Kentucky Named Most Federally Dependent State In 2025
Many states rely heavily on federal aid as the tax filing deadline looms. Personal-finance website WalletHub has released its updated rankings for the most federally dependent states for 2025 and Kentucky leads the pack. Here are some factors contributing to the Commonwealth's federal dependency.
KENTUCKY: 2ND MOST FEDERALLY DEPENDENT
Kentucky's relatively high poverty rate significantly affects the state's federal dependence. With the state's lower-than-average income levels, it means that a larger portion of the population depends on this federal funding every year. The funds help support healthcare, education, housing, and other services for the state's disadvantaged citizens.
WalletHub compared the 50 states using three critical metrics to determine the level of federal dependence:
1. Return on Taxes Paid to the Federal Government
2. Federal Funding as a Share of State Revenue
3. Share of Federal Jobs
“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. For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding, which often leads to higher-quality infrastructure, education, public health and more.” Chip Lupo, WalletHub Analyst
Federal Dependency of Kentucky (1=Most Dependent, 25=Avg.):
• 1st – Return on Taxes Paid to the Federal Government
• 7th – Federal Funding as a Share of State Revenue
• 24th – Share of Federal Jobs
STATE-BY-STATE BREAKDOWN
Some other factors contributing to Kentucky's federal dependence:
KENTUCKY RANKS 4TH IN FINANCIAL DISTRESS
Earlier in the year a WalletHub report reflected the economic struggles in Kentucky. Factors such as late or missed credit payments, high levels of debt, low credit scores, and unemployment rates all contribute to financial strain. Here are the key factors contributing to this ranking. There's significant work needed to improve the well-being of Kentucky residents.
Kentucky Overall Ranking: 4th
4th – Average Credit Score (Q3 2024)
10th – Change in the Share of People with Accounts in Distress - Q3 2024 vs. Q3 2023
9th – Change in the Average Number of Accounts in Distress - Q3 2024 vs. Q3 2023
13th – “Loans” Search Interest Index
KENTUCKY: 15TH MOST UNDERPRIVILEGED CHILDREN
In August, WalletHub released its annual report on the States with the Most Underprivileged Children. We have a lot of work to do to improve these rankings. Our life, children, and future depend on it. I'll be the first to admit that I can do more. How about you?
Kentucky Overall Rank: 15th
8th – % of Children in Households with Below-Poverty Income
12th – % of Maltreated Children
10th – Child Food-Insecurity Rate
30th – % of Uninsured Children
26th – Infant Mortality Rate
11th – % of Children in Foster Care
20th – % of Children in Single-Parent Families