Per Capita Income By State [2023]

Per capita by state research summary: Per capita income can vary greatly from state to state in the US, whether due to the laws of the state or other factors. In fact, some states have per capita incomes that are double that of other states. We’ve investigated the per capita income in all 50 states, and according to our research:

What is per capita income?

Per capita income, specifically by state, is the average income earned by workers. This average is calculated by dividing the total economic output (Gross State Product) of that state by its population.

Here is a step-by-step guide on how to calculate per capita income by state:

1. Gather data. This includes data on the total GDP (Gross Domestic Product) or GSP (Gross State Product) for each state and the population of each state for a specific time period.

2. Calculate. The formula for per capita income is: Per Capita Income for State X = Total GDP or GSP of State X / Population of State X

3. Repeat for All States. Perform this calculation for each state within the country you’re interested in.

4. Analyze and Compare. After calculating per capita income for all states, you can compare income variations, aiding policy analysis, economic research, and grasping regional disparities.

Per capita income by state is useful for many reasons. It reveals economic disparities, which aids policymakers and researchers in assessing regional contributions to the economy and living standards. Additionally, it informs decisions on resource allocation, economic development, and tackling state-level income inequality.

States with the highest per capita income

There are currently 5 states where the per capita income is over $110,000, and 11 states where it’s over $100,000. To learn more about these high per capita income states, here are the top five:

Top five states by per capita income

Here is more information about the top 5 states:

• New Jersey: New Jersey has the highest per capita income of any state, at over $117,000. However, New Jersey isn’t within the top 10 for the highest cost of living (rank 14) and is only ranked 6th for the highest tax burden, making the state’s high income even more beneficial for earners.

• Massachusetts: This state has the second-highest per capita income, but this benefit is somewhat offset by having the 2nd highest cost of living. Luckily, MA is only ranked 20th for the average tax burden.

• Connecticut: This state has the third highest per capita income of any state. However, Connecticut also has the 5th highest tax burden and the 8th highest cost of living in the US.

• Maryland: This state also has a per capita income of over $110,000, but this high average income is offset by having the 7th highest tax burden and the 6th highest cost of living.

• California: Like the others within the top 5, California’s high per capita income comes with the 3rd highest cost of living. However, this state only ranks 12th for the average tax burden.

States with the lowest per capita incomes

There are currently 3 states where the per capita income is less than $70,000, and 8 states where the per capita income is less than $75,000. Here are the bottom 5 states with the lowest per capita incomes:

Bottom five states by per capita income

These states have the lowest per capita incomes in the US. While lower incomes can have a detrimental effect on residents, it is worth noting that lower taxes and cost of living can help balance the situation for earners. Here is more information about the bottom 5:

• Mississippi: Mississippi is one of only 3 states with a per capita income under $70,000. While this state’s low per capita income is somewhat offset by also having the lowest cost of living in the US, having the 18th highest tax burden of all 50 states is not beneficial for earners.

• West Virginia: This state also has one of the lowest per capita incomes in the US, along with a low cost of living (rank 42), but a moderate tax burden (rank 23).

• Arkansas: This is the only other state with a per capita income under $70,000. The state’s cost of living and tax rates may not be offsetting the lower incomes either, with rankings of 40 and 22 respectively.

• New Mexico: This southwestern state has an average per capita income of just over $70,000. Further, low earnings for workers are made worse by a moderately high cost of living (rank 32), and a high tax burden (rank 14).

• Alabama: Alabama is the last of the bottom 5 states by per capita income. Luckily, Alabama has a low cost of living at rank 47, and a relatively low tax burden at rank 39.

Per capita income FAQ

1. What are the limitations of per capita income?

   The main limitations of per capita income include the failure to factor in inflation, income inequality, poverty, wealth disparities, and savings. For example, a state like New Jersey or Massachusetts might show some of the highest per capita incomes in the US, but the salaries of the wealthiest few could easily skew the incomes of the majority, which are far lower on average. This is a problem for every state’s calculations.

   Additionally, per capita income is not a measurement of the quality of life in each state, and does not factor in the cost of living. Even if a state like South Carolina has a much lower per capita income than Maryland, that doesn’t mean residents of South Carolina are struggling more financially.

   Ultimately, per capita income is a limited tool that measures the average per capita income in each state. This can provide valuable insights, but is only one part of a much bigger picture.

2. What is the advantage of per capita income?

   The main advantage of per capita income is that it helps to examine the wealth of diverse populations and various regions. For example, a higher per capita income in Massachusetts might indicate that there are certain high-paying careers available, or that the cost of living is higher.

   Conversely, a lower per capita income in Arkansas might indicate an abundance of lower-income workers and a lower average cost of living.

   While per capita income isn’t a perfect measurement, it is an important tool for examining the differences between states.

3. What state has the best per capita income?

   The state with the best per capita income is New Jersey, at $65,156. New Jersey has the highest per capita income of any state, with others among the top 5 including:

   • Massachusetts ($115,964)

   • Connecticut ($115,337)

   • Maryland ($114,236)

   • California ($111,622)

4. What state has the lowest per capita income?

   The state with the lowest per capita income is Mississippi, at $117,868. New Jersey has the highest per capita income of any state, with others among the top 5 including:

   • West Virginia ($65,332)

   • Arkansas ($69,357)

   • New Mexico ($70,241)

   • Alabama ($71,964)

Conclusion

Per capita income can reveal important information about each US state, even if it’s only one piece of the puzzle. Of the 50 states New Jersey, Massachusetts, Connecticut, Maryland, and California are the only ones with a per capita income higher than $110,000.

Conversely, the only 3 states with a per capita income lower than $70,000 include: Mississippi, West Virginia, and Arkansas.

Overall, it’s important to remember that each state comes with pros and cons, regardless of per capita income. Many states with high per capita income have a higher cost of living, which offsets some of the benefits. While workers in states with lower per capita incomes may still be able to live comfortably with a lower salary. In general, it’s best to research your needs as a job seeker to see what state best suits your needs.

Author

Jack Flynn

Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.