What It Takes to Join America's Top 1%

In the land of opportunity, the gap between the rich and the rest is widening. Today, the wealthiest 1% of American families are sitting on more than a third of the nation's wealth. That's a big jump from the 27% they held back in 1989. Meanwhile, the bottom half of households barely scrape together 2% of the total wealth. But what does it really take to break into this exclusive 1% club? Well, it turns out, it's not the same in every state.
 
 
 
The Magic Number for the 1%

Nationally, if your household is pulling in $652,657 a year, congrats, you're in the top 1%! That's over eight times more than the median household income of around $75,000. But this number isn't set in stone across the country. In places like Connecticut, you need to earn $952,902 to be in the 1%, while in West Virginia, the threshold is a more modest $367,582. 

 
 
A Closer Look State by State
 
  • Connecticut: Leads with the highest floor for the top 1%, where households need to earn nearly $953,000. It also imposes the highest effective tax rate on its top earners at 28.4%.
  • Massachusetts: Here, you need at least $903,401 to join the 1%, with a high effective tax rate of 27.15%.
  • California: To be in the 1% club, you need an income of $844,266, taxed at an average of 26.95%.
  • New Jersey: You need $817,346 to be in the 1%, and the tax rate here is a high tax rate of 28.01%.
  • Washington: A threshold of $804,853 is needed for the 1%, with a notable tax rate of 25.99%. 
  • New York: Sets its bar at $776,662 for the 1%, with the second-highest tax rate in the country at 28.29%. 
  • Southern States: They generally have lower income thresholds, reflecting their different economic landscapes and possibly more affordable living costs. 
 

Rank

 
 
 
 

State

 
 
 
 

Top 1% Threshold

 
 
 
 

1% Tax Rate

 
 
 
 

1

Connecticut

$952,902

28.40%

2

Massachusetts

$903,401

27.15%

3

California

$844,266

26.95%

4

New Jersey

$817,346

28.01%

5

Washington

$804,853

25.99%

6

New York

$776,662

28.29%

7

Colorado

$709,092

25.86%

8

Florida

$694,987

25.82%

9

Illinois

$660,810

26.35%

10

New Hampshire

$659,037

26.25%

11

Wyoming

$656,118

24.79%

12

Virginia

$643,848

26.11%

13

Maryland

$633,333

25.94%

14

Texas

$631,849

25.83%

15

Utah

$630,544

23.77%

 
What This Means for Multifamily Investors

These income disparities across states create unique opportunities for multifamily investors. In high-threshold states like Connecticut and California, there's a market for luxury housing, which could mean higher rents but bigger investments. On the flip side, states with lower thresholds like Georgia might be more suited for affordable housing, offering stable occupancy and potentially lower costs. 

But remember, state tax rates can take a big bite out of your profits. High-tax states could mean less money in your pocket. So, for investors, it's crucial to get the lay of the land financially to make smart, informed decisions that match the economic vibe and housing needs of the region.

 
Decoding the Regional Wealth Puzzle

The income needed to be in the 1% varies widely by state, highlighting the economic and cost of living differences across the country. Coastal states often have higher thresholds, suggesting more wealth and possibly higher living costs compared to the Southern and Midwestern states.

 
Final Thoughts

The income range for entering America's top 1% is a clear indicator of the nation's economic diversity. For those aiming for financial success, understanding these regional differences is key. It sheds light on the economic terrain they're navigating. As wealth continues to concentrate in certain pockets, sophisticated financial planning and a keen understanding of regional economic differences become increasingly important.

As always, Be Bold, Be great, and Keep Pushing Forward! 

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Sources: 

 
About Ellie Perlman

Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.

At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.

In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.

Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.

Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.

You can learn more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com. 

*The content provided on this website, including all downloadable resources, is for informational purposes only and should not be interpreted as financial advice. Furthermore, this material does not constitute an offer to sell or a solicitation of an offer to buy any securities.

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