STATEN ISLAND, N.Y. – What does it take to be counted among the top 1% of earners nationwide? According to a recent study, an American family needs an annual income of at least $550,000 to be put into that class -- and that number could be greater, depending on where you live.
“In Connecticut, a family needs almost $900,000 in annual income to be in the top 1% of earners in their state, whereas a family in the top 1% of West Virginia needs only an average of just over $350,000,” noted a report from SmartAsset, a financial technology company that publishes articles and reviews to help people make decisions about personal finance.
According to data journalism website Stacker, Smart Asset -- using numbers from the IRS and Bureau of Labor Statistics -- determined the minimum income required to be among the top 1% of earners in each state
SmartAsset found that most coastal states have the highest 1% income threshold, placing top earners in the nation’s major cities.
“The top five states are all on the East and West coasts,” the study noted, “and a total of eight coastal states rank in the top 10.”
The study also noted that the top 1% earners pay at least 25% of the total income tax share in their states and earn twice as much as the top 5%.
“The minimum income threshold needed to be considered among the top 1% of earners ($597,815) is 2.48 times higher than the threshold needed to crack the top 5% of earners nationwide ($240,712),” the study stated.
So where is the 1% income threshold the highest? Here’s SmartAsset’s look at how much you need to earn to be in that top bracket:
1. Connecticut
To be in the top 1% of taxpayers in Connecticut, you’ll need to earn at least $896,490. To be in the top 5%, meanwhile, you’ll need to earn at least $311,589. The average income tax burden for those in the 1% is 27.59%.
2. Massachusetts
Bay State residents need to earn $810,256 annually to be in the top 1% of all earners and $314,389 to land in the top 5%. The top 1% pay 40.19% of total income taxes in Massachusetts.
3. New York
New York’s cutoff to be in the 1% is $777,126. The 1% pays an average income tax rate of 27.09%, while what they pay accounts for 48.10% of all income taxes paid.
4. New Jersey
One percenters in New Jersey must earn at least $760,462, while the cutoff to land in the top 5% is $308,976. The top 5% pay 56.23% of all income taxes in the Garden State.
5. California
An adjusted gross income (AGI) of $745,314 will get you in the 1% in California, while you’ll need to earn $291,277 to be in the top 5% of income earners. The top 1% account for 41.55% of total Golden State income taxes.
States where the 1% income threshold Is the lowest, according to data.
1. West Virginia
The income needed to be in the top 1% in West Virginia is $350,212, while it takes $171,135 to be part of the top 5%. The top 5% of West Virginia income earners pay 48.25% of all income taxes in the state.
2. Mississippi
The top 1% in Mississippi earn upwards of $361,462. The average tax rate for these top earners is 22.67%, and their payments make up 32.98% of all income taxes in the state.
3. New Mexico
The threshold for joining the 1% in the Land of Enchantment is $384,427, while those in the top 5% earn at least $185,641. The average tax rate for the top 1% of earners is 23.25%.
4. Arkansas
The lower limit for the 1% in Arkansas is an income of $411,633. The average one percenter in the state pays a tax rate of 21.27%, and the 1% pays 41.55% of all income taxes in Arkansas.
5. Kentucky
If you make at least $412,836 in Kentucky, you are part of the top 1% of earners. Earn at least $184,217 and you’re in the top 5%. The average tax rate for that top 1% is 23.54% while for the top 5%, it is 19.47%.
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