Each state collects a myriad of taxes from its residents, but the ones residents of all states pay are federal income taxes. It makes sense then that states with more residents, specifically more high earners, will pay more to the collective in income taxes than they take, and because of this, we have “donor states.”
These states are the ones who give more federal funds than they receive per capita (or per person). The Tax Foundation says that “84 percent of federal individual income taxes—which account for over 40 percent of federal revenue—are paid by those in the top 25 percent of the income distribution. The majority of these taxpayers live in wealthy, urban, politically “blue” areas like New York, California, and Massachusetts.”
Before the pandemic, there were eight of these donor states, but after? There are none. To account for this change, we included both the 2019 and the 2020 Federal Fiscal Year data sets with each state's total receipts, expenditures, and balance of payments.
In this context, receipts are what the state government receives in federal funding, expenditures are what the state contributes in income taxes, and the balance of payment is the expenditures minus the receipts. Donor states have a negative balance of payments. It should be noted that the data used is from two years previous because these are very comprehensive figures that take a long time to compile, analyze, and interpret.
Prior to the COVID-19 pandemic, there were eight U.S. states considered donor states. The main reason that these states see a negative balance is that those states have some of the highest household incomes in the country, paying more federal taxes. This, however, does not guarantee that they would receive more federal funding for things such as Medicaid and education.
In 2019, New York was the largest donor state in the U.S., with a negative balance of payments at $22,798,000,000. For every dollar New York gave the federal government, its residents were only receiving $0.91 back. As we mentioned, this discrepancy is due to the sheer volume of high earners within the state. Additionally, due to the cost of living in New York City, most of its residents earn over 14% more than the average American.
Seven other states are donor states:
Virginia is at the opposite end of the spectrum, with the highest positive balance of payments. Virginia’s balance of payments is $111,785,000,000, and residents receive $2.24 for every dollar sent to the federal government. One of the reasons that Virginia receives so much is the proximity to the District of Columbia, where there is a lot of federal spending to support federal projects, politicians, and military efforts.
Kentucky follows with $63,229,000,000 and the highest expenditure per dollar of receipts at $2.89.
It is worth noting that just because these states are receiving funding does not mean that that money is being spent on residents. You can find out who is spending the most per dollar received by rearranging the data based on “Expenditures per Dollar of Receipts.”
The ten states with the largest positive balance of payments (the biggest takers) are:
Due to the severity and length of the pandemic, the 2020 FFY data does not reflect any existence of donor states. This is not likely to remain the case. As economies recover and government funding changes shape, we will see how this proceeds.
Upon analyzing the data for 2020, you can see a pattern of states with more residents (and therefore a higher number of COVID-19 cases) being bigger takers and states that have a smaller population, fewer cases, or less of a cultural focus on the pandemic being the ones that received less federal funding.
The states with the least balance of payments during the federal fiscal year of 2020 include
Within the 2020 FFY, the biggest takers (states with the largest balance of payments) include
Return On Tax Dollars 2022
% State Revenue From Federal Funds 2022
Overall Dependency Score
Per Capita Balance Of Payments 2021
Per Capita Balance Of Payments 2021 Without COVID
|District of Columbia||$1.38||27.65%||38.1||Blue||-||-|