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Regulation and Compliance > State Regulation

10 of the least federally dependent states in the U.S.

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As thousands of taxpayers fill out their tax forms, the yearly exercise makes many wonder: How much tax would you have to pay if you moved to another state? Would it be more or less than you are paying right now? Or how much of a federal refund would you receive?

It turns out that the amount will depend not only on the economies of those states, but on other points, such as that state’s residents’ dependency on the federal government, and a state’s government dependency, which was measured as federal funding as a percentage of state revenue, according to a recent report by WalletHub. The article claims that some states receive “a far higher return on their federal income-tax contributions than others.”

“What if, for example, a particular state can afford not to tax its residents at high rates because it receives disproportionately more funding from the federal government than states with apparently oppressive tax codes? That would change the narrative significantly, revealing federal dependence where bold, efficient stewardship was once thought to preside,” the WalletHub piece posits.

In seeking answers, analysts compared the 50 states across two key dimensions: “State residents’ dependency” and “State government’s dependency.” To get these, they had to first identify three relevant metrics, give them weights, and then calculate the overall score for each state (if you want to read more about their metrics, go here).

The data used to create the rankings were collected from the IRS, U.S. Census Bureau, USAspending.gov, Bureau of Labor Statistics and Governing.com.

The states are listed below and include information about their overall dependency rank (the No. 1 being the most dependent state — which is not included on this list — and No. 50 the least dependent), their total score, the “State residents’ dependency” rank and the “State government’s dependency” rank.

Take a look at the top 10 least federally dependent states, according to WalletHub:

 

10. New York

Overall dependency rank: 41

Total score: 21.07

“State residents’ dependency” rank: 46

“State government’s dependency” rank: 34 

9. New Hampshire

Overall dependency rank: 42

Total score: 19.57

“State residents’ dependency” rank: 44

“State government’s dependency” rank: 38

See also: 12 little-known annuity tax facts

8. Minnesota

Overall dependency rank: 43

Total score: 17.31

“State residents’ dependency” rank: 48

“State government’s dependency” rank: 39

7. Nevada

Overall dependency rank: 44

Total score: 17.10

“State residents’ dependency” rank: 32

“State government’s dependency” rank: 43

6. Illinois

Overall dependency rank: 45

Total score: 16.36

“State residents’ dependency” rank: 47

“State government’s dependency” rank: 40

See also: 5 types of tax procrastinators (and a few things you should know)

5. California

Overall dependency rank: 46

Total score: 16.25

“State residents’ dependency” rank: 36

“State government’s dependency” rank: 42

4. Kansas

Overall dependency rank: 47

Total score: 15.78

“State residents’ dependency” rank: 38

“State government’s dependency” rank: 44

3. New Jersey

Overall dependency rank: 48

Total score: 14.76

“State residents’ dependency” rank: 49

“State government’s dependency” rank: 41

See also: Tax uncertainties for life settlements: 5+ troublesome issues

2. Connecticut

Overall dependency rank: 49

Total score: 13.42

“State residents’ dependency” rank: 35

“State government’s dependency” rank: 46

1. Delaware

Overall dependency rank: 50

Total score: 12.90

“State residents’ dependency” rank: 50

“State government’s dependency” rank: 45

See also:

15 most overlooked tax deductions

What Americans really think about tax planning

10 worst states to move to when you retire

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