Research Areas

Federal Taxes Paid vs. Spending Received by State

States send federal taxes to Washington and receive federal spending in return. However, some states benefit more from federal taxing and spending policies than others. Some "beneficiary" states receive a positive return from Uncle Sam, making other states "donors" who pick up the tab. The most important factor determining whether a state is a net beneficiary is per capita income. States with wealthier residents pay higher federal taxes per capita thanks to the progressive structure of the income tax. Other factors include whether states have powerful Members of Congress, the number of federal employees present in a state, and the number of residents receiving Social Security, Medicare and other federal entitlements.

The study and data below from 2007 are the most recent we have available on this topic. (We are currently seeking funding to update this study.) If you would like to be notified when a new version of this study is published, sign up for an email update here.

Additional questions about federal taxes paid vs. spending received by state? Contact us at (202) 464-6200. 

Articles from the Tax Foundation