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Fact check: Which US states have the highest GDP and contribute most to federal tax revenue?
Executive Summary
California and New York lead U.S. states in total tax collections and federal contributions, while Texas and Florida rank high in overall GDP and tax payments despite having no state income tax; federal tax flows and state GDP growth vary by measure and period. Recent Bureau of Economic Analysis data show broad nationwide GDP growth in 2025 concentrated in a few fast-growing states, while state-level federal net balances and tax structures shape which states are net contributors to Washington [1] [2] [3].
1. Which states collect the most tax dollars—and why that matters for federal revenue
State-level totals show California, New York, Texas, Illinois and Florida as the largest collectors of state tax revenue in FY2023, with California topping the list at about $221 billion in collections; these totals reflect both large economies and progressive tax bases in states like California and New York [1]. That pattern matters because states with larger taxable incomes and denser high-income populations typically generate more federal income tax paid by residents and businesses, even if states themselves use different revenue mixes—this helps explain why California and New York are significant contributors to federal receipts, while states like Texas and Florida still contribute large federal tax dollars through corporate and payroll taxes despite lacking personal income taxes [1] [3].
2. GDP leaders versus federal taxpayers: not always the same story
Bureau of Economic Analysis (BEA) Q2 2025 data show 48 states experienced real GDP growth, led by North Dakota with a 7.3% annualized increase, underscoring that fast GDP growth does not automatically equal the largest share of federal tax payments [2]. High GDP growth in resource or small-population states can raise state output sharply without producing the same aggregate federal tax contribution as populous states with large service and finance sectors. Thus, GDP rank and federal-tax share diverge: California and New York remain dominant in absolute tax collections even when growth rates episodically favor smaller states [2] [4].
3. The top-1% and concentrated federal tax contributions: what the data show
Analyses of top-income shares indicate very concentrated federal tax contributions by high earners in particular states; one study cited Texas as having extremely large total income tax numbers for its top 1% cohort and listed Tennessee high as well, suggesting state-level concentration of top-earners significantly shapes federal tax flows [5]. That concentration interacts with state tax policy: states with large wealthy populations generate outsized federal income taxes even if state tax collections differ, producing complex fiscal relationships between state economies and federal receipts [5] [1].
4. Net federal flows: who pays more than they receive?
Federal tax payments alone do not determine whether a state is a net contributor to Washington; redistribution matters. In 2023 the federal government collected roughly $4.67 trillion and redistributed about $4.56 trillion back to states and residents, producing a landscape where 19 states paid more to the federal government than they received, with New York and California among large net contributors due to their large tax bases and comparatively lower per-capita federal transfer receipts [3]. This reveals a two-part reality: high-collection states fund federal spending at scale, but redistribution patterns materially alter net fiscal positions [3].
5. Different tax structures change who appears to 'pay more'
States use diverse revenue mixes—California and New York rely heavily on progressive personal income taxes, while Texas and Florida rely more on sales and excise taxes—so comparing who "contributes most" depends on the metric: total state tax collections, federal income taxes paid by residents, or net fiscal balance with the federal government [1]. The same dollar of state-collected revenue does not map directly to federal receipts; resident-income profiles and federal tax liabilities drive federal contributions independently of state tax design [1] [3].
6. Recent economic growth complicates short-term rankings
BEA’s Q2 2025 release shows rapid changes in state GDP growth, with most states expanding and only Arkansas and Mississippi contracting year-over-year, demonstrating that state rankings shift with cyclical conditions and one-off booms [4]. These dynamics mean that lists of “top GDP states” or “largest federal contributors” are temporally sensitive: population size, sector mix, and recent growth spurts can move a state’s contribution to national GDP and thus influence federal tax receipts over quarters and years [2] [4].
7. Takeaway: combining measures gives the full picture
To identify which states “contribute most” to federal tax revenue you must combine at least three measures: absolute federal taxes paid (driven by resident incomes), state GDP (size of the economy), and net federal balance (taxes paid minus federal receipts). Using the provided analyses, California and New York top collections and net contributions by scale, while Texas and Florida rank high in GDP and federal tax dollars despite different state tax regimes, and recent BEA growth shows smaller states can spike in GDP without overtaking big-state fiscal contributions [1] [3] [2].