Understanding Income Inequality Across America's Most Unequal States

The wealth gap between America’s highest and lowest earners has become increasingly pronounced, with some states experiencing far more dramatic disparities than others. To identify which regions face the most inequality, financial analysis firm GOBankingRates examined comprehensive Census Bureau data using the Gini coefficient—a standardized measure that quantifies income distribution within a population. A coefficient approaching 1.0 indicates extreme inequality, while approaching 0 suggests near-equal earnings across the population.

The analysis reveals that the United States maintains a national Gini coefficient of 48.2%—a slight improvement from 2023’s 48.5%, which had been the highest level recorded in the preceding 50 years. However, this marginal improvement masks significant regional variations, with 10 states substantially exceeding the national average for income disparity.

What the Gini Coefficient Actually Means

Before examining individual states, it’s important to understand what these measurements reveal about income inequality. The Gini coefficient distills complex wealth distribution patterns into a single percentage. For instance, a state with a 50% coefficient experiences considerably more unequal earnings distribution than one measuring 48%. The data underpinning these rankings comes from the 2022 American Community Survey, providing the most current comprehensive statistics available.

The Top 10 States With the Starkest Income Divides

Researchers identified a distinct tier of states where the wealth disparity between bottom and top earners reaches dramatic proportions. The rankings reveal not only which locations face the most inequality, but also the actual income figures that define these economic divisions.

District of Columbia Leads in Inequality

The nation’s capital exhibits the most pronounced wealth inequality of any state or territory, with a Gini coefficient of 52%. This exceptional disparity becomes clear when examining actual earnings: those in the bottom 20% average just $14,374 annually, while the top 5% earn an average of $719,253—a staggering differential exceeding $700,000. The top earners in D.C. actually surpass the national average for high earners, indicating concentration of elite income in the political and business hub.

Connecticut and Louisiana Share High Inequality Ratings

Connecticut registers a 50% Gini coefficient, tied with Louisiana. However, these states achieve this ranking through different income patterns. Connecticut’s top 5% earners average $656,438—the second-highest in the nation—while bottom earners average $18,445. Louisiana, conversely, represents a lower-income state overall; its top 5% average $384,432 against a bottom 20% average of just $11,192, illustrating how inequality can manifest differently across economic regions.

The 49% Bracket: Massachusetts, California, and Florida

Three states cluster at the 49% Gini coefficient level, each demonstrating substantial wealth gaps despite different economic profiles. Massachusetts ($617,199 for top earners versus $18,123 for bottom earners) and California ($613,602 versus $18,818) both feature high incomes at the top end paired with modest bottom-tier earnings. Florida presents a more extreme disparity, with top earners averaging $476,546 compared to just $15,579 for the bottom 20%—a gap of nearly $461,000.

New York’s Hidden Disparities

Despite a median household income of $81,385 statewide, New York exhibits significant inequality with a 48.8% Gini coefficient. The bottom 20% average only $14,932 annually—far below the state median—while the top 5% earn $621,301, substantially exceeding the national average for high earners of $494,992.

The 48% Group: Illinois, Arkansas, and Mississippi

Three states share a 48% Gini coefficient, marginally below the national average, yet each faces notable income challenges. Illinois presents median household income of $78,433 with bottom earners averaging $16,165 against top earners’ $503,970. Arkansas shows more severe inequality proportionally, with the bottom 20% earning just $12,745—the third-lowest on this entire ranking. Mississippi experiences the most extreme bottom-tier poverty among all states, with the lowest-income quintile averaging only $10,766 annually, while top earners reach $333,597.

Why These States Stand Out

Several patterns emerge from examining the states with at most inequality. Geographic concentration matters: both coasts and financial hubs tend toward higher Gini coefficients. Additionally, states with significant high-income industries—finance, technology, government—paired with substantial lower-income service sectors experience more pronounced disparities. The data underscores how income inequality extends beyond simple percentages to reflect fundamentally different economic realities for residents at opposite ends of the earnings spectrum.

Understanding the Broader Context

While 10 states exceed the national average for inequality, the relatively narrow Gini coefficient range—from below 48% to 52%—suggests that income inequality is a nationwide phenomenon rather than isolated to a few outliers. Even states near the bottom of this analysis exhibit substantial wealth gaps, reflecting broader economic trends affecting all American regions.

The persistence of these disparities, despite the slight improvement from 2023’s record levels, indicates that addressing income inequality remains a complex challenge requiring attention to structural economic factors, wage growth opportunities, and educational pathways for lower-income populations seeking upward mobility.

Data Source: U.S. Census Bureau, 2022 American Community Survey (Current as of July 2024)

Methodology Note: Rankings were determined exclusively by Gini coefficient analysis, measuring the distribution of income across the full earning spectrum. This measure provides a standardized comparison across all states and territories.