States That Depend Most and Least on Federal Funding

esfera / Shutterstock.com

States and their residents receive money from the federal government in a number of ways, from the Medicaid health insurance program to unemployment insurance.

Americans’ dependence on government assistance had been decreasing, but this year, the coronavirus pandemic has driven up federal spending to states, says WalletHub’s 2020 list of states that are most and least dependent on federal funds.

What follows are the five most-dependent states and the five most-independent states.

The ratings show a state’s dependency score from WalletHub. The scores take into account residents’ dependence on federal money and the state government’s dependency. The lower the score, the less a state depends on federal money.

No. 5 most-dependent state: Montana

Katherine Welles / Shutterstock.com

Total dependency score: 70.78 of 100 points

Montana ranks among the states receiving the most money from federal grants compared with the federal taxes its residents pay.

The state has been singled out as one of the best states for people with low incomes due to its relatively low taxes.

No. 4 most-dependent: West Virginia

Dee Browning / Shutterstock.com

Total dependency score: 73.86 of 100 points

West Virginia has suffered economically for some time. Some counties are seeing a recovery, but improvements have been largely concentrated in a few limited areas.

About 53% of the state’s working adults are unemployed or have stopped looking for work. Experts say workers in the state lack the education needed to compete, and that drug use among some residents compounds the problem.

No. 3 most-dependent: Mississippi

Sean Pavone / Shutterstock.com

Total dependency score: 77.02 of 100 points

Mississippi’s state government is more reliant on federal funding than any other, WalletHub says. In fact, 43.4% of the state’s general revenue is from federal aid, according to the nonpartisan Tax Foundation’s 2020 analysis.

The state ranks among the highest for the amount of federal income received versus the federal taxes its residents pay.

No. 2 most-dependent: Kentucky

f11photo / Shutterstock.com

Total dependency score: 78.18 of 100 points

About 1 in 8 Kentuckians (12%) qualify for SNAP benefits, compared with about 1 in 9 people nationally.

After the state reinstated work (or volunteer) requirements for SNAP benefits in late 2018, some 10,000 low-income people lost federal food assistance, according to the Associated Press.

No. 1 most-dependent: New Mexico

Jimack / Shutterstock.com

Total dependency score: 85.8 of 100 points

About 1 in 5 people (21%) in New Mexico use SNAP benefits, according to the latest data.

In addition to this high rate of food insecurity, the state also relies heavily on federal funding for state operations, with about 40.6% of New Mexico’s general revenues flowing from Washington, D.C., according to the Tax Foundation.

These facts contribute to making New Mexico the most federally dependent state.

No. 5 most-independent: Utah

f11photo / Shutterstock.com

Total dependency score: 17.83 of 100 points

Only about 1 in 19 (5%) of Utah’s residents need SNAP food assistance. A relatively small share of residents — 9% — live under the poverty line, according to SNAP data.

These comparatively low numbers mean that the state relies less on federal dollars to help its residents get by. In addition, state government here receives just 24.2% of its general revenue from federal sources, says the Tax Foundation.

No. 4 most-independent: Iowa

f11photo / Shutterstock.com

Total dependency score: 16.53 of 100 points

In Iowa, 29.4% of the state’s general revenue is from federal sources, the Tax Foundation’s 2020 report finds.

One in 10 (10%) of Iowans qualify for food assistance from the SNAP program.

Pay for Iowa teachers is in about the middle of the pack in this study of teacher compensation: “Here’s How Much Teachers Are Paid in Every State.”

No. 3 most-independent: Delaware

Jon Bilous / Shutterstock.com

Total dependency score: 14.91 out of 100 points

A relatively low 27.2% of Delaware’s general revenues come from federal government.

The state has been singled out as one of the best for people with low incomes due to its relatively low taxes. Delaware’s total tax burden as a percentage of income is 5.24%, compared with 14.59% in Washington state, where the total tax burden is highest.

No. 2 most-independent: New Jersey

mandritoiu / Shutterstock.com

Total dependency score: 14.52 of 100 points

New Jersey doesn’t rely heavily on federal government aid, which brings in just 28.4% of the state’s general revenues.

About 1 in 13 residents — or 8% — need SNAP benefits.

No. 1 most independent: Kansas

Jiri Flogel / Shutterstock.com

Total dependency score: 12.73 of 100 points

Kansas doesn’t use much money from the federal government. About 1 in 14 (7%) of residents need SNAP benefits, and a relatively modest 23.3% of state general revenue comes from the federal government.

Kansas City — in Kansas and Missouri — recently was named one of “The 15 Best Cities in America for Saving Money.” Cities were scored for their unemployment rates, housing costs and per-capita incomes.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Secret Departments of Amazon You Should Know About

These little-known sections of Amazon are hidden gems for deal-seekers and impulse shoppers alike.

Don’t Pay for These 10 Things: They Are Free With a Library Card

Before you spend another dollar on items and services like these, check with your public library.

15 of the Most Outrageously Overpriced Products

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

Retiree Households Lose $111,000 to This Social Security Misstep

A study finds 96% of retirees make this mistake when claiming Social Security benefits.

10 Colleges That Offer Free Tuition for Seniors

These schools let retirement-age students study, tuition-free, while earning college credit.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?

Understanding survivors benefits rules is the key to getting the most from your benefit.

These Are the 10 Worst Cars for Depreciation

Two types of vehicles are especially likely to see steep plunges in value.

Do This With Your Mask Before Thanksgiving Dinner

Before you sit down at the year’s biggest feast, make sure to properly care for your mask.

Never Buy These 10 Things With Your Credit Card

Credit cards offer many conveniences and protections, but sometimes it’s simply smarter to keep the plastic tucked away.

13 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

8 Surprising Household Items You Can Sell for Fast Cash

Sometimes, the humblest household items are worth the most money.

Cut These 11 Expenses Now If You Hope to Retire Early

Like the idea of financial independence? Part of the FIRE equation is cutting costs.

5 Ways Social Security Will Change in 2021

These adjustments will affect both workers and retirees in the new year.

These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

Stop Buying These 19 Things Online

The internet has changed how we shop. But for some things, you’re still better off buying the old-fashioned way.

15 Products You Need — Even If You Didn’t Know It

Discover some must-have products on Amazon that you didn’t even know you were missing.

7 Tips for Building an Emergency Food Supply

A pandemic or natural disaster could leave you reliant on your existing emergency food supply. Is your pantry well-prepared for emergencies? Knowing what to stock up on for emergencies can be a difficult task and we’re here to help.

3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.