Where you reside greatly influences what it means to be in the top 1% of earners.

For instance, in West Virginia, reaching the top 1% requires a pre-tax income of about $420,000. In contrast, in states like California and Connecticut, you’d need to earn over a million dollars.

This information is derived from a recent study by SmartAsset, a financial technology firm, which revealed a significant variation in the incomes necessary to be classified in the top 1% across different states in 2024.

The findings are part of several reports examining high-income earners in the U.S. during the times of inflation and the pandemic. According to federal data, median household income climbed by nearly 20%, reaching $80,610 between 2020 and 2023.

Two related analyses, released this summer by SmartAsset and GOBankingRates, ranked states based on the pre-tax income needed to qualify for the top 1%.

Millionaires at the Top: The Five Richest States

Here are the top five states with the highest minimum incomes needed to enter the top 1%. We’ve used SmartAsset’s figures, which closely align with those from GOBankingRates.

• Connecticut: $1.15 million for top 1% eligibility
• Massachusetts: $1.11 million minimum income
• California: $1.04 million minimum
• Washington State: $990,000
• New Jersey: $976,000

In contrast, these are the states where the least income is needed to rank in the top 1%:

• West Virginia: $420,000 for top 1% status
• Mississippi: $441,000 minimum
• New Mexico: $476,000
• Kentucky: $514,000
• Arkansas: $532,000

Defining Wealth: What Does It Mean to Be Rich?

States with high incomes, such as California and New York, are home to many Fortune 500 companies.

Jaclyn DeJohn, the director of economic analysis at SmartAsset, stated, “These areas offer either lifestyle or business opportunities.” She also highlighted that three of the ten states with the highest incomes do not have an income tax: Florida, Washington, and Wyoming.

“Generally speaking, you could be saving 6 or 7% of your income annually just from that,” she added.

Differences in income and local living costs likely influence Americans’ choices about where to live. Notably, the five states with the highest minimum incomes saw population losses due to domestic migration between 2020 and 2023, according to Census data. Conversely, three low-income states—Arkansas, Kentucky, and West Virginia—experienced population growth due to migration during the same period, with New Mexico and Mississippi seeing slight net losses.

Elise Gould, a senior economist at the Economic Policy Institute, posed an intriguing question: “What does being rich actually mean? Is it merely having more money than others, or does it relate to a higher quality of life? Are we measuring comfort levels or comparing oneself to others?”

To be counted among the top 1% of earners in the U.S., an individual needs to make close to $788,000, according to SmartAsset. Meanwhile, entering the top 5% requires a minimum income of $290,000. These figures are estimates based on IRS data from individual tax filers in 2021, adjusted for 2024 costs.

Income inequality is a growing concern in the U.S. From 1979 to 2022, earnings of the top 1% increased by 172% after inflation adjustments, as per the Economic Policy Institute. In comparison, the earnings of the bottom 90% increased by just 33% during the same period.

Gould pointed out, “At the very top, CEO pay significantly influences these numbers.”

In 1965, CEOs earned 21 times more than the average worker; by 2023, that figure skyrocketed to 290 times.

However, it’s worth noting that lower-income groups are also seeing increases in their earnings, particularly in recent years, aided by policies that supported them during the pandemic.

Struggling to enter the top 1%? Aim for the top 10% instead!

If your earnings fall short of $400,000 or even $1 million, there’s a chance you might still reach the top 5% or 10% income bracket either nationally or within your state.

According to a recent analysis by Motley Fool, here’s the household income required to be part of various top income brackets in the U.S. for 2023:

• Top 10%: $234,900
• Top 20%: $165,300
• Top 30%: $127,300

Additionally: In a surprising turn, workers with lower wages experienced the highest wage growth during the pandemic.

The following figures show the minimum income required to be in the top 5% in select states, based on data from SmartAsset. These numbers correspond to individual income.

For states with higher incomes:

• Connecticut: minimum income of $370,000 for top 5%
• Massachusetts: $393,000
• California: $365,000
• Washington State: $377,000
• New Jersey: $372,000

For states with lower incomes:

• West Virginia: minimum income of $193,000 for top 5%
• Mississippi: $193,000
• New Mexico: $215,000
• Kentucky: $214,000
• Arkansas: $217,000