Report: Texas one of the states that is least dependent on federal aid

Texas ranks as one of the least federally dependent states in the nation, according to a new WalletHub report released this month that analyzed how much states rely on federal support.

The Lone Star State placed 38th overall in federal dependency among all 50 states, with a score of 32.54 out of 100, where higher scores indicate greater dependency.

“Texas continues to demonstrate strong fiscal independence compared to many other states,” said John S. Kiernan, WalletHub’s managing editor, who supervised the study published March 10.

The analysis evaluated states based on three key metrics: return on taxes paid to the federal government, share of federal jobs, and federal funding as a percentage of state revenue.

Texas residents ranked 44th in dependency, indicating they receive significantly less in federal aid per tax dollar contributed than residents in most other states. Meanwhile, the Texas state government ranked 28th in its reliance on federal funding.

The study found that Texas is among five states receiving the least federal grant money per dollar of federal taxes paid, ranking 48th in this category.

This pattern contrasts sharply with the most federally dependent states — Alaska, Kentucky and West Virginia — which receive substantially more federal funding than their residents contribute in taxes.

For every dollar Texas residents pay in federal taxes, the state receives considerably less in return, effectively subsidizing more federally dependent states, according to the report’s methodology.

The findings challenge some political narratives, as the study showed varying levels of federal dependency among both Republican and Democratic-leaning states. Texas exemplifies a red state with low federal dependency, receiving less in federal support than many blue states with similar tax contributions.

State economic experts attribute Texas’ low federal dependency to its diverse economy, business-friendly regulations and strong job market. The state has consistently maintained lower unemployment rates than the national average in recent years.

“Regardless of whether the distribution of federal funds is fair or not, living in one of the most federally dependent states can be beneficial for residents,” Kiernan noted in the report. “For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding.”

For Texas, however, the calculus appears different — the state contributes more to federal coffers than it takes out, positioning it among the net contributors to the federal system rather than net beneficiaries.