In California, reaching the top 1% of earners now requires an income of over $1 million a year, a dramatic increase from previous years. While the West Coast was expected to have the highest thresholds, surprising states like Connecticut and Massachusetts top the list. Despite the high costs of living in California, where a median home price can exceed $860,000, the income needed to be considered wealthy has soared nationwide, reflecting broader economic pressures and income disparities. This startling shift underscores the intense financial strain facing even high-income residents in the Golden State.
According to research published on July 17 by the financial website Go Banking Rates, people must earn more than $1 million a year to be considered among California’s highest earners.
According to the study, which converted the amounts earned to 2024 dollars to account for inflation, roughly 200,000 California households earn more than $1 million annually. The state has a population of slightly over 39 million, and nearly 20 million income tax returns were filed in 2022 for the 2021 tax year.
The West Coast was predicted to place highest by the researchers, but “surprisingly,” Connecticut and Massachusetts in the Northeast had higher barriers to entry into the top 1 percent reports Travis Gillmore from The Epoch Times.
Seven-figure salaries are earned by the top 1 percent of earnings in five states across the country: Connecticut, Massachusetts, California, Washington, and New Jersey, in that order of ranking.
New York finished only $253 short of joining the million-dollar club, trailing closely behind the top five.
On the lowest end of the spectrum, three states—New Mexico, Mississippi, and West Virginia—have the top 1% of workers earning less than $500,000.
According to a different analysis by Go Banking Rates, which was released on July 2, the national income threshold for being considered “rich”—which the report defined as the top 5 percent of state salaries—is rising.
The Internal Revenue Service’s most recent filing data shows that, between 2017 and 2022, the average income of California’s wealthiest 5 percent of households increased by more than 37 percent, from slightly less than $450,000 to more than $613,000.
Every state had an increase over that time, but North Dakota’s about 15% increase from roughly $365,000 to approximately $419,000 was the lowest in the US. Washington’s average increased the most, nearly 44%, from more than $378,000 to almost $545,000.
According to the survey, employees in 12 states must make at least $50,000 per year to be considered “wealthy,” a significant increase from the previous year when only workers in Connecticut and Washington, D.C. qualified for such a designation.
Several Californians report that rising costs of living are making things difficult for their families.
“No matter how much I make or how many hours I work, it’s still difficult to pay for everything,” Mary Smith, a Sacramento-based customer service representative, told The Epoch Times.
A resident of Northern California expressed disbelief at the results, highlighting the perception that high earnings are necessary to survive in the Golden State.
“I had no idea so many people were making that much money,” Juan Hernandez, a laborer in the East Bay, told The Epoch Times on July 22. “But with the housing prices in the Bay Area, if you’re not a millionaire, it’s impossible to afford anything.”
Zillow, an online real estate website, conducted research and found that the average cost of a home in the Bay Area is $1.2 million.
Redfin, an online real estate listing company, estimates that in June 2024, the median price of homes sold in California would be close to $860,000.
Previously, GreatGameInternational reported that according to SmartAsset, which calculated the income a family needs to live comfortably in every US state using the MIT Living Wage Calculator, Massachusetts is the most costly state to live comfortably, and Mississippi is the cheapest.
