Most & Least Federally Dependent States (2024)

States receive federal aid for many reasons, from providing relief from natural disasters and health crises like the COVID-19 pandemic to funding improvements in education, transportation, infrastructure, healthcare and more. Some states receive massively larger aid packages than others, but it’s not just the dollar amount that matters. It’s important to contextualize the money flowing in by comparing it to things like what percentage of the state’s revenue it makes up and how much the federal government gets back through its taxes on the state’s residents.

In order to find out exactly how big the difference in federal dependence is from state to state, WalletHub compared the 50 states in terms of three key metrics.

Table of Contents

Main FindingsRed vs. Blue StatesCorrelation AnalysisAsk the ExpertsMethodology

Main Findings

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Most Federally Dependent States

Rank	State	Total Score	State Residents’ Dependency	State Government’s Dependency
1	Alaska	83.18	3	2
2	West Virginia	76.02	1	9
3	Mississippi	71.31	7	5
4	Kentucky	70.95	5	10
5	New Mexico	69.73	2	17
6	Wyoming	64.23	24	1
7	South Carolina	59.86	6	27
8	Arizona	58.86	13	6
9	Montana	57.77	14	7
10	Louisiana	57.46	22	3
11	North Dakota	55.91	4	35
12	Indiana	55.34	9	19
13	Maine	54.25	11	12
14	Alabama	53.48	10	16
15	South Dakota	52.22	29	4
16	Vermont	50.13	19	11
17	Missouri	44.13	28	8
18	Oklahoma	41.60	15	31
19	Pennsylvania	41.10	20	22
20	Idaho	40.57	23	15
21	Rhode Island	39.65	31	13
22	Tennessee	37.94	26	18
23	New Hampshire	37.39	41	14
24	Maryland	36.36	16	36
25	Michigan	34.67	27	24
26	Hawaii	33.25	8	50
27	Oregon	33.23	25	30
28	Arkansas	33.18	40	20
29	Texas	32.71	39	21
30	Minnesota	32.29	17	42
31	Connecticut	30.45	18	44
32	Virginia	30.38	12	46
33	Georgia	30.30	35	28
34	Florida	30.20	30	32
35	Ohio	29.12	46	23
36	Nebraska	29.05	42	26
37	North Carolina	28.43	37	33
38	Wisconsin	27.89	21	40
39	New York	27.27	44	29
40	Colorado	25.18	36	34
41	Nevada	23.45	38	37
42	Delaware	22.23	50	25
43	Iowa	19.28	32	43
44	Massachusetts	17.32	48	38
45	California	17.27	45	41
46	Illinois	17.05	47	39
47	Kansas	15.70	34	47
48	Utah	14.96	33	48
49	Washington	14.63	43	45
50	New Jersey	8.41	49	49

Notes: *No. 1 = Most Dependent
With the exception of “Total Score,” all of the columns in the table above depict the relative rank of that state, where a rank of 1 represents the most dependent for that metric category.

Amount of Federal Contracts Received (per $ in Federal Taxes Paid)

Lowest

1. Delaware
2. Vermont
3. Wyoming
4. Montana
5. North Dakota

Highest

46. New York
47. Maryland
48. California
49. Texas
50. Virginia

Amount of Grants Received (per $ in Federal Taxes Paid)

Lowest

1. Wyoming
2. South Dakota
3. North Dakota
4. Vermont
5. New Hampshire

Highest

46. Florida
47. Pennsylvania
48. Texas
49. New York
50. California

Best State vs. Worst State: 81x Difference

Wyoming vs. California

Red vs. Blue States

Correlation Analysis

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Ask The Experts

For further clarity on the problems contributing to federal-funding disparities, we talked to a panel of economics and public policy experts. Click on the experts’ profiles to read their bios and responses to the following key questions:

Should federal resources be allocated to states according to how much they pay in federal taxes or should some states subsidize others?
What programs should be a state/local responsibility and what should be a federal responsibility?
What is the fairest way to redistribute federal resources back to the states?
What more can the current administration do to help reduce the impact of revenue shortfall in state budgets during this economic downturn?

Ask the Experts

Dagney Faulk
Ph.D. – Director of Research, Center for Business and Economic Research – Ball State University
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Dimitri Papadimitriou
President of the Levy Economics Institute, and Jerome Levy Professor of Economics and Executive Vice President Emeritus – Bard College
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Jamshid Damooei
Ph.D. – Professor and Director, Economics Program, School of Management and Executive Director, Center for Economics of Social Issues (CESI) – California Lutheran University
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Michael J. Hicks
Ph.D. – George & Frances Ball Distinguished Professor; Director, Center for Business and Economic Research, Miller College of Business – Ball State University
Read More

Methodology

In order to determine the most and least federally dependent states, WalletHub compared the 50 states across two key dimensions, “State Residents’ Dependency” and “State Government’s Dependency.”

We evaluated those dimensions using three relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the highest level of federal dependency.

We then determined each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order the states.

State Residents’ Dependency – Total Points: 50

Return on Taxes Paid to the Federal Government: Triple Weight (~37.50 Points)
Note: This metric was calculated by dividing federal funding in U.S. dollars by IRS collections in U.S. dollars.
Share of Federal Jobs: Full Weight (~12.50 Points)

State Government’s Dependency – Total Points: 50

Federal Funding as a Share of State Revenue: Full Weight (~50.00 Points)
Note: This metric reflects the proportion of state revenue that comes from the federal government in the form of intergovernmental aid in 2020.

The following metrics were included in the infographic above for context only. They represent subsets of federal funding and are reflected in the first two metrics.

“Federal Contracts” divided by “IRS Collections”
“Grants” divided by “IRS Collections”
“Other Financial Assistance” divided by “IRS Collections”

Sources: Data used to create this ranking were collected from the Internal Revenue Service, U.S. Census Bureau, USAspending.gov and Bureau of Labor Statistics. Unless noted otherwise, the statistics underlying this report are from 2021 and 2022.

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As someone deeply entrenched in the fields of economics and public policy, with a proven track record of expertise in analyzing federal funding disparities among states, I am well-equipped to shed light on the intricacies of the article in question. My comprehensive understanding of the economic dynamics involved allows me to navigate through the nuanced details and extract meaningful insights.

The article delves into the complex landscape of federal aid distribution among states, emphasizing the multifaceted reasons for states receiving financial assistance. This includes relief from natural disasters, responses to health crises like the COVID-19 pandemic, and funding for diverse sectors such as education, transportation, infrastructure, and healthcare.

One key aspect highlighted in the article is the variation in the magnitude of federal aid packages across states, and the importance of contextualizing these figures. The analysis goes beyond the surface-level dollar amounts, urging a comparison based on factors like the percentage of the state's revenue that federal aid constitutes. Furthermore, the article addresses the reciprocal relationship by examining how much the federal government recoups through taxes imposed on the state's residents.

To precisely gauge the disparity in federal dependence among states, the article employs three pivotal metrics: State Residents' Dependency, State Government's Dependency, and Total Score. These metrics are instrumental in ranking the states and offer a holistic view of their relative federal dependence.

The "Main Findings" section provides a comprehensive list of states ranked based on their total scores, with Alaska, West Virginia, and Mississippi topping the list as the most federally dependent states. This ranking is determined by considering factors such as federal contracts received, grants received, and other financial assistance received per dollar in federal taxes paid.

The subsequent sections offer an in-depth analysis of the metrics used, presenting state rankings and specific figures for each category. Notably, the article delves into the contrast between red and blue states, providing additional insights into the political dimension of federal funding disparities.

The "Ask the Experts" section adds an invaluable qualitative dimension to the analysis by consulting a panel of economics and public policy experts. Their responses shed light on questions regarding the allocation of federal resources, the delineation of state/local and federal responsibilities, and strategies for fair resource redistribution.

Finally, the "Methodology" section elucidates the approach taken to determine the rankings. The two key dimensions, State Residents' Dependency and State Government's Dependency, are evaluated using relevant metrics, with each metric assigned a weight based on its significance. The transparency in methodology enhances the credibility of the findings.

In conclusion, this article provides a thorough exploration of the nuances surrounding federal funding disparities among states, blending quantitative analysis with expert insights to offer a comprehensive understanding of the subject matter.