If you’ve paid attention to politics in the past 10 years, you’ve likely heard a good deal of rhetoric about “the 1%” — those whose annual income puts them in the top 1% of earners. You’d be forgiven, though, for not actually understanding how much money it takes to be in that 1%. Plus, money goes further in different places — someone who isn’t in the 1% nationally in a less expensive city might live more comfortably than a one percenter living in a very expensive place like New York or Los Angeles. With that in mind, SmartAsset crunched the numbers to find out how much you need to earn to be in the 1% for each state.
Coastal states have the highest 1% floor. Unsurprisingly, it takes the most to make it into the 1% in big coastal states where major cities are located. The top five states are all on the east and west coasts, and a total of eight coastal states rank in the top 10.
The top 1% nationwide earns more than twice as much as the top 5%. The nationwide average to be considered in the top 1% is $529,852, while the top 5% is $223,215. For a wider comparison, the average 1% income in top 10 states is $715,243, and the average in the bottom 1o states is $411,776. The average 5% income in top 10 states is $275,048, and the bottom 10 states average $188,278.
States Where the 1% Floor Is the Highest 1. Connecticut
To be in the top 1% of income earners 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 total tax burden for those in the 1% is 27.59%.
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 on average a 27.09% income tax rate, while they account 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.
A salary 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% Floor Is the Lowest 1. West Virginia
The floor for the 1% in West Virginia is annual income of $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 taxes in the state.
The top 1% in Mississippi all earn at least $361,462. The 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%.
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.
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 5% is 19.47%.
Data and Methodology
To figure out top 1% of earners in each state, we used IRS data from 2018, adjusted using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of 2021.
Financial Planning Tips
Work with a professional. Whether you’re in the top 1% or not, you can benefit from the help of a financial professional. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Understand how much you’ll owe in taxes. Knowing your potential tax burden is a key part of financial planning. Use SmartAsset’s free income tax calculator to get an idea of what you’ll owe Uncle Sam.
Don’t forget to consider retirement savings. Retirement planning is important no matter your income level. If you have access to a workplace retirement plan like a 401(k), use it! If not, consider opening an individual retirement account (IRA).
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