Introduction:
A recent study by financial information provider SmartAsset has unveiled crucial insights into the income thresholds required to enter the esteemed group of the top 1% of wealthiest households in the United States. State-by-state variations are evident, with Connecticut claiming the highest threshold and Massachusetts following closely, both demanding over $900,000 annually before taxes for inclusion in the ultra-wealthy list. This article will comprehensively explore the study’s key findings, state rankings, and the factors influencing these income thresholds.
- Income Threshold Rankings: SmartAsset’s study has meticulously ranked states based on the income threshold necessary to secure a spot among the exclusive top 1% of affluent households. Leading the list is Connecticut, where households must command an annual income of approximately $953,000 before taxes. Massachusetts closely trails behind, with a significant income threshold of $903,401. Other states among the top ranks include California, New Jersey, and Washington, with income requirements of $844,266, $817,346, and $804,853, respectively.
- New York’s Unique Scenario: Notably, New York presents a distinct scenario compared to its counterparts. The income threshold to enter the top 1% remains stagnant at approximately $776,662, making it relatively more accessible for high-earning households. According to Jaclyn DeJohn, SmartAsset’s managing editor of economic analysis, “It’s easier to get into the 1% in New York than it ever has been.”
Income Thresholds and Top 1% Tax Rates by State
| Rank | State | Income Threshold for Top 1% | Top 1% Tax Rate |
|---|---|---|---|
| 1 | Connecticut | $952,902 | 28.4% |
| 2 | Massachusetts | $903,401 | 27.1% |
| 3 | California | $844,266 | 26.9% |
| 4 | New Jersey | $817,346 | 28.0% |
| 5 | Washington | $804,853 | 26.0% |
| 6 | New York | $776,662 | 28.3% |
| 7 | Colorado | $709,092 | 25.9% |
| 8 | Florida | $694,987 | 25.8% |
| 9 | Illinois | $660,810 | 26.4% |
| 10 | New Hampshire | $659,037 | 26.3% |
Note:
The income thresholds are based on 2020 IRS data adjusted to May 2023 dollars, and the top 1% tax rates represent the percentage of taxes paid by the top 1% of earners in each state.
Conclusion:
The comprehensive study conducted by SmartAsset offers valuable insights into the income thresholds required to join the top 1% of the wealthiest households in the US. With Connecticut and Massachusetts leading the pack, and New York presenting an intriguing scenario, the financial landscape for the ultra-wealthy varies significantly across states. Understanding the factors influencing these thresholds is essential in comprehending the dynamics of wealth distribution in the country.
