What does it take to be in top 1% of California earners? Here’s the minimum income
The top households in the United States earn about eight times as much as the median household. To make the top 1% in California, residents have to earn even more.
That’s according to a 2023 report from SmartAsset, a financial advice website.
The report analyzed data from the IRS and the U.S. Bureau of Labor Statistics to find the minimum income that would place someone in the top 1% by state.
The national median income is around $74,580, according to U.S. Census data, and SmartAsset found households have to earn $652,657 to make it in the top 1% nationally.
The 1% threshold ranges from $368,000 to $953,000, depending on the state.
In California, the median household income is $84,097, according to Census data. People in California’s top 1% earn $844,266.
California rounds out the top three states ranked by the income threshold needed to be in the top 1%, according to SmartAsset. It follows Connecticut at $952,902 and Massachusetts at $903,401. If Washington D.C. were a state, it would rank first with the top 1% needing a minimum of more than $1 million.
Connecticut has the highest effective average tax rate at 28.4% compared to Arkansas, the lowest, at 21.11%. California’s effective average tax rate is fifth at 26.95%, according to SmartAsset.
California has a progressive tax system and the top rate of 12.3% kicks in over $677,276, according to NerdWallet. Plus, if you make more than $1 million, a 1% mental health services tax will add on. California ranked 12th in WalletHub’s ranking of overall tax burdens by state.
A 2022 Congressional Budget Office report found the top 1% of families control a third of wealth, up from 27% in 1989. The bottom half of households have 2%.
The median income for single, full-time workers is $57,200. A 2023 GoBankingRates analysis, using data from the U.S. Bureau of Labor Statistics and the Missouri Economic Research and Information Center, found that the median annual living wage in the U.S. is $53,327.
The online personal finance resource determined the living wage differently than a typical living wage calculator by basing it on a 50/30/20 budget, where you set aside half of your income for necessities, a third for wants and 20% for savings.
That study found single Californians need to earn $80,013.
The low income limit to qualify for income-driven programs in Sacramento County is around $60,000, according to the California Department of Housing and Community Development Division.
As of January, California’s minimum wage is $15.50 an hour. If you work a 40-hour week, that comes out to roughly $31,200, which is lower than what the MIT Living Wage Calculator estimates an individual would need to meet basic needs, such as child care, housing and food.
Prices have increased 3.7% over the last year, according to the September Consumer Price Index released this month.
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This story was originally published October 18, 2023 at 5:00 AM with the headline "What does it take to be in top 1% of California earners? Here’s the minimum income."
