Income Inequality Across America: What It Takes To Reach the Top 5% Earners in Your State

The concept of being “wealthy” varies dramatically depending on where you live. Cost of living, regional economic development, and local job markets all shape what income level actually qualifies as affluent. To understand this geographic divide, we analyzed IRS data revealing the earnings thresholds needed to break into the top income brackets in each state.

The Income Divide: Understanding Top Earner Status

Based on the United States Census Bureau’s 2021 American Community Survey data, the threshold to enter the top 20% income bracket ranges from as low as $103,135 in West Virginia to $180,558 in New Jersey. The gap becomes even more pronounced when examining the top 5% earners, where income requirements span from $299,882 to $562,886—nearly double in high-cost states.

This disparity illustrates a fundamental truth about American economics: your purchasing power and social status aren’t solely determined by salary, but by regional context.

States Where the Wealthy Earn Less

The most affordable entry point to upper-income status exists in Southern and Appalachian regions. West Virginia requires the lowest threshold at just over $103,000 to join the top 20%, while Arkansas ($104,746), Kentucky ($110,561), and New Mexico ($110,659) follow closely. For the top 5%, West Virginia tops out at $299,882—less than half what’s needed in coastal states.

These lower thresholds reflect regional economic realities: lower housing costs, reduced cost of services, and generally lower expenses for healthcare and education.

The Midwest and Ohio’s Position

Midwestern states present a middle ground. Ohio, for instance, requires $120,392 to reach the top 20% income bracket—a moderate threshold reflecting a balanced cost of living. To break into the top 5 percent income tier in Ohio specifically, you’d need to earn $370,964, positioning the state slightly below the national average for ultra-high earners.

Indiana ($116,983 for top 20%), Missouri ($118,737), and Iowa ($121,178) show similar patterns, where regional affordability keeps income thresholds reasonable compared to coastal counterparts.

High-Barrier States: Where Six Figures Still Isn’t Enough

The path to “rich” becomes substantially harder in states with elevated living costs and competitive job markets. New Jersey leads as the most expensive state to enter the wealthy class, requiring $180,558 to reach the top 20%—and a staggering $562,886 to join the top 5%.

Massachusetts ($179,470 for top 20%, $558,616 for top 5%) and Connecticut ($169,183 for top 20%, $602,707 for top 5%) follow similar patterns. California requires $171,387 to reach the upper tier, though the top 5% threshold stands at $555,007—slightly lower than the Northeast despite comparable living costs.

New York represents another premium market, where $158,336 enters the top 20%, but $574,063 is required for the top 5%—the highest threshold in the nation, reflecting New York City’s outsized influence on state economics.

Tech and Growth States

Western states with tech booms show interesting patterns. Washington requires $158,712 to reach the top 20% and $487,950 for the top 5%, reflecting Seattle’s economic pull. Colorado ($153,338 and $466,181 respectively) demonstrates how emerging tech hubs push income thresholds upward compared to traditional industrial regions.

Understanding the Regional Gap

The data reveals a critical insight: earning $150,000 makes you genuinely wealthy in Ohio, exceptional in West Virginia, but merely comfortable in New Jersey. This gap—ranging from $103,000 to $180,000+ for the same relative status—demonstrates how geographical location fundamentally reshapes financial definitions.

For those tracking wealth status, your state matters as much as your salary. The same income level that secures top 5% status in rural states barely guarantees top 20% positioning in high-cost metros.

Data sourced from United States Census Bureau’s 2021 American Community Survey, current as of early 2023. Analysis based on adjusted gross income figures and income quintile breakdowns by state.