Top 5 Percent Income by State: Thresholds, Taxes, and Buying Power

The income needed to land in the top 5 percent by state ranges from roughly $218,600 in West Virginia to about $598,340 in the District of Columbia, with a national household threshold near $289,763 in the most recent detailed American Community Survey data and closer to $335,575 in more recent Current Population Survey estimates for 2025.¹ Where you live shapes the number more than almost any other factor, because the mix of industries and pay scales in each state pushes that cutoff up or down.

What Counts Toward the Threshold

The 95th percentile is the income level where exactly 5 percent of households earn more and 95 percent earn less. The Census Bureau calculates it by ranking every household’s total money income from all members ages 15 and older, then finding that cutoff. It is a household-level measure, so a married couple with two working adults is compared directly to a single person living alone.

Census “money income” covers wages, salaries, self-employment earnings, interest, dividends, rental income, Social Security, pensions, public assistance, and other recurring payments. It does not include capital gains, insurance payouts, or lump sums like inheritances. All figures are pre-tax.² That matters: the Census threshold is lower than what many high-earning households actually take in once investment gains and other excluded sources are counted. The IRS tracks a related figure using adjusted gross income from tax returns, and those numbers tend to run higher because they include capital gains.³

States Where the Top 5 Percent Starts Highest

The District of Columbia leads all jurisdictions at approximately $598,340, more than double the national figure. Federal contracting, lobbying, and law firm concentration drive that number. The next tier clusters along the coasts:

New Jersey: approximately $482,850
Massachusetts: approximately $467,400
Connecticut: approximately $455,200
Maryland: approximately $438,100
California: approximately $426,900
New York: approximately $412,500
Washington: approximately $402,400
Colorado: approximately $382,900
New Hampshire: approximately $374,200

These figures come from American Community Survey data on the 95th percentile of household income.¹ Each state on the list has a heavy presence of industries that pay well at the top: technology in Washington and California, finance in New York and Connecticut, biotech and higher education in Massachusetts, defense contracting in Maryland.

States Where the Top 5 Percent Starts Lowest

At the other end, a household in West Virginia reaches the top 5 percent with roughly $218,600. That is less than half of what the same ranking requires in D.C. The ten lowest thresholds concentrate in the South and lower Midwest:

West Virginia: approximately $218,600
Mississippi: approximately $222,400
Arkansas: approximately $231,100
Kentucky: approximately $236,700
New Mexico: approximately $238,900
Alabama: approximately $242,500
Oklahoma: approximately $246,800
Louisiana: approximately $246,800
South Carolina: approximately $252,300
Ohio: approximately $258,900

Even at these levels, top-five-percent incomes run three to four times the median household earnings in those same states.¹ A $230,000 household income in rural Arkansas is not a modest living. Fewer extremely high-paying positions exist in these local economies, so the bar for “top 5 percent” doesn’t get pushed as high.

Regional Averages

Grouped by Census region, the Northeast has the highest average threshold at roughly $385,000, driven by financial services around New York and high-compensation institutions across New England. The West averages around $340,000, lifted by the technology corridor from Seattle through the Bay Area and into Colorado.

The Midwest averages closer to $285,000, reflecting a more even economic base in manufacturing, healthcare, and agricultural business. The South has the lowest regional average near $278,000, though that masks wide internal variation: the D.C. suburbs in Virginia and the Research Triangle in North Carolina pull the average up, while Mississippi and West Virginia pull it down.

What the Same Income Buys in Different States

Raw thresholds tell you where a household ranks, but not what the income actually buys. The Bureau of Economic Analysis publishes regional price parities measuring the cost of goods and services in each state relative to the national average. In 2024, California had the highest price level at 110.7 (about 11 percent above the national average), followed by Hawaii at 110.0, D.C. at 109.9, and New Jersey at 108.8.⁴

At the bottom, Arkansas came in at 86.9, Mississippi at 87.0, and Oklahoma and Iowa tied at 87.8.⁴ Adjusted for these differences, a household earning $222,400 in Mississippi can afford roughly as much as one earning $280,000 or more in California. The ranking still holds, but the gap in actual standard of living is smaller than the raw dollar figures suggest.

Federal Taxes at Top 5 Percent Income

Crossing the 95th percentile pulls a household past several federal tax lines that don’t apply to most filers. One common assumption is worth correcting first: reaching the top 5 percent does not automatically mean paying the top marginal rate.

For tax year 2026, a single filer enters the 35 percent bracket at $256,226 and the top 37 percent bracket at $640,601. Married couples filing jointly hit the 35 percent bracket at $512,451 and the 37 percent rate at $768,701.⁵ A married couple at the national 95th percentile of $290,000 to $335,000 falls into the 24 percent bracket. A single filer at the same income falls into the 35 percent bracket. Only households in D.C., New Jersey, and similar high-threshold states start approaching the 37 percent rate for single filers.

Three additional federal levies target incomes common in this group:

The Net Investment Income Tax adds 3.8 percent to investment income (interest, dividends, capital gains, rental income) for single filers with modified adjusted gross income above $200,000 and joint filers above $250,000. These thresholds are not indexed for inflation, so they catch more households every year.⁶
The Additional Medicare Tax adds 0.9 percent to wages above $200,000, regardless of filing status. Employers start withholding it automatically once pay crosses that mark in a calendar year.⁷
The Alternative Minimum Tax can still hit households with large state and local tax deductions or incentive stock option exercises. For 2026, the exemption is $90,100 for single filers and $140,200 for joint filers, with phaseouts starting at $500,000 and $1,000,000 respectively.⁵

Who Actually Lives in a Top 5 Percent Household

The label combines the earnings of everyone under one roof. A married couple where both spouses earn $150,000 has a household income of $300,000 and clears the national threshold, even though neither salary alone would come close. A single person needs the whole amount from one paycheck.

That mechanic makes dual-earner households far more likely to appear in the top 5 percent even when neither person holds what most would call an elite position. Two nurses, two mid-career engineers, or a teacher married to a software developer can clear $290,000 combined in many metro areas. The Census data does not distinguish between a household where one person earns everything and one where the income is split. When comparing your own numbers against the thresholds above, the question is what your household brings in together, not what any one earner makes.

1
National Equity Atlas. Income Inequality
2
United States Census Bureau. About Income
3
Internal Revenue Service. Individual Statistical Tables by Tax Rate and Income Percentile
4
Bureau of Economic Analysis. Regional Price Parities by State and Metro Area
5
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
6
Internal Revenue Service. Topic No. 559, Net Investment Income Tax
7
Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates