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The Income You Need to Be in the Top 1% in Each U.S. State
According to a recent analysis by personal finance website SmartAsset, the amount of income required to be in the top 1% of earners can vary significantly depending on the state you live in. In Connecticut, households need to earn an annual income of $952,902 or more to be part of the top 1%, while in West Virginia, the threshold is $367,582. Nationally, households making $652,657 or more are considered among the top 1%, which is nearly eight times the median household income. The study also found that states with large urban hubs like California and New York tend to have higher-paid residents compared to rural Southern and Midwestern states.
States with the Highest Income Thresholds
In Connecticut, the top 1% income threshold is $952,902, making it the state with the highest requirement. Massachusetts follows closely behind with a threshold of $903,401, while California comes in third with a threshold of $844,266. New Jersey and Washington round out the top five with thresholds of $817,346 and $804,853, respectively.
Urban vs. Rural States
It's not surprising that states with large urban centers like California, New York, and Massachusetts have higher income thresholds for the top 1%. These states tend to have higher-paying job opportunities and a higher cost of living, which offsets the larger incomes to some extent. On the other hand, rural Southern and Midwestern states like West Virginia and Mississippi have lower income thresholds for the top 1%.
Income Thresholds in Other States
The income thresholds for the top 1% in various other states are as follows:
- Connecticut: $952,902
- Massachusetts: $903,401
- California: $844,266
- New Jersey: $817,346
- Washington: $804,853
- New York: $776,662
- Colorado: $709,092
- Florida: $694,987
- Illinois: $660,810
- New Hampshire: $659,037
- Wyoming: $656,118
- Virginia: $643,848
- Maryland: $633,333
- Texas: $631,849
- Utah: $630,544
- Minnesota: $626,451
- Nevada: $603,751
- South Dakota: $590,373
- Pennsylvania: $588,702
- North Dakota: $585,556
And the list continues with the thresholds for the remaining states.
Choosing Your Sandbox - The Impact on New Businesses
The significant variation in the income required to be in the top 1% across different U.S. states has implications for new businesses and entrepreneurs. Understanding the income thresholds in each state can help entrepreneurs make informed decisions about where to establish their businesses, target their products or services, and attract the right customer base.
Entrepreneurs aiming to cater to the top 1% of earners may find it more advantageous to establish their businesses in states with higher income thresholds, such as Connecticut, Massachusetts, or California. These states offer a larger pool of potential affluent customers and a supportive ecosystem that caters to the needs and demands of top earners.
On the other hand, entrepreneurs looking for untapped markets or aiming for a broader customer base may find opportunities in states with lower income thresholds for the top 1%. These states, like West Virginia or Mississippi, may have a lower cost of living and potentially fewer competitors targeting affluent consumers. Entrepreneurs with innovative products or services could capitalize on these factors to attract customers looking for unique offerings.
Adjusting Business Strategies
The disparities in income thresholds also highlight the importance of adapting business strategies to local market conditions. Entrepreneurs need to consider factors such as affordability, consumer preferences, and purchasing power specific to the target region. Understanding the income distribution and economic landscape becomes crucial when setting pricing, designing marketing campaigns, and positioning products to appeal to the desired customer segment.
In summary, the varying income thresholds for the top 1% across U.S. states present both challenges and opportunities for new businesses. By carefully evaluating the potential customer base, market demand, and local economic conditions, entrepreneurs can develop effective strategies to thrive and succeed in different regions. The state-specific income requirements shed light on the diverse landscape of the U.S. market and highlight the need for targeted approaches in business planning and execution.
Article First Published at: https://www.cnbc.com/2023/07/18/how-much-you-need-to-earn-to-be-in-the-top-1-percent-in-every-us-state.html