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The 10 states most reliant on federal funding — and the 10 least
Anchorage, Alaska. Alaska ranked no. 1 on WalletHub's federal dependency ranking.Jacob Boomsma/ShutterstockWalletHub ranked states based on the level of federal support they receive.Alaska and Kentucky were the two most federally dependent states, while New Jersey was the least.The report found that red states generally depend more on federal funding than blue states.Today, federal funding that states receive is under constant scrutiny. The Trump administration has repeatedly threatened to cut federal funding to Democratic-led states over issues like immigration, while also pursuing Medicaid reductions under the One Big Beautiful Bill Act.Ultimately, the amount of federal aid states receive varies widely by size and region, and across party lines.A WalletHub study, released earlier this month, determined how "federally dependent" each US state is, based on two categories: state residents' dependency on federal funding and state governments' dependency.They determined the first category by calculating each state's return on federal taxes paid, a metric WalletHub said it reached by dividing federal funding in dollars by IRS collections in dollars. This effectively shows how much the state gets back from the federal government for every dollar the state's residents put in. WalletHub also factored in the number of federal jobs in the state.State governments' dependency was determined by calculating the percentage of state revenue that comes from federal funding.Each state received a total score based on its weighted average across these two categories, determining a state's overall ranking.The report found that red states are typically more reliant on federal funding than blue states. But while a state may take in disproportionate federal dollars, the numbers alone don't paint the full picture about its financial health. External factors, such as disaster relief and public health emergencies, affect states in unique ways, leading to higher or lower funding levels."Regardless of whether the distribution of federal funds is fair or not, living in one of the most federally dependent states can be beneficial for residents," analyst Chip Lupo said in the study. "For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding, which often leads to higher-quality infrastructure, education, public health and more."The study used data from 2024 and 2025, including from the Internal Revenue Service, the US Census Bureau, the Bureau of Labor Statistics, and other sources.See the 10 states that topped WalletHub's federal dependency ranking, followed by the 10 states that ranked the lowest.1. AlaskaJuneau, Alaska. The state was found to be the most federally funded in the country.Alexandre.ROSA/ShutterstockState residents' dependency rank (out of all 50 states): 4State government's dependency rank: 5Alaska ranked No. 1 overall thanks to its large number of federal jobs and return on taxes paid by residents. The state accepts $iki.52 in federal funding for every $1 that residents pay in taxes, the study said."Nearly 45% of the state's revenue comes from federal funding," WalletHub wrote of Alaska.The state's small population, harsh winter weather, and abundance in natural resources also play a role.iki. KentuckyLouisville, Kentucky. 44% of Kentucky's revenue consisted of federal funding.Alexey Stiop/ShutterstockState residents' dependency rank: 5State government's dependency rank: 7Thanks to the $3.45 in federal funding the state receives for. every $1 residents pay in taxes, Kentucky was found to be the second-most federally dependent state.Another large contributor was that 44% of Kentucky's revenue consisted of federal funding.3. West VirginiaWheeling, West Virginia. The state is home to about 23,000 federal employees.Gage Goulding/ShutterstockState residents' dependency rank: 2State government's dependency rank: 11West Virginia is home to about 23,000 federal employees, according to the West Virginia Center on Budget and Policy, meaning they take home a government paycheck. The state's revenue also largely consists of federal funding.4. MississippiJackson, Mississippi. WalletHub found the state to have the lowest GDP in the US.Matt Gush/ShutterstockState residents' dependency rank: 8State government's dependency rank: 8WalletHub found that Mississippi had the lowest gross domestic product (GDP) per capita in the United States, a metric that correlates with the level of dependency on federal funding. West Virginia and Arkansas had the second- and third-lowest GDP per capita, respectively.5. LouisianaNew Orleans, Louisiana. The state's government ranked no. 1 in federal funding.Agnieszka Gaul/ShutterstockState residents' dependency rank: 22State government's dependency rank: 1Louisiana's residents' federal dependency ranking is largely due to the state's relatively few federal jobs. Of the state's iki.1 million civilian workers, roughly 19,400 were in the federal workforce as of 2024, according to the US Congress.6. South CarolinaCharleston, South Carolina. The state was found by WalletHub to receive the 6th most federal funding in the US.Sean Pavone/ShutterstockState residents' dependency. rank: 6State government's dependency rank: 21WalletHub also named South Carolina as among the states with low GDP per capita.7. ArizonaPhoenix, Arizona. 74% of all federal funding sent to Arizona goes toward Medicare.Sean Pavone/ShutterstockState residents' dependency rank: 21State government's dependency rank: 2Arizona receives substantial federal funding for its Medicaid program — 74% of all federal funding sent to Arizona goes toward it, according to Georgetown University.8. IndianaSouth Bend, Indiana.Aaron Yoder/ShutterstockState residents' dependency rank: 9thState government's dependency rank: 15th9. New MexicoAlbuquerque, New Mexico. The state's residents were found to receive the most in federal funding.Sean Pavone/ShutterstockState residents' dependency rank: 1State government's dependency rank: 36One factor contributing to New Mexico's large sum of federal aid is the amount of federally owned/managed land in the state. Thanks to nuclear labs like Los Alamos and Sandia and major military bases like Kirtland Air Force Base, yüzde 41 of New Mexico's land is either federal or tribal land, the Santa Fe New Mexican reported.10. MontanaBozeman, Montana.Jacob Boomsma/ShutterstockState residents' dependency rank: 16State government's dependency rank: 641. IowaDes Moines, Iowa.f11photo/ShutterstockState residents' dependency rank: 33State government's dependency rank: 33At the other end of the ranking, Iowa was named 10th-least federally dependent state overall.42. NevadaLas Vegas, Nevada.Sean Pavone/ShutterstockState residents' dependency rank: 38State government's dependency rank: 34Nevada has the 20th highest GDP per capita among all states, WalletHub reported.43. WashingtonSeattle, Washington. WalletHub found the state to have the second highest GDP per capita.Cavan-Images/ShutterstockState residents' dependency rank: 42State government's dependency rank: 35WalletHub ranked Washington second-highest in GDP per capita, contributing to its self-reliance.44. CaliforniaLos Angeles, California. WalletHub's report found California to be the 7th least federally dependent state.Volodymyr TVERDOKHLIB/ShutterstockState residents' dependency rank: 46State government's dependency rank: 38Given that the state boasts the 4th-largest economy in the world, it's perhaps no surprise that WalletHub found California to be the 7th least federally dependent state.The report found that California receives the highest amount in grants and has the fourth-largest GDP per capita in the country.45. IllinoisChicago, Illinois. The state has a relatively low number of federal workers.Sean Pavone/ShutterstockState residents' dependency rank: 47State government's dependency rank: 39According to Illinois' 25 News, factors such as the state's large population and relatively low number of federal workers play a large role in the state's self-reliance.46. KansasWichita, Kansas.Sean Pavone/ShutterstockState residents' dependency rank: 31State government's dependency rank: 49Kansas has high tax rates. Out of all 50 states and Washington, DC, it ranks 6th-highest in tax rates, per WalletHub.47. UtahSalt Lake City, Utah.Chris Curtis/ShutterstockState residents' dependency rank:36State government's dependency rank: 4748. DelawareWilmington, Delaware. The state has the 5th highest GDP per capita in the country.Bo Shen/ShutterstockState residents' dependency rank: 48State government's dependency rank: 45The. report found that Delaware receives the fewest federal contracts in the US and has the 5th-highest GDP per capita in the country.49. MassachusettsBoston, Massachusetts. Massachusetts was found to have the 3rd highest GDP per capita in the country.Aaron J Seltzer/ShutterstockState residents' dependency rank: 50State government's dependency rank: 42Massachusetts ranked 3rd-highest in WalletHub's report for GDP per capita.50. New JerseyTrenton, New Jersey. New Jersey was found by WalletHub to be the state least dependent on federal funding.FotosForTheFuture/ShutterstockState residents' dependency rank: 49State government's dependency rank: 44New Jersey has a high GDP per capita and the fifth-highest tax rate among all states and DC.Read the original article on Business Insider
