CHICAGO — States send tax dollars to the federal government and get services in return, but not every state is equally reliant on what they get back. Believe it or not, Illinois ranks 47th of 51 for its reliance on federal dollars.
MoneyGeek published a study in February 2022. They analyzed and ranked all 50 states and the District of Columbia according to their dependence on the federal government. To reach the results, their team of researchers looked at net benefits individuals and organizations in the state receive, state government revenue from federal sources and GDP per capita. They also took a look at which states received the most money in child tax credits and the state’s general political affiliation to learn more about the factors which contribute to federal dependency.
Here are the top ten states most reliant on money from the federal government.
RankStatePolitical
AffiliationReturn on
Tax DollarsFed Funding as a
% of State RevenuesGDP
(in $M)1New MexicoBlue$4.3325.94%$401,2412West VirginiaRed$3.7427.18%$294,8373MississippiRed$3.4027.10%$456,8024AlaskaRed$3.1928.64%$200,9875MontanaRed$2.2529.23%$205,9556KentuckyRed$2.0527.77%$840,0977AlabamaRed$2.4623.32%$899,4828ArizonaRed$2.3024.35%$1,489,8449LouisianaRed$1.8129.07%$967,96310VermontBlue$1.9724.40%$131,187Top ten states most dependent on federal dollars
Eight out of the top ten are considered red states, or Republican leaning. MoneyGeek found Democratic-leaning blue states tend to be wealthier and pay more taxes to the federal government. They also tend to pay higher state taxes and thus have more state-funded government programs. Comparatively, red states often have lower taxes which means similar programs in red states rely more on federal funding.
From a big picture perspective MoneyGeek notes the higher-income states produce the majority of the tax dollars that go into the federal government’s pocket. Thus it is largely the taxpayers in blue states supporting those in red states when it comes to this analysis of federal dollars dependency.
To amplify this contrast, here is the bottom of the list, or rather, the ten states least dependent on federal money.
RankStatePolitical
AffiliationReturn on
Tax DollarsFed Funding as a
% of State RevenuesGDP
(in $M)42ColoradoBlue$1.1415.85%$1,560,39543UtahRed$1.1215.74%$779,94344CaliforniaBlue$1.0016.92%$12,367,48645DelawareBlue$0.6320.39%$302,05046KansasRed$1.2413.88%$693,19347IllinoisBlue$0.9416.54%$3,454,06748MinnesotaBlue$0.8516.17%$1,497,40749WashingtonBlue$0.9414.54%$2,474,82050NebraskaRed$0.9314.33%$515,23551New JerseyBlue$0.7815.43%$2,476,244Ten states least dependent on federal dollars
As you can see, MoneyGeek’s rankings show seven out of the bottom ten states are Democratic-leaning.
Child Tax Credit Payments by State
When the research team analyzed which states received the most benefit from the child tax credit, they looked at both the total annualized amount and the dollars per capita. The biggest total amounts generally correlated with state population. California received the biggest annualized payments followed by Texas and Florida, the three most populous states. However, according to MoneyGeek demographics show red states tend to have larger families and thus got the most money per capita. Iowa, Oklahoma, South Dakota, North Dakota and Tennessee were the top five, all Republican-voting states.
Methodology and Data Sources
You can see the full dataset and methodology here. MoneyGeek used reporting by the Internal Revenue Service and data from the Treasury Department to do their analysis.