Current:Home > MarketsHow much income does it take to crack the top 1%? A lot depends on where you live.-LoTradeCoin
How much income does it take to crack the top 1%? A lot depends on where you live.
lotradecoin review View Date:2024-12-25 12:42:32
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! (64667)
Related
- Beyoncé takes home first award in country music category at 2024 Billboard Music Awards
- Mississippi local officials say human error and poor training led to election-day chaos
- YouTuber Ruby Franke Pleads Guilty in Child Abuse Case
- Lionel Messi to have Newell's Old Boys reunion with Inter Miami friendly in 2024
- China's ruling Communist Party expels former chief of sports body
- Robbers' getaway car stolen as they're robbing Colorado check chasing store, police say
- Lionel Messi to have Newell's Old Boys reunion with Inter Miami friendly in 2024
- What's the best Christmas cookie? Google shares popular 2023 holiday searches by state
- The burial site of the people Andrew Jackson enslaved was lost. The Hermitage says it is found
- Major cleanup underway after storm batters Northeastern US, knocks out power and floods roads
Ranking
- California judges say they’re underpaid, and their new lawsuit could cost taxpayers millions
- Major cleanup underway after storm batters Northeastern US, knocks out power and floods roads
- How can Catholic priests bless same-sex unions?
- Teddi Mellencamp Shares Next Step in Cancer Battle After Unsuccessful Immunotherapy
- Manager of pet grooming salon charged over death of corgi that fell off table
- CIA director William Burns meets Israel's Mossad chief in Europe in renewed push to free Gaza hostages
- Michigan mother found guilty of murder in starvation death of her disabled 15-year-old son
- Biden has big plans for semiconductors. But there's a big hole: not enough workers
Recommendation
-
China's new tactic against Taiwan: drills 'that dare not speak their name'
-
Apple to stop some watch sales in US over patent dispute
-
Hiker trapped under 3-ton boulder for 7 hours gets 'second chance' after dramatic rescue
-
Russell Brand questioned by London police over 6 more sexual offense claims, UK media say
-
Beyoncé's BeyGood charity donates $100K to Houston law center amid Jay
-
Kendall Jenner Steps Out With Justin Bieber and Friends in Aspen Amid Bad Bunny Breakup
-
'Survivor' Season 45 finale: Finalists, start time, how and where to watch
-
Japan’s central bank keeps its negative interest rate unchanged, says it’s watching wage trends