Today, federal funding that states receive is under constant scrutiny. The Trump administration has repeatedly threatened to cut federal funding to Democratic-led states over issues like immigration, while also pursuing Medicaid reductions under the One Big Beautiful Bill Act.
Ultimately, the amount of federal aid states receive varies widely by size and region, and across party lines.
A WalletHub study, released earlier this month, determined how “federally dependent” each US state is, based on two categories: state residents’ dependency on federal funding and state governments’ dependency.
They determined the first category by calculating each state’s return on federal taxes paid, a metric WalletHub said it reached by dividing federal funding in dollars by IRS collections in dollars. This effectively shows how much the state gets back from the federal government for every dollar the state’s residents put in. WalletHub also factored in the number of federal jobs in the state.
State governments’ dependency was determined by calculating the percentage of state revenue that comes from federal funding.
Each state received a total score based on its weighted average across these two categories, determining a state’s overall ranking.
The report found that red states are typically more reliant on federal funding than blue states. But while a state may take in disproportionate federal dollars, the numbers alone don’t paint the full picture about its financial health. External factors, such as disaster relief and public health emergencies, affect states in unique ways, leading to higher or lower funding levels.
“Regardless of whether the distribution of federal funds is fair or not, living in one of the most federally dependent states can be beneficial for residents,” analyst Chip Lupo said in the study. “For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding, which often leads to higher-quality infrastructure, education, public health and more.”
The study used data from 2024 and 2025, including from the Internal Revenue Service, the US Census Bureau, the Bureau of Labor Statistics, and other sources.
See the 10 states that topped WalletHub’s federal dependency ranking, followed by the 10 states that ranked the lowest.
1. Alaska
State residents’ dependency rank (out of all 50 states): 4
State government’s dependency rank: 5
Alaska ranked No. 1 overall thanks to its large number of federal jobs and return on taxes paid by residents. The state accepts $2.52 in federal funding for every $1 that residents pay in taxes, the study said.
“Nearly 45% of the state’s revenue comes from federal funding,” WalletHub wrote of Alaska.
The state’s small population, harsh winter weather, and abundance in natural resources also play a role.
2. Kentucky
State residents’ dependency rank: 5
State government’s dependency rank: 7
Thanks to the $3.45 in federal funding the state receives for every $1 residents pay in taxes, Kentucky was found to be the second-most federally dependent state.
Another large contributor was that 44% of Kentucky’s revenue consisted of federal funding.
3. West Virginia
State residents’ dependency rank: 2
State government’s dependency rank: 11
West Virginia is home to about 23,000 federal employees, according to the West Virginia Center on Budget and Policy, meaning they take home a government paycheck. The state’s revenue also largely consists of federal funding.
4. Mississippi
State residents’ dependency rank: 8
State government’s dependency rank: 8
WalletHub found that Mississippi had the lowest gross domestic product (GDP) per capita in the United States, a metric that correlates with the level of dependency on federal funding. West Virginia and Arkansas had the second- and third-lowest GDP per capita, respectively.
5. Louisiana
State residents’ dependency rank: 22
State government’s dependency rank: 1
Louisiana’s residents’ federal dependency ranking is largely due to the state’s relatively few federal jobs. Of the state’s 2.1 million civilian workers, roughly 19,400 were in the federal workforce as of 2024, according to the US Congress.
6. South Carolina
State residents’ dependency rank: 6
State government’s dependency rank: 21
WalletHub also named South Carolina as among the states with low GDP per capita.
7. Arizona
State residents’ dependency rank: 21
State government’s dependency rank: 2
Arizona receives substantial federal funding for its Medicaid program — 74% of all federal funding sent to Arizona goes toward it, according to Georgetown University.
8. Indiana
State residents’ dependency rank: 9th
State government’s dependency rank: 15th
9. New Mexico
State residents’ dependency rank: 1
State government’s dependency rank: 36
One factor contributing to New Mexico’s large sum of federal aid is the amount of federally owned/managed land in the state. Thanks to nuclear labs like Los Alamos and Sandia and major military bases like Kirtland Air Force Base, 41% of New Mexico’s land is either federal or tribal land, the Santa Fe New Mexican reported.
10. Montana
State residents’ dependency rank: 16
State government’s dependency rank: 6
41. Iowa
State residents’ dependency rank: 33
State government’s dependency rank: 33
At the other end of the ranking, Iowa was named 10th-least federally dependent state overall.
42. Nevada
State residents’ dependency rank: 38
State government’s dependency rank: 34
Nevada has the 20th highest GDP per capita among all states, WalletHub reported.
43. Washington
State residents’ dependency rank: 42
State government’s dependency rank: 35
WalletHub ranked Washington second-highest in GDP per capita, contributing to its self-reliance.
44. California
State residents’ dependency rank: 46
State government’s dependency rank: 38
Given that the state boasts the 4th-largest economy in the world, it’s perhaps no surprise that WalletHub found California to be the 7th least federally dependent state.
The report found that California receives the highest amount in grants and has the fourth-largest GDP per capita in the country.
45. Illinois
State residents’ dependency rank: 47
State government’s dependency rank: 39
According to Illinois’ 25 News, factors such as the state’s large population and relatively low number of federal workers play a large role in the state’s self-reliance.
46. Kansas
State residents’ dependency rank: 31
State government’s dependency rank: 49
Kansas has high tax rates. Out of all 50 states and Washington, DC, it ranks 6th-highest in tax rates, per WalletHub.
47. Utah
State residents’ dependency rank:36
State government’s dependency rank: 47
48. Delaware
State residents’ dependency rank: 48
State government’s dependency rank: 45
The report found that Delaware receives the fewest federal contracts in the US and has the 5th-highest GDP per capita in the country.
49. Massachusetts
State residents’ dependency rank: 50
State government’s dependency rank: 42
Massachusetts ranked 3rd-highest in WalletHub’s report for GDP per capita.
50. New Jersey
State residents’ dependency rank: 49
State government’s dependency rank: 44
New Jersey has a high GDP per capita and the fifth-highest tax rate among all states and DC.
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