household income of approximately $75,000, as reported in the study.

The Disparities and Influencing Factors

SmartAsset’s analysis showcases significant income disparities across states, largely attributed to various influencing factors:

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  1. Cost of Living: States with larger urban hubs like California and New York showcase how “Location Matters: The Top 1% Differs By State,” as they tend to boast higher-paid residents; however, they also have higher costs of living, somewhat offsetting their larger incomes.
  2. Industry and Job Opportunities: Diverse state economies driven by different industries can greatly impact average incomes, with tech-heavy states typically reporting higher earnings.
  3. Taxation Policies: Varied state tax structures can influence disposable income, directly affecting the overall income required to reach the top 1%.
  4. Population Density: States with larger populations may experience higher levels of income competition, which can influence salary ranges across industries.

The Top 1%: Aspirations and Realities

Location Matters: The Top 1% Differs By State

Implications for Financial Planning

Understanding the income disparities by location can significantly impact individuals’ financial planning decisions. Relocating to states with lower income thresholds might offer greater wealth-building opportunities for those aspiring to join the top 1%.

When it comes to being rich, location matters.

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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.

Below is a list of 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

 

The findings from SmartAsset’s analysis present a compelling portrait of the economic diversity across the United States. Location indeed matters when it comes to achieving financial success and becoming part of the nation’s top 1% of earners. As individuals set their financial goals and navigate their paths to success, they must consider these income disparities and the unique opportunities and challenges that different states present.

 

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