WalletHub ranked states based on the level of federal support they receive, finding Alaska, Kentucky and West Virginia as the most dependent states. The study used data from 2024 and 2025 from the Internal Revenue Service, the U.S. Census Bureau, the Bureau of Labor Statistics, and other sources.

A state's residents' dependency on federal funding was measured by dividing federal funding in dollars by IRS collections in dollars to calculate return on taxes paid. State governments' dependency on federal funding was measured by calculating the percentage of state revenue that comes from federal funding. Each state received a total score based on its weighted average across the two dependency categories, determining its overall federal dependency ranking.

Alaska ranked No. 1 overall on WalletHub's federal dependency ranking. Alaska's residents receive $2.52 in federal funding for every $1 they pay in taxes, and nearly 45% of Alaska's state revenue comes from federal funding.

Kentucky ranked No. 2 overall on WalletHub's federal dependency ranking. Kentucky receives $3.45 in federal funding for every $1 residents pay in taxes, with 44% of Kentucky's revenue consisting of federal funding.

West Virginia ranked No. 3 overall on WalletHub's federal dependency ranking. West Virginia's state revenue largely consists of federal funding. West Virginia is home to about 23,000 federal employees, according to the West Virginia Center on Budget and Policy.

The report found that red states typically depend more on federal funding than blue states. Mississippi ranked No. 4 overall, Louisiana ranked No. 5, South Carolina ranked No. 6, Arizona ranked No. 7, Indiana ranked No. 8, New Mexico ranked No. 9 and Montana ranked No. 10.

At the other end of the ranking, Iowa was named the 10th-least federally dependent state overall. California receives the highest amount in federal grants among states.

Mississippi had the lowest gross domestic product per capita in the United States. West Virginia had the second-lowest gross domestic product per capita in the United States.

"Regardless of whether the distribution of federal funds is fair or not, living in one of the most federally dependent states can be beneficial for residents. For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding, which often leads to higher-quality infrastructure, education, public health and more," said Chip Lupo, an analyst.