Kentucky Is 2025’s 2nd Most Federally Dependent State – WalletHub Study

States receive federal aid for many reasons, from providing relief during natural disasters and health crises to funding improvements in education, transportation, infrastructure, healthcare and more. Some states receive much larger aid packages than others, but it’s not just the dollar amount that matters. It’s important to contextualize the money flowing in by comparing it to things like what percentage of the state’s revenue it makes up and how much the federal government gets back through its taxes on the state’s residents.

In order to find out exactly how big the difference in federal dependence is from state to state, WalletHub compared the 50 states in terms of three key metrics: the return on taxes paid to the federal government, the share of federal jobs, and federal funding as a share of state revenue.
In-Depth Look at the Most Federally Dependent States

Alaska is the most federally dependent state, as over 50% of the state’s revenue comes from federal funding. Some reasons why Alaska gets a lot of federal dollars include the difficulty of maintaining infrastructure in a big state with harsh weather and a small population, plus Alaska’s richness in natural resources, its vulnerability to disasters and its defensive importance.

Alaska also has a lot of federal jobs – in fact, nearly 5% of the state’s workforce is employed by the federal government. For context, the share for most states is only between 1% and 3%.

Finally, Alaska has a very good return on the taxes that its residents pay to the federal government. For every $1 that residents pay in taxes, the state receives $2.36 in federal funding, over double their investment.

Kentucky is the second-most federally dependent state, in large part because it receives a huge amount of federal funding compared to the taxes that residents pay. For every $1 paid in taxes, Kentucky gets $3.35 in federal funding. Around half of the other states get less than $1 in federal funding for every tax dollar.

Federal funding makes up a large share of Kentucky’s revenue as well, at over 46%, among the highest in the country. Kentucky doesn’t have quite as many federal jobs as other states, though. Around 1.8% of the state’s residents are employed by the federal government, which puts Kentucky around the middle of the 50 states for that particular metric.

West Virginia ranks third when it comes to dependence on the federal government, its residents get $2.72 in federal funding for every $1 they pay in taxes, which is a pretty great deal for them.

Federal funding makes up a large share of West Virginia’s revenue as well, at over 45% and more than 3.7% of West Virginia’s workforce is employed by the federal government. Both of these rates are among the highest in the country, proving that West Virginia’s economy owes a lot to the federal government.