2023’s Most & Least Federally Dependent States

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.

Main Findings

Most Federally Dependent States

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

Amount of Other Financial Assistance Received (per $ in Federal Taxes Paid)

Lowest

• 1. Wyoming
• 2. Vermont
• 3. Alaska
• 4. South Dakota
• 5. Delaware

Highest

• 46. Texas
• 47. Pennsylvania
• 48. Minnesota
• 49. Florida
• 50. California

Best State vs. Worst State: 57x Difference

Wyoming vs. California

Gross Domestic Product (per Capita)

Highest

• 1. Massachusetts
• 2. Washington
• 3. New York
• 4. California
• 5. North Dakota

Lowest

• 46. South Carolina
• 47. Alabama
• 48. Arkansas
• 49. West Virginia
• 50. Mississippi

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Red vs. Blue States

Correlation Analysis

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:

1. Should federal resources be allocated to states according to how much they pay in federal taxes or should some states subsidize others?
2. What programs should be a state/local responsibility and what should be a federal responsibility?
3. What is the fairest way to redistribute federal resources back to the states?
4. 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
Read More

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
Read More

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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