In fiscal year 2024, only 19 states sent more money to Washington than they got back, while 31 states plus the District of Columbia received more than their residents and businesses paid in. That is the short answer to how federal taxes paid vs. received by state actually shakes out: New Jersey leads the donor list at roughly $2,000 more per person paid than received, and Virginia leads the recipient list at more than $16,000 per person received than paid, driven largely by federal agencies and defense contracts concentrated around Washington, D.C.
The States That Pay More Than They Get Back
The donor list is short. According to the Rockefeller Institute of Government’s 2025 balance of payments report covering fiscal year 2023, only a handful of states finished meaningfully in the red:
- New Jersey: -$2,011 per person
- Massachusetts: -$967 per person
- Washington: -$7 per person
New Hampshire and California hovered near the breakeven line.1Rockefeller Institute of Government. New York’s Balance of Payments with the Federal Government
USAFacts data for fiscal year 2024 lines up with that picture from the revenue side. Massachusetts residents paid the most per person in federal taxes at $21,933, followed closely by Nebraska at $21,922 and Minnesota at $21,106.2USAFacts. Which States Contribute the Most and Least to Federal Revenue?
The States That Get More Than They Pay
The recipient side of the ledger is where the biggest per-person gaps show up. The five states with the largest per-capita surplus in fiscal year 2023 were:
- Virginia: +$16,650 per person
- New Mexico: +$16,178 per person
- Alaska: +$14,760 per person
- Maryland: +$13,037 per person
- West Virginia: +$12,130 per person
These states receive far more in federal spending than their residents and businesses contribute in federal taxes.1Rockefeller Institute of Government. New York’s Balance of Payments with the Federal Government
Looking just at federal spending received per person in fiscal year 2024, Alaska led at $24,796, followed by Virginia at $23,975 and New Mexico at $21,481. At the same time, West Virginia residents paid the least in federal taxes at $4,912 per person, followed by Mississippi at $5,161 and New Mexico at $6,033. Virginia also had the largest total-dollar gap of any state at $89 billion in fiscal year 2024.2USAFacts. Which States Contribute the Most and Least to Federal Revenue?
Why Donor States End Up on the Paying Side
The progressive federal income tax does most of the work. Rates rise from 10 percent to 37 percent as income increases, so a state where the average household earns $120,000 does not just pay a little more than a state averaging $60,000.3Internal Revenue Service. Federal Income Tax Rates and Brackets Higher-income residents hit higher marginal brackets, so their share of total federal revenue is disproportionately large. The IRS publishes state-level data breaking down adjusted gross income, and the gap in average tax rates between high-income and low-income states is substantial.4Internal Revenue Service. SOI Tax Stats – Individual Income Tax State Data
Payroll taxes reinforce the pattern. Employers and employees both pay into Social Security and Medicare through FICA, with the employer matching the employee’s share.5Social Security Administration. What Are FICA and SECA Taxes? Even though FICA rates are flat, states with large workforces earning high wages generate outsized payroll tax revenue.
Donor states also tend to cluster high-paying industries: technology, finance, pharmaceuticals, biotech. Those industries drive up individual incomes and corporate profits at the same time. New Jersey and Massachusetts fit the profile: wealthy suburbs, financial services, biotech corridors, and few of the federal spending magnets that pull money back the other way. They do not host sprawling military installations, major federal agency campuses, or unusually large populations of federal retirees. Money leaves through taxes and comparatively little returns through procurement contracts or federal payroll.
Why Recipient States Come Out Ahead
Virginia and Maryland at the top of the recipient list surprises people, but the reason is straightforward. The Pentagon, CIA, NSA, and dozens of other federal agencies are headquartered in or around the D.C. metro area. Federal employee salaries and defense contracts pour tens of billions into those two states every year.
New Mexico and Alaska follow a different pattern. Both are sparsely populated states with significant federal land, military bases, and national laboratories. When federal spending on those facilities is divided by a small population, the per-person figure looks enormous. New Mexico’s residents also paid among the lowest per-capita federal taxes in the country, which widens the gap further.1Rockefeller Institute of Government. New York’s Balance of Payments with the Federal Government
West Virginia and Mississippi represent a third path onto the recipient list: lower average incomes, older populations, and higher rates of poverty. Residents contribute less in income taxes because they earn less, while drawing more in Social Security, Medicare, Medicaid, and disability payments. West Virginia residents paid the lowest per-capita federal taxes of any state at $4,912 in fiscal year 2024, yet the state received over $12,000 per person more than it contributed.2USAFacts. Which States Contribute the Most and Least to Federal Revenue?1Rockefeller Institute of Government. New York’s Balance of Payments with the Federal Government
What Goes Into “Paid” and “Received”
The “paid” side adds up every dollar the federal government collects from a state: individual income taxes (the biggest piece by far), employer and employee FICA payroll taxes, corporate income taxes on business profits, and excise taxes on goods like alcohol, tobacco, and fuel.6Office of the Law Revision Counsel. 26 USC Subtitle E – Alcohol, Tobacco, and Certain Other Excise Taxes The IRS publishes gross collections by tax type and state in its annual Data Book.7Internal Revenue Service. Gross Collections by Type of Tax and State – IRS Data Book Table 5
The “received” side is broader. It includes direct payments to individuals (Social Security, Medicare, veterans’ benefits), grants to state and local governments (Medicaid is the largest, with the federal government covering 50 to 90 percent of a state’s Medicaid costs depending on per-capita income), federal procurement contracts, wages for federal employees including military personnel and civilian agency staff, and emergency or disaster spending that can spike in any given year.8Rockefeller Institute of Government. Giving or Getting? New York’s Balance of Payments with the Federal Government
Caveats That Change How to Read the Rankings
These figures are useful but imperfect, and a few caveats matter before drawing sweeping conclusions.
Retiree migration distorts the numbers. When someone works in New York for 35 years paying federal taxes, then retires to Florida, their Social Security and Medicare payments count as federal spending in Florida. Florida looks like a bigger recipient, New York looks like a bigger donor, and the numbers overstate the actual redistribution between the two. The effect is substantial in states that attract retirees.
Federal spending location does not always equal benefit. A defense contractor headquartered in Virginia may employ workers who live in Maryland and buy parts from suppliers in dozens of other states. The spending gets attributed to Virginia, but the economic benefit spreads much further.
The federal deficit muddies the math. Because Washington consistently spends more than it collects, more states end up looking like recipients than would be true under a balanced budget. In fiscal year 2024, total federal spending was $6.8 trillion while collections from states totaled about $5.07 trillion.2USAFacts. Which States Contribute the Most and Least to Federal Revenue? That gap is financed by borrowing, not by any state’s tax contributions, which inflates the “received” side across the board.
Year-to-year volatility is real. Emergency spending, a one-time grant, or a single large defense contract award can push a state into recipient territory in one year and back toward donor status the next. The Rockefeller Institute tracks multi-year averages to smooth these swings, and those averages are generally more reliable than any single year’s snapshot.
How 2026 Tax Changes Could Shift the Balance
The One Big Beautiful Bill Act, signed in July 2025, extended most of the individual income tax provisions from the 2017 Tax Cuts and Jobs Act that were set to expire at the end of 2025. The lower marginal tax rates (topping out at 37 percent rather than reverting to 39.6 percent) and the higher standard deduction remain in place for 2026. Had those provisions expired, an estimated 62 percent of filers would have faced higher tax bills, and donor states with large concentrations of high earners would have seen their federal contributions jump.
The change most likely to shift the donor-recipient picture is the expanded state and local tax (SALT) deduction cap. Under the original 2017 law, taxpayers could deduct only $10,000 in state and local taxes. For 2026, the cap rises to $40,400 for most filing statuses. The higher cap begins phasing out for taxpayers with modified adjusted gross income above $505,000, shrinking at 30 cents per dollar of income above that threshold until it hits a floor of $10,000. For married couples filing separately, the cap is $20,200 with a lower phaseout threshold.
A larger SALT deduction disproportionately benefits residents of high-tax states like New Jersey, New York, California, and Connecticut. It reduces their federal taxable income, which reduces the total federal taxes collected from those states. That could narrow the gap between what donor states pay and what they receive, though the effect will be muted for the highest earners who hit the phaseout.
These rankings move slowly. The fundamental drivers are structural: where high-income earners live, where federal installations sit, and how old a state’s population is. Policy shifts at the margins can nudge individual states a few spots up or down, but the broad pattern of wealthy coastal states subsidizing federal spending in lower-income and military-heavy states has held steady for decades.