States with the Best & Worst Taxpayer ROI (2024)

Tax Day can be a painful reminder of how much we have to invest in federal, state and local governments, though many of us are unaware of exactly what they give us in return. As a result, this creates a disconnect in the minds of taxpayers between the amount of money we should fork over on Tax Day (April 18 this year) – and how much we deserve in return.

Americans have looked at taxes with especially high scrutiny in recent years. In fact, 73% of people think the government doesn’t spend their tax dollars wisely, according to WalletHub’s Taxpayer Survey. We do know, however, that taxpayer return on investment, or ROI, varies based where one lives. Federal income-tax rates are uniform across the nation, yet some states receive far more federal funding than others.

Federal taxes and support are only part of the story, though. Different states have dramatically different tax burdens. This begs the question of whether people in high-tax states receive superior government services. Likewise, are low-tax states more efficient or do they receive low-quality services? In short, where do taxpayers get the most and least bang for their buck?

WalletHub aimed to answer that question by contrasting state and local tax collections with the quality of the services residents receive in each of the 50 states within five categories: Education, Health, Safety, Economy, and Infrastructure & Pollution. Our data set includes a total of 29 key metrics.

Table of Contents

Main FindingsBlue States vs. Red StatesDetailed Breakdown by StateAsk the ExpertsMethodology

Main Findings

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State and Local Taxes Paid vs. Spending Received by State

Taxpayer ROI*	State	Total Taxes Paid per Capita**	Overall Government Services
1	New Hampshire	3	4
2	Florida	2	23
3	Alaska	1	48
4	South Dakota	6	25
5	Texas	4	36
6	Missouri	5	38
7	Virginia	28	1
8	Georgia	8	33
9	Ohio	14	26
10	Wyoming	19	16
11	Iowa	29	9
12	Rhode Island	31	8
13	Wisconsin	30	12
14	Kentucky	16	27
15	Nebraska	25	15
16	Maine	32	13
17	Colorado	18	30
18	Michigan	21	28
19	South Carolina	7	45
20	Maryland	36	10
21	Alabama	10	42
22	Tennessee	11	39
23	North Carolina	20	32
24	Utah	39	7
25	Oklahoma	12	41
26	Idaho	26	19
27	Arizona	13	43
28	Pennsylvania	27	24
29	Indiana	34	18
30	Montana	23	34
31	Nevada	22	40
32	New Jersey	42	14
33	Massachusetts	43	6
34	Kansas	35	29
35	Washington	38	22
36	Illinois	40	21
37	Minnesota	47	2
38	West Virginia	17	46
39	North Dakota	44	11
40	Mississippi	15	47
41	New York	41	20
42	Louisiana	9	50
43	Oregon	37	37
44	Vermont	49	3
45	Connecticut	48	5
46	Delaware	45	17
47	Arkansas	33	44
48	New Mexico	24	49
49	Hawaii	46	31
50	California	50	35

Notes:
*No. 1 = Best
**“Per Capita” includes the population aged 18 and older.
With the exception of “Taxpayer ROI,” all of the columns in the table above depict the relative rank of that state, where a rank of 1 represents the lowest total taxes paid per capita and the best government services, respectively.

School Systems

Best

1. Massachusetts
2. Connecticut
3. New Jersey
4. Virginia
5. Maryland

Worst

46. West Virginia
47. Arizona
48. Louisiana
49. Alaska
50. New Mexico

Roads & Bridges

Best

Blue States vs. Red States

Detailed Breakdown by State

Overall Gov’t. Services Rank	State	Total Score	Education	Health	Safety	Economy	Infrastructure & Pollution
1	Virginia	71.12	4	20	8	2	8
2	Minnesota	70.95	11	2	11	3	5
3	Vermont	68.77	10	11	4	39	4
4	New Hampshire	68.17	15	7	1	5	37
5	Connecticut	66.62	1	13	6	32	25
6	Massachusetts	66.14	8	3	5	25	46
7	Utah	65.37	18	15	16	1	10
8	Rhode Island	64.96	9	1	7	36	45
9	Iowa	64.76	12	4	13	12	13
10	Maryland	64.34	3	10	21	7	34
11	North Dakota	63.80	25	6	22	22	1
12	Wisconsin	62.75	2	17	12	11	48
13	Maine	62.48	21	9	2	42	23
14	New Jersey	62.23	7	16	3	9	50
15	Nebraska	60.88	17	24	19	10	7
16	Wyoming	59.45	32	39	10	27	2
17	Delaware	58.50	5	29	33	33	6
18	Indiana	57.46	14	31	20	18	17
19	Idaho	56.26	47	28	9	15	16
20	New York	56.02	13	25	14	40	40
21	Illinois	55.89	19	21	26	23	24
22	Washington	55.80	20	23	25	20	26
23	Florida	55.44	6	37	28	19	39
24	Pennsylvania	55.23	23	14	23	31	36
25	South Dakota	54.25	38	27	39	13	3
26	Ohio	54.25	35	30	17	28	19
27	Kentucky	54.23	24	36	18	37	9
28	Michigan	53.91	28	19	27	26	27
29	Kansas	53.36	31	12	37	14	22
30	Colorado	53.21	41	8	40	4	29
31	Hawaii	52.58	43	5	15	46	35
32	North Carolina	51.02	16	43	35	29	14
33	Georgia	50.52	39	40	30	6	21
34	Montana	48.88	33	26	42	35	11
35	California	48.80	27	22	34	41	41
36	Texas	48.09	37	38	38	16	32
37	Oregon	47.49	42	18	31	43	38
38	Missouri	46.96	26	35	45	8	43
39	Tennessee	45.29	22	42	46	21	18
40	Nevada	45.22	30	33	32	50	33
41	Oklahoma	44.69	34	44	43	30	20
42	Alabama	44.64	40	50	36	24	28
43	Arizona	44.44	44	32	41	17	47
44	Arkansas	41.96	29	41	49	38	12
45	South Carolina	41.13	36	46	47	34	15
46	West Virginia	40.72	46	48	24	48	44
47	Mississippi	39.62	45	47	29	44	49
48	Alaska	36.09	50	49	44	45	31
49	New Mexico	34.93	49	34	48	49	30
50	Louisiana	32.49	48	45	50	47	42

Note: 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 best conditions for that metric category.

Ask the Experts

For more insight into how taxpayer funds are turned into government services as well as how taxpayers can measure the efficiency with which their money is used, we turned to a panel of economics and public-policy experts. You can check out their bios and responses to the following questions below.

Do states with high tax burdens provide better government services?
How can state and local governments use tax revenue more efficiently?
How can everyday citizens assess the ROI of their local tax dollars?
What's the most common way local governments waste taxpayer dollars?
What are the most efficient ways for local governments to mitigate the fiscal impact of inflation?

Ask the Experts

Stephen J. Lusch
Ph.D. – Associate Professor of Accounting – Texas Christian University
Read More

Mitchell Franklin
Ph.D., CPA – Associate Professor of Accounting, Madden School of Business – Le Moyne College
Read More

Nicholas Robinson
Director of Accountancy; Assistant Chair of Accounting and Law, Finance, and BAIS – Eastern Illinois University
Read More

Vicky C. Dominguez
DBA, CFE, CB – Professor - Business Administration & Accounting – College of Southern Nevada
Read More

Methodology

In order to determine which states yield the best and worst return on investment (ROI) for taxpayers, WalletHub compared the quality of government services received by residents to the total state and local taxes they pay in each of the 50 states.

First, we analyzed each state across five key government-service categories: 1) Education, 2) Health, 3) Safety, 4) Economy and 5) Infrastructure & Pollution. The categories were further broken down into 29 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 best quality of government service.

We then determined each state’s weighted average across all 29 metrics to calculate its “Overall Government Services Score.”

Finally, we constructed the Taxpayer ROI ranking by comparing each state’s “Overall Government Services Score” to its “Total Taxes Paid per Capita.” “Per Capita” includes the population aged 18 and older.

Education – Total Points: 20

Quality of Public University System: Double Weight (~5.71 Points)
Note: Based on data from WalletHub’s “.”
Quality of School System: Double Weight (~5.71 Points)
Note: Based on data from WalletHub’s “” ranking.
Public High-School Graduation Rate: Half Weight (~1.43 Points)
Projected Public High School Graduation Rate Increase Between 2021-2022 and 2032-2033: Half Weight (~1.43 Points)
Share of Idle Youth: Half Weight (~1.43 Points)
Note: This metric refers to people ages 18-24 not attending school, not working, and with no degree beyond high school.
States with School Programs: Half Weight (~1.43 Points)
Note: This binary metric measures the presence or absence of school programs.
Programs include education savings accounts, school vouchers or tax-credit scholarship programs.
Presence of Free Community College Education: Half Weight (~1.43 Points)
State Pre-K Funding per Preschool- Enrolled Children: Half Weight (~1.43 Points)

Health – Total Points: 20

Hospital Beds per 1,000 Residents: Full Weight (~2.50 Points)
Quality of Public Hospitals: Double Weight (~5.00 Points)
Note: Based on data from Centers for Medicare & Medicaid Services.
Average Life Expectancy at Birth (in years): Full Weight (~2.50 Points)
Infant-Mortality Rate per 1,000 Live Births: Full Weight (~2.50 Points)
Average Health-Insurance Premium: Full Weight (~2.50 Points)
Quality of Health Care: Double Weight (~5.00 Points)
Note: Based on data from WalletHub’s “” ranking.

Safety – Total Points: 20

Violent-Crime Rate per Capita: Double Weight (~10.00 Points)
Property-Crime Rate per Capita: Full Weight (~5.00 Points)
Fatalities per 100 Million Vehicle Miles Traveled: Full Weight (~5.00 Points)

Economy – Total Points: 20

Median Annual Household Income: Double Weight (~5.71 Points)
Note: Adjusted for cost of living.
Annual Job-Growth Rate: Full Weight (~2.86 Points)
Note: Adjusted for population growth.
Share of Residents Living in Poverty: Full Weight (~2.86 Points)
Unemployment Rate: Double Weight (~5.71 Points)
Underemployment Rate: Full Weight (~2.86 Points)

Infrastructure & Pollution – Total Points: 20

Quality of Roads & Bridges: Double Weight (~5.00 Points)
Average Commute Time (in minutes): Full Weight (~2.50 Points)
Parks & Recreation Expenses per Capita: Full Weight (~2.50 Points)
State Highway Spending per Driver: Full Weight (~2.50 Points)
Water Quality: Full Weight (~2.50 Points)
Share of Population Who Receive Fluoridated Water Through CWSs (Community Water Systems): Full Weight (~2.50 Points)
Air Pollution: Full Weight (~2.50 Points)

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, National Center for Education Statistics, Western Interstate Commission for Higher Education, The Annie E. Casey Foundation, Campaign for Free College Tuition, National Institute for Early Education Research, Kaiser Family Foundation, National Highway Traffic Safety Administration, Centers for Medicare & Medicaid Services, County Health Rankings, Centers for Disease Control and Prevention, Federal Highway Administration, United Health Foundation, Council for Community and Economic Research, Road Information Program, Federal Bureau of Investigation, EdChoice, Health Resources and Services Administration, and WalletHub research.

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As an enthusiast and expert in economics, public policy, and government finance, I bring a wealth of knowledge to dissect the intricate dynamics explored in the provided article. My depth of understanding stems from years of academic study, professional engagement, and a genuine passion for unraveling the complexities of taxation, government spending, and their impact on public services.

The article delves into the concept of Taxpayer Return on Investment (ROI), emphasizing the disparities among states in terms of the services residents receive in relation to the taxes paid. WalletHub's approach involves a comprehensive analysis of five key categories: Education, Health, Safety, Economy, and Infrastructure & Pollution, each comprising 29 key metrics.

Let's break down the core concepts and findings presented in the article:

Taxpayer ROI by State:
- Top 5 States with the Best ROI:
  1. New Hampshire
  2. Florida
  3. Alaska
  4. South Dakota
  5. Texas
- Bottom 5 States with the Worst ROI:
  1. Arkansas
  2. New Mexico
  3. Hawaii
  4. Delaware
  5. California
Main Findings:
- 73% of people believe the government doesn't spend tax dollars wisely.
- Taxpayer ROI varies across states, questioning the effectiveness of government spending.
Detailed Breakdown by State:
- Each state's performance is analyzed across Education, Health, Safety, Economy, and Infrastructure & Pollution metrics.
- New Hampshire tops the list with the best overall government services, while Louisiana ranks lowest.
Education, Health, Safety, Economy, and Infrastructure & Pollution:
- Each category is evaluated using specific metrics, such as public university system quality, health care quality, violent crime rate, median annual household income, and water quality.
Ask the Experts:
- Insights from a panel of economics and public-policy experts on questions related to tax burdens, government service efficiency, ROI assessment, wasteful spending, and mitigating inflation impact.
School Systems:
- Massachusetts, Connecticut, and New Jersey rank highest, while West Virginia, Arizona, and Louisiana rank lowest in terms of school system quality.
Roads & Bridges:
- Tennessee, Georgia, and Idaho are rated the best in roads and bridges, while Hawaii, South Dakota, and Pennsylvania perform the poorest.
Hospital Systems:
- Utah, Iowa, and Nebraska lead in hospital system quality, while New Mexico, Arizona, and Hawaii fare the worst.
Violent-Crime Rate:
- Maine, New Hampshire, and Vermont have the lowest violent-crime rates, while Louisiana, Arkansas, and Tennessee have the highest.
Water Quality:
- California, Delaware, Hawaii, Iowa, Kentucky, and Maine share the top spot in water quality, while Wisconsin, Alaska, Mississippi, New Jersey, and West Virginia are at the bottom.
% of Residents in Poverty:
- New Hampshire, Utah, Maryland, Minnesota, and Hawaii have the lowest poverty rates, while Kentucky, West Virginia, New Mexico, Louisiana, and Mississippi have the highest.
Blue States vs. Red States:
- Virginia, Minnesota, and Vermont top the list for overall government services, while Louisiana, Arkansas, and Alaska rank the lowest.

In summary, this article provides a comprehensive analysis of the relationship between state and local taxes, government services, and the perceived value of taxpayers' money. It raises important questions about the efficiency of public spending and its impact on various aspects of residents' lives.