The States That Are Most Reliant on Federal Aid

As Americans head to the polls — or the mail-in ballot drop boxes — voters will weigh in on their own state's financial health based on who they elect in state, local and federal elections.

To put states' financial health — and the potential impact on residents of those states — into context, MoneyGeek analyzed and ranked states according to their dependence on the federal government. Rankings account for political affiliation, the net benefits individuals and organizations in the state receive, state government revenue from federal sources and GDP per capita.

• Seven of the 10 states most dependent on the federal government were Republican-voting, with the average red state receiving $1.24 per dollar spent.
• Thirty-one states sent more to the federal government than they received, slightly higher than the 29 states in 2022.
• Of the states that sent more than they received, 48% were Democrat-voting, and 52% were Republican-voting.
• New Mexico had the highest return on federal spending of any state ($3.42 per dollar spent), and Delaware had the lowest ($0.46 per dollar spent).

To find the states in the U.S. that were most dependent on the federal government in 2024, MoneyGeek analyzed the return on taxes sent to the federal government and the percent of each state’s revenue provided by the federal government. We also compared states by political affiliation and per capita GDP to learn more about the factors that contribute to federal dependency.

In 2022, wealthier, Democratic-leaning blue states paid more into the federal government than they received, in contrast to the less wealthy, Republican-leaning red states, which received more in federal funds than they contributed. By 2024, this dynamic shifted, with both red and blue states receiving more from the federal government than they paid in taxes. However, red states still outpaced blue states in federal funds received per dollar paid in taxes, securing $1.24 compared to the $1.14 blue states received. In the MoneyGeek rankings, seven of the 10 most dependent states are considered red states.

MoneyGeek analysis shows that states with higher per capita GDP are less dependent on the federal government.

"Higher-income states produce the majority of the tax dollars that go into the federal government's pocket," states Kathy Fallon, a human services practice area director at Public Consulting Group. Because of the higher income, states and their residents need less support and use fewer federal dollars.

Fallon noted that tax code changes have made wealthy states' contributions more pronounced.

"Before, people who paid large state income taxes would deduct those from their federal tax payments," she says. Now, state tax deductions are capped. "Ironically, it means the wealthier states' populations are paying even more."

Taxes may be one of life's only two certainties — along with death — according to writing attributed to Benjamin Franklin. But how much you pay in taxes and what you get for your tax dollars can vary greatly depending on where you live.

Suppose you're in a state that provides net contributions to the federal government and, therefore, to other states. In that case, you may consider whether your policy priorities are reflected in how the federal government spends and distributes that contribution.

If your state receives more than it contributes, you might examine the role the federal government plays in the day-to-day life of your state. Educate yourself, decide how you feel about how your state budgets and spends money and show your approval or disapproval at the polls when you vote. No matter how divided the nation feels politically, states remain interconnected economically, bound to each other through tax contributions and receipts. Participating in the process and voting ensures that your voice is heard at the state and national level.

When evaluating the states most dependent on the federal government in 2024, MoneyGeek created an overall score focused on two key metrics: return on taxes sent to the federal government and the percent of each state’s revenue provided by the federal government. This final overall score was converted to a 100-point scale.

To determine the return on taxes sent to the federal government, MoneyGeek utilized reporting by the Internal Revenue Service (IRS) to identify the amount of taxes paid by the residents and businesses of each state for individual income tax, business income tax, estate and gift taxes, unemployment insurance taxes and excise taxes. MoneyGeek then identified data from the Treasury Department on payments from the federal government to individuals and organizations within each state and calculated the monetary benefit provided by the federal government to each state relative to the amount of taxes provided by each state (Medicare payments were removed from this calculation as this information was consolidated to a handful of states). This metric was given a double weighting and converted to a 100-point scale for inclusion in the final score.

We defined each state as being Republican or Democrat-led based on its voting history in the past five presidential elections. States where the Democratic candidate won three out of the five elections were labeled as blue, and states where the republican candidate won three out of the five elections were labeled as red.

The percentage of each state’s revenue provided by the federal government was calculated using information on each state’s revenue sources collected by the U.S. Census. This metric was given a full weighting and converted to a 100-point scale for inclusion in the final score.