A federal state is a country whose written constitution divides political authority between a central government and regional governments, with each level holding powers the other cannot unilaterally revoke. That mutual independence, locked in by a supreme legal document, is the defining feature. Roughly 25 countries use this structure today, covering about 40 percent of the world’s population, and the list includes the United States, Germany, India, Brazil, Canada, Australia, and Mexico.
Where Federal States Sit on the Spectrum
Three basic models describe how countries organize power, and each answers the same question differently: who holds ultimate authority?
In a unitary state, the central government is supreme. It can create, reshape, or abolish regional governments at will. Local authorities exist only because the central government allows them to, and whatever power they exercise can be pulled back at any time. France, Japan, and the United Kingdom are classic examples.
A confederation flips that arrangement. Member states keep their sovereignty and voluntarily cooperate through a shared central body, and they retain the right to leave. The central authority answers to the member states, not the other way around. The original American government under the Articles of Confederation (1781–1789) worked this way.
A federal state sits in the middle. Regional governments are not administrative creatures of the central authority, the way they are in a unitary system. But they also cannot simply walk away, as members of a confederation can. Both levels draw their authority from a shared constitution, and neither can eliminate the other.
The Constitutional Foundation
Every federal state rests on a written constitution that functions as the supreme law. In the United States, this document does two things at once: it grants specific powers to the federal government and reserves everything else to the states or the people. Neither Congress nor a state legislature can override that arrangement through ordinary legislation. Both levels get their authority from the same source, and that source sits above them both.
Because the constitution anchors the whole system, changing it is deliberately difficult. A U.S. constitutional amendment can be proposed either by a two-thirds vote of both chambers of Congress or by a convention called by two-thirds of state legislatures. Ratification then requires approval from three-fourths of the states, meaning 38 out of 50.1National Archives. Constitutional Amendment Process That high bar prevents either level of government from quietly rewriting the rules in its own favor. Germany’s Basic Law has a similar protection, requiring a two-thirds vote in both chambers of its parliament to amend the constitutional division of powers.
This rigidity creates predictability. Citizens and businesses can rely on knowing which government handles what. A workplace safety dispute is primarily federal. A local zoning challenge is a state or municipal matter. The constitution is what makes those lanes stable rather than subject to political whim.
How Powers Are Divided
Power in a federal state breaks into three categories: powers belonging exclusively to the central government, powers reserved to the regional governments, and powers both levels share.
Enumerated Powers
The U.S. Constitution spells out the federal government’s responsibilities in Article I, Section 8. Congress has the authority to collect taxes, regulate commerce between states and with foreign nations, coin money, establish post offices, and raise military forces, among other functions listed there.2Constitution Annotated. Article I Section 8 These are called enumerated powers because the document names them one by one. The logic is straightforward: the federal government can do only what the constitution affirmatively permits.
Reserved Powers
The Tenth Amendment makes the flip side explicit: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”3Congress.gov. U.S. Constitution – Tenth Amendment In practice, states control education policy, professional licensing, family law, local policing, and land use within their borders. They set their own sales tax rates, establish their own criminal codes, and run their own court systems. This is where the real diversity in a federal system lives. Building codes in Arizona look different from building codes in Vermont because of this principle.
Concurrent Powers
Some powers belong to both levels of government at once. Both the federal government and states can levy taxes, borrow money, establish courts, take private property through eminent domain, and define crimes with corresponding punishments. These overlapping authorities keep the system flexible. The federal income tax and a state income tax coexist because taxing power is shared, not exclusive to either side.
Germany’s Basic Law takes a slightly different approach. Under Article 70, the German states (called Länder) hold the default right to legislate on any matter where the constitution hasn’t assigned that power to the federal government. For areas of concurrent jurisdiction, the Länder can legislate freely as long as the federal government hasn’t already acted on the same topic. Where federal law exists, it preempts state law. The structural principle is the same as in the United States, though the specific dividing lines differ.
Rules Between the States Themselves
Federalism is not only about the vertical relationship between the national government and the states. The Constitution also governs horizontal relationships among the states.
Full Faith and Credit
Article IV, Section 1 requires every state to honor the “public Acts, Records, and judicial Proceedings of every other State.”4Constitution Annotated. Article IV Section 1 A court judgment from Ohio doesn’t become worthless the moment you cross into Pennsylvania. A marriage license issued in one state doesn’t vanish in another. Without this clause, every interstate transaction and every person who moved across state lines would face enormous legal uncertainty.
Privileges and Immunities
Article IV, Section 2 adds another layer of protection: states cannot discriminate against citizens of other states in favor of their own residents when it comes to fundamental rights.5Constitution Annotated. Overview of Privileges and Immunities Clause A state can limit voting to its own residents or require residency for holding elected office. It cannot bar out-of-state residents from earning a living within its borders. The clause covers both explicit discrimination and laws that have the practical effect of disadvantaging nonresidents, even when they don’t say so on their face.
Who Settles Disputes Over the Line
A constitution dividing power between two levels of government inevitably produces disagreements about where one government’s authority ends and the other’s begins. Resolving those disputes falls to an independent judiciary.
The U.S. Constitution addresses this head-on. The Supremacy Clause in Article VI declares that the Constitution and federal laws “made in Pursuance thereof” are “the supreme Law of the Land,” binding on state judges regardless of any conflicting state law.6Constitution Annotated. Overview of Supremacy Clause When a valid federal law and a state law genuinely conflict, federal law wins. “Valid” is the key word. Courts must first determine whether the federal law actually falls within Congress’s constitutional authority before giving it supremacy over state law.
The foundational case here is McCulloch v. Maryland (1819). Maryland tried to tax the Second Bank of the United States, a federally chartered institution. Chief Justice John Marshall’s opinion established two principles that still anchor federalism disputes today. First, the federal government possesses implied powers beyond those explicitly listed in the Constitution. If a law is a legitimate means of carrying out an enumerated power, Congress can enact it even though the Constitution doesn’t mention that specific tool. Second, states cannot tax or otherwise interfere with legitimate federal operations. As Marshall put it, states have “no power, by taxation or otherwise, to retard, impede, burthen, or in any manner control” federal activities within their borders.7Justia. McCulloch v Maryland, 17 US 316 (1819)
Without judicial review, the constitutional boundary lines would be suggestions rather than enforceable limits. When Congress pushes into territory that arguably belongs to the states, or when a state enacts a law that runs against federal authority, neither side gets to be the judge of its own case. An independent court examines the constitution and draws the line. That mechanism is what turns a written division of powers into a working system of government.