Current:Home > NewsHow much income does it take to crack the top 1%? A lot depends on where you live.-InfoLens
How much income does it take to crack the top 1%? A lot depends on where you live.
View Date:2024-12-23 12:06:17
Depending on where you live, being in the top 1% can mean very different things.
In West Virginia, you can join the top 1% with pre-tax income of about $420,000. In California or Connecticut, by contrast, you’d need a seven-figure salary.
Those figures come from a recent analysis by SmartAsset, the financial technology company. The report found a wide range of incomes to qualify for the top 1% in different states in 2024.
The report is one of several to examine the upper reaches of American earnings in an era shaped by inflation and a pandemic. Median household income rose nearly 20% to $80,610 between 2020 and 2023, according to federal data.
In separate analyses, both published this summer, SmartAsset and the personal finance site GOBankingRates ranked states according to the pre-tax income required to qualify for the top 1% in each one.
Capitalize on high interest rates: Best current CD rates
In these states, the top 1% are all millionaires
Here are the five wealthiest states, in terms of the minimum salary you would need to crack the top 1%. We’ll use SmartAsset’s numbers, which are fairly similar to the ones from GOBankingRates.
- Connecticut: $1.15 million minimum income for the top 1%
- Massachusetts: $1.11 million minimum income
- California: $1.04 million
- Washington State: $990,000
- New Jersey: $976,000
And here are the five states where the lowest income puts you in the top 1%:
- West Virginia: $420,000 income floor for Top 1%
- Mississippi: $441,000 minimum income
- New Mexico: $476,000
- Kentucky: $514,000
- Arkansas: $532,000
'What does it mean to be rich?'
Some of the states with the highest top incomes, including California and New York, host large numbers of Fortune 500 companies.
"There's either lifestyle or business opportunities in all of these places," said Jaclyn DeJohn, director of economic analysis at SmartAsset.
DeJohn noted, too, that three of the 10 states with the highest incomes do not levy income tax: Florida, Washington and Wyoming.
"On average, you're probably saving 6 or 7% of your income every year on that factor alone," she said.
Incomes and local costs of living may partly explain how Americans decide where to live. The five wealthiest states, in terms of top income, all lost population to other states in domestic migration between 2020 and 2023, Census figures show. Three of the lowest-income states, Arkansas, Kentucky and West Virginia, gained population from migration in those years. (New Mexico and Mississippi experienced small net losses.)
“The question is, What does it mean to be rich?” said Elise Gould, a senior economist at the Economic Policy Institute, a left-leaning thinktank. “Does it mean you have more money than other people, or does it mean you have a higher standard of living? Is it a measure of how comfortable you can live, or is it a measure of how well you do relative to other people?”
In the United States as a whole, you’d need to earn nearly $788,000 to be in the top 1% of earners, SmartAsset reports. To crack the top 5%, you’d have to take in at least $290,000. The figures are estimates, drawn from IRS data for individual filers in 2021 and adjusted to 2024 dollars.
Wage equality is rising in America. Between 1979 and 2022, the wages of Americans in the top 1% of earners grew by 172%, after adjusting for inflation, according to the Economic Policy Institute. In the same years, the bottom 90% of earners saw their wages grow by a more modest 33%.
“When you think about the very top, it’s about what’s happening with executive compensation,” and CEO pay in particular, Gould said.
In 1965, CEOs were paid 21 times as much as a typical worker, on average, according to EPI research. In 2023, CEOs were paid 290 times as much.
But lower-income Americans are also earning more money, especially in recent years. Lower-paid workers actually had relatively robust wage growth between 2019 and 2023, the EPI found, because of policy moves that aided them during the pandemic.
Can't crack the top 1%? How about the top 10%?
If your income isn’t $400,000, let alone $1 million, you may still earn enough to qualify for the top 5% or 10%, either in your state or the nation as a whole.
Here is how much household income you would need to qualify for the top U.S. income brackets in 2023, according to a new Motley Fool analysis:
- Top 10%: $234,900
- Top 20%: $165,300
- Top 30%: $127,300
More:In striking reversal, low-paid workers saw biggest wage growth during pandemic years
And here is the minimum income to be in the top 5% in some of the states listed above, according to SmartAsset. These figures are for individual income.
High-income states:
- Connecticut: $370,000 minimum income for top 5%
- Massachusetts: $393,000
- California: $365,000
- Washington State: $377,000
- New Jersey: $372,000
Low-income states:
- West Virginia: $193,000 minimum income for top 5%
- Mississippi: $193,000
- New Mexico: $215,000
- Kentucky: $214,000
- Arkansas: $217,000
This article was updated to add a new video.
veryGood! (1737)
Related
- Artem Chigvintsev Returns to Dancing With the Stars Ballroom Amid Nikki Garcia Divorce
- UFL championship game: Odds, how to watch Birmingham Stallions vs. San Antonio Brahmas
- Run, Don’t Walk to Anthropologie to Save an Extra 40% off Their Sale Full of Cute Summer Dresses & More
- Was this Tiger Woods' last US Open? Legend uncertain about future after missing cut
- Glen Powell Addresses Rumor He’ll Replace Tom Cruise in Mission Impossible Franchise
- Gretchen Walsh, a senior at Virginia, sets world record at Olympic trials
- Charles Barkley says next season will be his last on TV, no matter what happens with NBA media deals
- North Carolina governor vetoes bill that would mandate more youths getting tried in adult court
- Police capture Tennessee murder suspect accused of faking his own death on scenic highway
- Q&A: Choked by Diesel Pollution From Generators, Cancer Rates in Beirut Surge by 30 Percent
Ranking
- Georgia House Republicans stick with leadership team for the next two years
- R.E.M. discusses surprise reunion at Songwriters Hall of Fame, reveals why there won't be another
- Some hawking stem cells say they can treat almost anything. They can’t
- Shooting in Detroit suburb leaves ‘numerous wounded victims,’ authorities say
- Congress heard more testimony about UFOs: Here are the biggest revelations
- A man died after falling into a manure tanker at a New York farm. A second man who tried to help also fell in and died.
- Charles Barkley says he will retire from television after 2024-25 NBA season
- New York Gov. Kathy Hochul wrongly says Buffalo supermarket killer used a bump stock
Recommendation
-
High-scoring night in NBA: Giannis Antetokounmpo explodes for 59, Victor Wembanyama for 50
-
'It was just awful': 66-year-old woman fatally struck by police truck on South Carolina beach
-
'Predator catchers' cover the USA, live-streaming their brand of vigilante justice
-
Hiker falls 300 feet down steep snow slope to his death in Colorado
-
'America's flagship' SS United States has departure from Philadelphia to Florida delayed
-
California’s Democratic leaders clash with businesses over curbing retail theft. Here’s what to know
-
What we know about the fight between conspiracist Alex Jones and Sandy Hook families over his assets
-
Euro 2024 highlights: Germany crushes Scotland in tournament opener. See all the goals