What Are the Easiest States to Build Wealth in?
We evaluated median income, income taxes, and cost of living by state to rank which states are the easiest states to build wealth in. Maine was our top-ranked state with Kansas finishing last.
COVID-19 changed some things.
One fascinating shift to me was the sudden migration from a country that was slowly growing accustomed to the idea of remote working to a workforce almost completely reporting from home overnight.
The abrupt lack of connection to a specific geographic location led to a transformation in our country that’s still working itself out.
One no longer had to be in the same city as their employer or even live in a city at all.
Technology and a forced cultural shift have provided a much greater degree of flexibility in where we work, but consequently, it has also led to greater freedom in where we live.
And who could blame someone for leaving a location with a high cost of living in favor of one more affordable?
Manhattan, New York income in a Manhattan, Kansas home would go a long way.
If there isn’t a strong personal attachment to a place, moving could be a great financial move.
Wages, housing & consumer costs, and taxes all can have a major long-term impact on your ability to build wealth.
But where to go? What are the easiest states to build wealth in?
Or maybe you’d just like to know how your state stacks up against others?
I was curious too, so I put on my nerd had and did a little digging.
Below, we’ll go over how all 50 states rank in terms of median wages, median taxes, and cost of living relative to one another.
What follows is some real data, followed by my own subjective scoring summary. In truth, one’s financial behavior in any state will be the primary factor in determining their ability to build wealth.
This is a fun exercise that I hope you find enlightening. I’m not guaranteeing that a move to Maine will make you rich.
Ranking Basis
If you’re here for the fun of it, you may want to skip on down to the next section.
For those of you who are interested in our method, this is a summary of how we collected and ranked the data.
To begin, we used worldpopulationreview.com for our information about median income and cost of living relative to the national average.
For the state income tax information, I looked it up on Google. One state at a time.
Yes, it took a while.
Once we had all the data, we needed to create some sort of scoring method to come up with a final ranking.
Initially, I tried providing a grade out of 100 for each state relative to all of the others, followed by providing a category weight (more on this in a minute) to produce a final score which was then ranked.
But this didn’t work very well.
The reason is the range in incomes, costs of living and even taxes from state to state is so broad that the states on the extreme ends of the range were benefiting too greatly or being penalized too harshly.
In the end, we ranked each state for every category, then provided a weight to each category based on how important we perceived it to be.
Our assumption was this variety of inputs would lead us to the easiest states to build wealth in.
We’ll explain the weighting in the final score section below.
Median Household Income
Naturally, one would expect wages and high costs of living to go hand in hand, and for the most part, that’s true.
But it isn’t a hard and fast rule.
A state that enjoys a combination of high income and low costs should be a shoo-in as one of the easiest states to build wealth in.
For the purposes of this project, we have elected to use median household income in our evaluation. Here’s why:
- Average income is skewed heavily by high-income earners;
- Our cost of living and tax rankings were based on household, not individual data, so we needed to be consistent.
Behold, a list of all 50 states and how they ranked in median household wage as of January 2023.
Rank | State | Median Household Income |
1 | Maryland | $87,063 |
2 | New Jersey | $85,245 |
3 | Massachusetts | $84,385 |
4 | Hawaii | $83,173 |
5 | Connecticut | $79,855 |
6 | California | $78,672 |
7 | New Hampshire | $77,923 |
8 | Alaska | $77,790 |
9 | Washington | $77,006 |
10 | Virginia | $76,398 |
11 | Colorado | $75,231 |
12 | Utah | $74,197 |
13 | Minnesota | $73,382 |
14 | New York | $71,117 |
15 | Rhode Island | $70,305 |
16 | Delaware | $69,110 |
17 | Illinois | $68,428 |
18 | Oregon | $65,667 |
19 | North Dakota | $65,315 |
20 | Wyoming | $65,304 |
21 | Texas | $63,826 |
22 | Pennsylvania | $63,627 |
23 | Vermont | $63,477 |
24 | Wisconsin | $63,293 |
25 | Nebraska | $63,015 |
26 | Nevada | $62,043 |
27 | Iowa | $61,836 |
28 | Arizona | $61,529 |
29 | Georgia | $61,224 |
30 | Kansas | $61,091 |
31 | South Dakota | $59,896 |
32 | Maine | $59,489 |
33 | Michigan | $59,234 |
34 | Idaho | $58,915 |
35 | Indiana | $58,235 |
36 | Ohio | $58,116 |
37 | Florida | $57,703 |
38 | Missouri | $57,290 |
39 | North Carolina | $56,642 |
40 | Montana | $56,539 |
41 | South Carolina | $54,864 |
42 | Tennessee | $54,833 |
43 | Oklahoma | $53,840 |
44 | Kentucky | $52,238 |
45 | Alabama | $52,035 |
46 | New Mexico | $51,243 |
47 | Louisiana | $50,800 |
48 | Arkansas | $49,475 |
49 | West Virginia | $48,037 |
50 | Mississippi | $46,511 |
Nothing terribly unexpected, but I did not anticipate Maryland being on top.
Way to go Terps.
This is interesting data, but again, it’s only one piece of the wealth building equation.
Let’s look at state taxes next.
Median State Taxes
No reason to prolong things. Here’s the list from lowest taxes to highest:
Median Income Tax Rank | State | Income Tax Rates |
1 | Alaska | 0% |
1 | Florida | 0% |
1 | Nevada | 0% |
1 | South Dakota | 0% |
1 | Tennessee | 0% |
1 | Texas | 0% |
1 | Washington | 0% |
1 | Wyoming | 0% |
9 | North Dakota | 1.1% – 2.9% |
10 | Pennsylvania | 3.07% |
11 | Indiana | 3.23% |
12 | Ohio | 0% – 3.99% |
13 | Vermont | 3.35% – 8.75% |
14 | Louisiana | 1.85% – 4.25% |
15 | Arizona | 2.59% – 4.5% |
16 | Michigan | 4.25% |
17 | Maryland | 2% – 5.75% |
17 | Oklahoma | 0.25% – 4.75% |
17 | Rhode Island | 3.75% – 5.99% |
20 | New Mexico | 1.7% – 5.9% |
21 | Colorado | 4.55% |
22 | Illinois | 4.95% |
22 | Utah | 4.95% |
24 | North Carolina | 4.99% |
25 | Alabama | 2%-5% |
25 | Connecticut | 3% – 6.99% |
25 | Kentucky | 5% |
25 | Massachusetts | 5% |
25 | Mississippi | 0% – 5% |
25 | New Hampshire | 5% |
31 | Missouri | 1.5% – 5.3% |
31 | Wisconsin | 3.54% – 7.65% |
33 | Arkansas | 2% – 5.5% |
34 | New Jersey | 1.4% – 10.75% |
35 | Kansas | 3.1% – 5.7% |
36 | Georgia | 1% – 5.75% |
36 | Virginia | 2% – 5.75% |
38 | New York | 4% – 10.9% |
39 | California | 1% to 13.3% |
39 | West Virginia | 3% – 6.5% |
41 | Idaho | 1.125% – 6.5% |
42 | Delaware | 0% – 6.6% |
43 | Maine | 5.8% – 7.15% |
43 | Montana | 1% – 6.75% |
45 | Minnesota | 5.35% – 9.85% |
46 | Nebraska | 2.46% – 6.84% |
47 | South Carolina | 0% – 7% |
48 | Iowa | 0.33% – 8.53% |
49 | Hawaii | 1.4% – 11% |
50 | Oregon | 4.75% – 9.9% |
You’ve likely noticed that many states have a range of tax brackets which may leave you wondering how we ranked them.
Well, we figured out what the marginal tax rate would be for the median income in each state and ranked them accordingly.
For example, Mississippi’s income taxes range from 0%-5%, but everything over $10,000 is taxed at 5%, so we just marked them as tied with the other six states that tax the median income in their state at 5%.
I was surprised tax rates in some western or northeastern states are as low as they are.
I certainly didn’t expect to see Vermont, Maryland, and Rhode Island in the top 20. Nor did I expect Iowa and South Carolina to be in the bottom 4.
And Oregon? Wow.
Cost of Living Index
Our third and final measure is a cost-of-living index based on each state’s variance from the national average.
In other words, the national average is 100.
Each score below that means that the state is more affordable than the national average and each score above is more expensive than average.
These indices capture costs for food, housing, transportation, and healthcare. Taxes are not included.
Cost of Living Rank | State | Cost of Living Index |
1 | Mississippi | 83.3 |
2 | Kansas | 86.5 |
3 | Alabama | 87.9 |
3 | Oklahoma | 87.9 |
5 | Georgia | 88.8 |
6 | Tennessee | 89 |
7 | Missouri | 89.8 |
8 | Iowa | 89.9 |
9 | West Virginia | 90.5 |
10 | Indiana | 90.6 |
11 | Arkansas | 90.9 |
12 | New Mexico | 91 |
13 | Michigan | 91.3 |
13 | Ohio | 91.3 |
15 | Texas | 92.1 |
16 | Louisiana | 93 |
17 | Kentucky | 93.1 |
18 | South Carolina | 93.6 |
19 | Nebraska | 93.7 |
20 | Illinois | 94.3 |
20 | Wyoming | 94.3 |
22 | North Carolina | 95.7 |
23 | Wisconsin | 96.4 |
24 | North Dakota | 98.2 |
25 | Utah | 99 |
26 | Minnesota | 100 |
27 | Florida | 100.3 |
28 | Montana | 100.7 |
29 | South Dakota | 101 |
30 | Virginia | 101.8 |
31 | Idaho | 102.1 |
32 | Pennsylvania | 102.5 |
33 | Arizona | 103.2 |
34 | Colorado | 105.3 |
35 | Nevada | 106.3 |
36 | Delaware | 107.9 |
37 | New Hampshire | 109.9 |
38 | Washington | 111.6 |
39 | Maine | 115 |
40 | New Jersey | 115.2 |
41 | Vermont | 117 |
42 | Rhode Island | 117.2 |
43 | Connecticut | 121.6 |
44 | Maryland | 124 |
45 | Alaska | 127.1 |
46 | Oregon | 130.1 |
47 | Massachusetts | 135 |
48 | California | 142.2 |
49 | New York | 148.2 |
50 | Hawaii | 193.3 |
I found this list least surprising, although I did expect Alaska to be higher than California.
I guess the real estate is just that expensive in the Golden Gate State.
Somebody said, amen.
The Final Score – What is the Easiest State to Build Wealth in?
As I mentioned above, we decided to rank all of the states into one master list, then weigh each category to produce a final score and rank.
Out of 100%, we provided a 45% weight to median household income, a 5% weight on state income taxes, and a 50% weight on the cost-of-living index.
We wrestled with the weights for a while but ultimately landed with 50% of the equation based on wages (income and taxes) and 50% based on expenses.
We chose 5% for income taxes because on average, 4.63% of income goes to pay state income taxes.
Additionally, we’ve added a column with the ranking for actual median net worth in each state since that’s the ultimate object we are trying to measure.
Final Rank | State | Median Net Worth | Median Net Worth Rank |
1 | Maine | $107,400 | 30 |
2 | Montana | $190,300 | 13 |
3 | Oregon | $183,200 | 14 |
4 | Idaho | $182,400 | 15 |
5 | New York | $123,900 | 25 |
6 | Vermont | $243,600 | 3 |
7 | Florida | $95,770 | 34 |
8 | Louisiana | $84,850 | 38 |
9 | Arizona | $126,100 | 24 |
10 | South Carolina | $81,150 | 41 |
11 | North Carolina | $108,400 | 29 |
12 | Kentucky | $73,150 | 44 |
13 | Nevada | $93,920 | 35 |
14 | Hawaii | $373,200 | 1 |
15 | Arkansas | $49,990 | 49 |
16 | South Dakota | $216,600 | 8 |
17 | California | $200,300 | 9 |
18 | Rhode Island | $83,790 | 40 |
19 | West Virginia | $65,290 | 47 |
20 | New Mexico | $56,450 | 48 |
21 | Delaware | $143,700 | 22 |
22 | Pennsylvania | $137,800 | 23 |
23 | Alaska | $200,000 | 10 |
24 | Massachusetts | $251,000 | 2 |
25 | Connecticut | $173,500 | 16 |
26 | Mississippi | $40,280 | 50 |
27 | Wisconsin | $110,400 | 27 |
28 | Ohio | $102,800 | 32 |
29 | Maryland | $194,700 | 12 |
30 | Alabama | $85,900 | 37 |
31 | Washington | $170,400 | 19 |
32 | Colorado | $217,900 | 7 |
33 | Nebraska | $99,520 | 33 |
34 | New Hampshire | $243,600 | 3 |
35 | New Jersey | $195,200 | 11 |
36 | Michigan | $117,600 | 26 |
37 | Missouri | $70,220 | 45 |
38 | Tennessee | $70,100 | 46 |
39 | Oklahoma | $80,790 | 42 |
40 | Wyoming | $171,600 | 17 |
41 | Virginia | $148,400 | 21 |
42 | Indiana | $84,620 | 39 |
43 | Minnesota | $228,500 | 6 |
44 | North Dakota | $241,000 | 5 |
45 | Illinois | $103,500 | 31 |
46 | Utah | $170,900 | 18 |
47 | Iowa | $152,800 | 20 |
48 | Georgia | $110,000 | 28 |
49 | Texas | $90,390 | 36 |
50 | Kansas | $77,010 | 43 |
Overall, our results do not appear to be connected to reality at all.
Having our top ranked state (Maine) 30 spots away from actual median net worth is a bit disappointing, but having the environment for building wealth doesn’t necessarily mean it’s going to happen.
There are millions of factors, chief among them being human behavior.
I think we’ll revisit this post down the road and see if we can find some stronger correlations between actual net worth and other factors.
