NASHVILLE, Tenn. (WKRN/NEXSTAR) – Have you ever wondered how close you are to being among the richest in Tennessee? A new analysis by SmartAsset shows just how much it takes to be in the top 1% in each of the 50 states.
How it works
Using tax data from the IRS, the site was able to determine the minimum income required to be among the highest earners in each state. These figures were then adjusted to 2021 dollars using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the Bureau of Labor Statistics.
States were ranked based on the adjusted gross income of those in the top 1%. Adjusted gross income, or AGI, is your gross income minus adjustments to income, according to the IRS. Gross income includes wages, capital gains, retirement distribution, and any other income. Adjustments may include student loan interest, alimony payments, or contributions to a retirement account.
Your AGI is used to determine which credits and deductibles you qualify for while filing your taxes.
The benchmark to be considered among the top 1% of earners varies by state. So how much does it take to land among the top 1% in Tennessee? You’ll need to make an income of at least $492,000 to find yourself in the 1% of the Volunteer State.
That average of just under $500K puts Tennessee around the middle of the pack compared to the other states.
Here are the five states with the highest adjusted gross incomes to be considered among the top 1%:
- Connecticut: $896,490
- Massachusetts: $810,256
- New York: $777,126
- New Jersey: $760,462
- California: $745,314
Technically, Washington, D.C., which isn’t a state, has the highest AGI to be considered one of the highest earners at $918,000.
Alternatively, here are the five states with the lowest AGIs for the top 1%:
- West Virginia: $350,212
- Mississippi: $361,462
- New Mexico: $384,427
- Arkansas: $411,633
- Kentucky: $412,836
In its analysis, SmartAsset found an American family needs a gross income of $597,815 to fall in the top 1% of earners nationally. Those in the top 1% in the U.S. earn twice as much as those in the top 5% – a gross income of $240,712 is enough to put you in the top 5%.
If you don’t land among the top 1% of earners, you may still be considered ‘rich’ in your community. Go Banking Rates recently released an analysis showing how much you need to be considered rich in 50 U.S. cities. Two Tennessee cities made the list – Memphis (47) and Nashville (26).
The lowest income to be considered “rich” (Top 20%) in Memphis is $86,964. The average income of the top 20% comes in at $172,622. For the top 5%, the average income is $335,653.
In Music City, the lowest income to be considered “rich” (Top 20%) is $115,609. The average income of the top 20% comes in at $212,201. For the top 5%, the average income is $393,014.