Keep Factually independent
Whether you agree or disagree with our analysis, these conversations matter for democracy. We don't take money from political groups - even a $5 donation helps us keep it that way.
How do the top 5 states with the highest tax burdens in 2025 use federal funds for infrastructure development?
Executive Summary
WalletHub’s 2025 ranking lists Hawaii, New York, Vermont, California, and Maine as the five U.S. states with the highest tax burdens, but that study does not analyze how those states spend federal infrastructure dollars; federal infrastructure flows instead follow statutory apportionment formulas and competitive grant programs under the Bipartisan Infrastructure Law and related FHWA notices. Examining FHWA apportionment tables, IIJA program descriptions, and federal grant patterns shows that federal funds reach states through formula shares for highways, bridge programs, and earmarked EV and resilience initiatives, while actual state spending choices vary and are documented in state obligation and budget reports [1] [2] [3].
1. What the original claims say — a clear starting point and what's missing
The core empirical claim anchored in the materials is straightforward: WalletHub identifies Hawaii, New York, Vermont, California, and Maine as the top five states by tax burden in 2025, with tax burdens ranging from roughly 13.9% down to 10.6% of personal income. That study is strictly about state and local tax incidence — property, individual income, and sales/excise taxes — and it explicitly does not address federal grants or how states allocate federal infrastructure dollars, leaving a gap between tax-burden measurement and federal fund use that other datasets must fill [1] [4] [5]. Critics in the WalletHub thread note potential measurement issues — omitted business taxes and changing rates — which weakens any direct inference from tax burden to federal-spending behavior without additional data [1].
2. How federal infrastructure money is actually allocated — formulas, apportionments, and competitive pots
Federal infrastructure funding primarily arrives to states through statutory apportionments and competitive grants established under the Infrastructure Investment and Jobs Act and administered by agencies like the Federal Highway Administration. Apportionments for highways and bridges are computed by formula and published in FHWA computational tables, which show billions in authorized apportioned funds and state-by-state shares subject to adjustments such as minimum rates of return and obligation limits [2] [6]. The IIJA also created new formula programs — including the National Electric Vehicle Infrastructure program — and expanded set‑asides and competitive grant windows, meaning some federal funds go directly via formula while others require states to apply and match for projects [7] [3].
3. Which programs matter most to infrastructure outcomes in high‑tax states
The dominant federal channels that affect visible infrastructure outcomes are the Federal‑Aid Highway Program, Bridge Formula Program, EV infrastructure formula grants, and competitive resilience/RAISE grants. Those programs together constitute the large, recurring federal flows that states then program into construction, maintenance, EV charging, and resilience investments; FHWA apportionment estimates list the largest dollar flows to big states like California and New York, while formula shares and competitive award histories determine amounts each year [8] [2]. The Bipartisan Infrastructure Law’s expanded authority also channels non‑transportation infrastructure funds — broadband and resilience — which states with active grant-seeking capacity can secure in addition to formula highway dollars [3].
4. Why you cannot assume high state tax burden equals different federal‑fund usage
Tax-burden rankings and federal spending are distinct fiscal phenomena. A high state tax burden does not predict how federal funds are used within a state because federal allocations depend on statutory formulas, project eligibility, and competitive grant success, not a state’s tax rate. For example, FHWA apportionments and EV funding lists show large absolute dollar shares flowing to populous states irrespective of tax burdens; conversely, smaller high‑tax states may receive smaller formula shares but could win competitive grants for targeted projects [8] [7]. Additionally, state budget priorities and matching-capacity govern whether federal dollars are applied to highways, transit, broadband, or resilience, so the end-use profile is driven by state executive and legislative choices and grant applications [9] [3].
5. What evidence is missing and how to close the gap — a roadmap for definitive answers
Existing sources establish the rules and aggregate flows but do not map WalletHub’s top-five tax states to their specific federal infrastructure spending decisions; to close that gap requires combining state-level federal obligation and apportionment records, state capital budgets, and competitive grant award databases. FHWA computational tables and IIJA program reports provide apportionment and program totals, while state DOT obligation reports and state budget documents show how those apportionments were obligated and matched; synthesizing those datasets will reveal whether Hawaii, New York, Vermont, California, and Maine direct federal funds to highways, bridges, EV charging, broadband, or resilience [2] [6] [3]. Note that WalletHub’s methodological limits and differing timeframes mean any definitive mapping must align fiscal years and control for one‑time competitive awards versus recurring formula apportionments [1] [9].