In five states, the threshold for reaching the top 1 percent is a seven-figure income. However, in West Virginia, it takes less than $500,000.
With a population of over 39 million and nearly 20 million income tax returns filed in 2022 for the 2021 tax year, about 200,000 California households make more than $1 million per year. The study adjusted the earnings to 2024 dollars to consider inflation.
While it was expected that the West Coast would have the highest threshold, the study found that two Northeast states, Connecticut and Massachusetts, have a higher threshold for reaching the top 1 percent.
The top 1 percent of earners in five states—Connecticut, Massachusetts, California, Washington, and New Jersey—all bring home seven-figure incomes.
New York was close behind the top five, falling just $253 short of joining the million-dollar club.
On the lower end of the scale, the top 1 percent of workers earn less than $500,000 in three states—New Mexico, Mississippi, and West Virginia.
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Between 2017 and 2022, the average income of the top 5 percent of households in California increased by over 37%, from just under $450,000 to more than $613,000.
Every state saw an increase in the top 5 percent income over the same period, with Washington experiencing the largest jump of nearly 44%, while North Dakota had the lowest increase at almost 15%.
Workers in 12 states now need to earn at least half a million dollars annually to be classified as “wealthy,” a significant increase from 2017 when only Washington, D.C., and Connecticut had such high salary requirements.
Many Californians are feeling the financial strain due to rising living costs.
“No matter how much I make or how many hours I work, it’s still difficult to pay for everything,” said Mary Smith, a customer service representative in Sacramento.
One resident in Northern California expressed shock at the findings, highlighting the challenges of affording housing in the state.
“I had no idea so many people were making that much money,” said Juan Hernandez, a laborer in the East Bay. “But with the housing prices in the Bay Area, if you’re not a millionaire, it’s impossible to afford anything.”
