Fact check: What are the top 5 states with the highest tax burdens in 2025 and how do they allocate federal funds?

1. What claim^[4] are on the table and why they matter to citizens

The primary claims drawn from the supplied analyses are twofold: first, that Hawaii, New York, Vermont, California, and Maine top the 2025 list of state tax burdens as a percentage of resident income; second, that Alaska and several rural/poorer states are the most federally dependent, receiving large shares of state revenue from the federal government. These claims matter because tax burden rankings guide individual relocation, retirement, and business decisions, while federal-dependency metrics signal fiscal exposure to federal policy shifts and potential vulnerability to cuts in federal programs ^{[3] [2]}.

2. Confirming the top-five tax-burden ranking and its numeric scale

WalletHub’s 2025 Tax Burden report lists explicit percentages for the top five: Hawaii 13.92%, New York 13.56%, Vermont 11.53%, California 11.00%, Maine 10.64%, calculated as the sum of property, individual income, and sales/excise taxes divided by total personal income. These figures frame the tax burden as an income-relative metric rather than a per-capita dollar amount, making the list sensitive to both tax policy and local income levels. The ranking is derived from cross-state comparisons using the defined tax categories and personal-income denominators ^{[3] [5]}.

3. How the top tax-burden states receive and use federal funds

WalletHub and related trackers indicate that federal funds flow differently across states and serve multiple purposes, including healthcare (Medicaid), education, infrastructure grants (broadband, transportation), and direct disaster relief. The analysis provided links high tax-burden states to varied federal funding uses but does not quantify federal shares for each top-five tax state. Federal dollars often supplement state revenue for healthcare and social services, which can reduce pressure on state tax policy, yet high-tax states may still levy significant own-source revenue for higher public-service levels ^{[1] [6]}.

4. Key methodological differences that explain divergent state lists

The apparent tension between “highest tax burden” and “most federally dependent” stems from distinct metrics: tax burden measures taxes relative to resident incomes, while federal dependency measures the share of state revenue coming from federal transfers. A state can be high-tax because it funds expansive public services from state revenue, while another state with low taxes can appear federally dependent because it relies heavily on federal transfers to cover programs. Understanding policy implications requires noting this methodological separation ^{[5] [2]}.

5. State-by-state examples that illustrate nuance and exception

Hawaii and New York show high tax burdens largely because of state-level income and sales taxes used to fund extensive services; they also receive meaningful federal funds but not at the extreme levels seen in states like Alaska. Conversely, Alaska—though low-tax in some measures—is reported as the most federally dependent because more than half of its revenue can derive from federal sources tied to unique economic and demographic factors. These contrasting profiles show tax burden and federal reliance do not move in lockstep ^{[3] [2] [7]}.

6. Policy implications for residents, policymakers, and stakeholders

For residents and businesses, the combined picture means you must weigh tax rates, public-service quality, and exposure to federal policy. Policymakers in high-tax states face choices about tax competitiveness versus service levels; policymakers in federally dependent states face the risk of policy-driven revenue volatility. Federal grant programs like ARPA and BEAD influence state spending priorities but do not replace structural budget choices about taxation and service provision ^{[8] [9] [6]}.

7. Where the evidence is thin and what to watch next

The supplied analyses lack state-by-state breakdowns of exact federal funding shares for the five highest-tax states and do not reconcile year-to-year trends or the potential effects of recent federal programs and budgetary changes. Watch for updated federal funds trackers and state financial reports through late 2025 for more granular allocations, and compare those to WalletHub’s future updates to see whether tax-burden rankings shift with income and tax-policy changes ^{[9] [1]}.

8. Bottom line: complementary metrics, not contradictions

The simple headline—top tax-burden states are Hawaii, New York, Vermont, California, and Maine; most federally dependent states include Alaska and several poorer/rural states—is accurate within the datasets cited. The apparent contradiction dissolves when recognizing that tax burden and federal dependency measure different fiscal realities: one measures what residents pay relative to income; the other measures how much state revenue comes from the federal government. For complete judgment, consult both metrics together and monitor updated state financial disclosures and federal grant-tracking databases ^{[3] [2] [9]}.