Which States Contribute the Most and Least to Federal Revenue (2023 Data)

In 2023, the U.S. federal government collected $4.67 trillion in taxes and redistributed $4.56 trillion back to states through programs such as Social Security, Medicaid, and education grants.

However, not every state gives and receives equally. Nineteen states contributed more to Washington than they got back, while thirty-one states and D.C. received more than they paid.

The largest donor was New York, paying $89 billion more than it received. The biggest recipient was Virginia, gaining $79 billion more than it contributed.

These differences come from variations in income levels, business activity, population size, and the presence of federal facilities such as military bases or research centers.

Top Contributing States (Paid More Than They Received)

In total, 19 states contributed more than they received in 2023. These are primarily located in the Northeast, West Coast, and parts of the Midwest, areas with strong economies and a high cost of living.

New York stands out as the nation’s biggest net donor, paying $89 billion more than it received. That translates to about $5,000 per resident.

New York’s massive income tax base, large corporate sector, and high wages ensure the state sends an outsized share of federal taxes to Washington. Yet federal spending there, while still large, can’t keep up.

California followed closely with a $78 billion deficit. The state’s tech industry and large workforce generate tremendous tax revenue, but California’s size and economic output dwarf the per-capita return of federal spending.

New Jersey, with $70 billion more paid than received, ranked third, largely because of its high-income residents and dense corporate presence near New York City.

States like Massachusetts, Washington, and Minnesota also paid far more than they received, largely due to their strong wage levels, advanced industries, and limited reliance on federal transfer programs.

Even Texas, despite being a net contributor at −$67 billion, remains in this group because of its large workforce and major corporate tax contributions.

Per capita, Delaware is the most extreme example, each resident effectively sent about $11,000 more to the federal government than they received back. That’s because Delaware’s lenient corporate laws have turned it into the legal home of hundreds of thousands of companies.

These entities file corporate taxes there, dramatically raising the per-person figure even though the state’s population is small.

Top Recipient States (Received More Than They Paid)

On the opposite end, 31 states and Washington, D.C., received more than they paid. The reasons vary: some rely heavily on social programs, others host large numbers of federal employees, and some serve as hubs for military spending or research funding.

Virginia leads the pack by a wide margin, receiving $79 billion more from Washington than it paid. The state’s economy is deeply tied to the federal government, with a huge number of defense contractors, military bases, and civil service jobs concentrated in the Washington, D.C, metro area.

On a per-person basis, that’s about $9,000 more per resident flowing into Virginia.

Alabama and Arizona follow with $41 billion and $40 billion, respectively. Alabama’s advantage comes from heavy defense spending and a high share of federal aid programs. Arizona benefits from retirees, veterans’ programs, and a growing federal presence tied to border security and healthcare.

Mississippi and New Mexico are also among the top recipients. Their relatively low incomes and high dependency on Medicaid, food stamps, and other federal programs mean far more money comes in than goes out.

In per-capita terms, Alaska, New Mexico, and West Virginia lead all states in net inflows, each resident effectively receiving between $11,000 and $15,000 more than they contributed.

Per-Capita Extremes

What Drives These Differences

Overall Picture

Why the Gap Exists

The gap between donor and recipient states reflects structural economic and political realities. The U.S. tax system is progressive; wealthier individuals and corporations pay higher rates, which means revenue is concentrated in high-income regions.

But spending is often needs-based or federally mandated, targeting defense, healthcare, infrastructure, and social assistance where it’s needed most.

Defense spending explains much of the imbalance. For instance, Virginia, Maryland, Hawaii, and South Carolina receive billions in Pentagon contracts. The presence of military bases like Norfolk Naval Station or Fort Jackson draws federal payrolls and investments.

In contrast, high-income states like Massachusetts and New York rely more on private-sector activity, which does not generate direct federal outlays.

Federal aid programs are another factor. Medicaid, SNAP, and housing assistance funnel money to low-income states. In 2023, Medicaid alone accounted for $607 billion in transfers to states. Education and transportation added another $135 billion combined.

Meanwhile, federal social insurance programs like Social Security and Medicare directed another $1.6 trillion directly to individuals, often in older or rural states.

Broader Economic Implications

The donor-recipient balance raises important questions about fairness and sustainability. Economically advanced states argue that they shoulder a disproportionate share of the national burden, effectively subsidizing federal benefits in poorer or smaller states.

Critics, however, note that this redistribution is essential for national stability,  as it ensures consistent healthcare, defense, and infrastructure across all regions.

Over time, the divide between donor and recipient states has deepened as population shifts and federal priorities change. States with fast-growing populations but low tax bases, like Arizona, Alabama, and Kentucky, are becoming increasingly reliant on federal money.

Conversely, high-cost states like California and New York face ongoing fiscal pressure as they fund national programs while grappling with their own state-level spending needs.

The Complete State-by-State Balance (FY 2023)

Conclusion

Federal fiscal balance in 2023 showed a stark divide between wealth-producing and federally supported states.

New York, California, and New Jersey remain net donors, underwriting much of the federal budget.

Meanwhile, Virginia, Alabama, and New Mexico benefit most from federal contracts and programs.

The system highlights how the national economy depends on a redistribution network where tax-heavy states fuel national operations, and federal-spending states sustain the broader social and defense infrastructure that binds the U.S. together.