Which U.S. States Are Not in Debt? A Complete Financial Analysis

When examining which states maintain the healthiest financial positions, the data reveals a clear picture: very few states operate completely debt-free. However, some states have managed to keep their debt-to-asset ratios remarkably low, demonstrating strong financial management and stable economic foundations. Understanding which states are not drowning in debt requires looking beyond simple debt numbers to examine the relationship between a state’s obligations and its available resources.

Based on comprehensive financial analysis of state balance sheets, Idaho, Alaska, and Utah emerge as the frontrunners in managing their financial obligations. These states represent the beginning of a spectrum that ranges from minimal debt burdens to severe financial stress, with some states owing more than they own in total assets.

States With the Least Debt: The Financial Leaders

The states with minimal debt obligations share common characteristics: strong asset bases relative to their liabilities, prudent fiscal management, and stable revenue streams. Idaho leads the pack with remarkably low financial pressure, holding total obligations of $4.43 billion against assets totaling $24.25 billion, resulting in a debt ratio of just 10.68%. This means Idaho has less than 11 cents of debt for every dollar of assets—an exceptionally healthy position.

Alaska follows closely with total liabilities of $12.99 billion compared to $104.68 billion in assets, producing a debt ratio of 14.68%. Utah rounds out the top three with liabilities of $6.45 billion against $46.13 billion in assets, maintaining a 15.93% debt ratio.

The next tier of low-debt states includes Nebraska (22.99%), South Dakota (23.88%), New Hampshire (24.64%), North Dakota (26.34%), Oklahoma (27.39%), Iowa (29.58%), and New Mexico (30.46%). These states demonstrate that financial discipline translates into reduced debt burdens and greater fiscal flexibility for future investments.

Understanding Debt Ratio: What Makes a State Financially Healthy

A debt ratio represents the percentage of a state’s financial obligations relative to its total resources. When this ratio exceeds 100%, it signals a critical situation: the state owes more than the combined value of everything it owns. Conversely, states with debt ratios below 50% maintain substantial financial cushions and demonstrate strong economic management.

Idaho’s 10.68% debt ratio illustrates this principle perfectly. For every $100 in state assets, Idaho carries only $10.68 in liabilities. This positioning provides significant room for economic weathering, infrastructure investment, and public service maintenance without immediately requiring tax increases or service cuts.

The calculation incorporates four key financial components: total assets, total liabilities, deferred inflows (money promised in the future), and deferred outflows (obligations owed in the future). This comprehensive approach reveals the complete financial picture rather than surface-level debt figures alone.

The Debt-Free Dream: States Achieving the Lowest Financial Burdens

While no state achieves completely zero debt—government operations require borrowing for infrastructure and bond obligations—some states come remarkably close to debt-free status. These low-debt states typically benefit from several factors:

Stable Tax Revenue: States like Idaho and Alaska maintain consistent revenue streams through population growth, business expansion, and natural resource management.

Controlled Spending: These states exercise restraint in creating new long-term liabilities and pension obligations.

Asset Accumulation: Alaska’s Permanent Fund and other state investment programs create substantial asset bases that offset liabilities.

Strong Economic Fundamentals: Diverse economies reduce dependency on single industries or economic cycles.

North Carolina, despite its larger size, achieves a 30.95% debt ratio by managing $109.28 billion in assets against $31.50 billion in liabilities. Montana maintains a 33.28% ratio, Wyoming holds 33.81%, and Arkansas manages 35.79%. These mid-sized states demonstrate that fiscal responsibility remains achievable across different demographic and economic contexts.

States Facing Serious Debt Challenges: When Debt Exceeds Assets

On the opposite end of the spectrum lie states whose financial positions have deteriorated significantly. These jurisdictions face the consequences of decades of spending exceeding revenues, underfunded pension liabilities, and bond obligations.

Illinois represents the most extreme case with a debt ratio of 295.58%—meaning the state owes nearly three times its total asset value. New Jersey faces similar challenges with a 249.64% ratio, while Connecticut grapples with 172.44% and New York carries 218.12%. These states owe more than they own, creating significant fiscal stress and limiting economic flexibility.

California ($111.04% ratio) and Hawaii ($107.31% ratio) have crossed the critical 100% threshold, representing situations where states’ total obligations exceed their combined assets. This dangerous position reflects generations of unfunded liabilities, particularly from public employee pension systems and healthcare obligations.

Connecticut, New York, and New Jersey—all wealthy, developed states—demonstrate that high income levels don’t guarantee financial stability. These northeastern states accumulated substantial liabilities through generous public employee benefits, infrastructure investments, and social programs that now strain their balance sheets.

The Middle Ground: States Managing Moderate Debt Levels

Between the financially healthy and financially stressed states lies a large middle tier managing debt ratios between 40% and 80%. Texas, with its massive $221.17 billion in liabilities against $475.45 billion in assets, maintains a 59.39% debt ratio—a manageable position for a state of its size and economic power.

Ohio carries $53.40 billion in liabilities with a 57.65% ratio, Colorado manages $37.10 billion with a 65.56% ratio, and Washington State holds $94.85 billion with a 77.52% ratio. These states operate within sustainable parameters, though they carry significant debt obligations that constrain budgetary flexibility.

Massachusetts, despite its wealthy status, carries a 56.31% debt ratio. Michigan holds 56.65%, Nevada manages 56.51%, and Michigan carries substantial liabilities reflecting legacy costs and infrastructure requirements. These states remain financially viable but face ongoing challenges managing their obligations.

How States’ Financial Health Is Measured

Accurate assessment of state debt requires examining multiple financial dimensions simultaneously. A state’s financial position depends not just on the size of its debt but on its capacity to service that debt through revenues and its accumulated assets that provide financial security.

State financial analysis relies on each state’s Annual Comprehensive Financial Report (ACFR), an official document that details complete financial positions including assets, liabilities, and future obligations. These reports, typically released annually, provide standardized accounting information that enables comparison across all fifty states.

The analysis incorporates four critical elements: total assets (everything a state owns—cash, investments, property, equipment), total liabilities (everything a state owes—bonds, pensions, employee benefits), deferred inflows (future payments owed to the state), and deferred outflows (future obligations the state must meet).

By examining the relationship between liabilities and assets, financial analysts determine whether states maintain healthy debt ratios or face fiscal stress. Ratios below 50% indicate strong fiscal management, ratios between 50% and 100% suggest moderate stress, and ratios exceeding 100% indicate severe financial challenges.

Data for this analysis derives from 2022 Annual Comprehensive Financial Reports for most states, with Nevada and California reporting based on 2021 data, providing the most recent comprehensive financial information available for state fiscal analysis.

The financial landscape reveals that states not burdened by excessive debt share common characteristics: prudent spending discipline, strong asset management, and realistic pension and benefit obligations. Meanwhile, states drowning in debt accumulated liabilities through years of obligations outpacing revenues, creating fiscal challenges that constrain future economic flexibility and public investment capacity.