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All Contents © 2018The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
| August 6, 2018
There’s a lot of conspicuous consumption in the U.S., but in reality, millionaires are actually pretty rare.
Only 5.8% of all American households have investable assets of $1 million or more, excluding the value of real estate, employer-sponsored retirement plans and business partnerships, according to Phoenix Marketing International, a firm that tracks the affluent market. Not surprisingly, the states with the highest concentrations of millionaires also tend to have some of the highest incomes, home values and living expenses in the country.
New York and California have lots of millionaires, you say? No kidding. They also have sky-high median household incomes and other pricey demographic indicators. What’s more remarkable is when a state can manage to have a relatively high concentration of millionaires and relatively low costs at the same time.
Using data from Phoenix Marketing International and the U.S. census, we searched for states with median incomes and median home values well below national levels that still managed to support relatively high concentrations (at least 5%) of millionaire households.
Here’s a look at 10 states with surprisingly high concentrations of millionaires given their broader income and home value demographics. For perspective, we’re also providing the richest residents of these states, as well as important tax and cost-of-living information.
Estimates of millionaire households provided by Phoenix Marketing International, a firm that tracks the affluent market. Investable assets include education/custodial accounts, individually owned retirement accounts, stocks, options, bonds, mutual funds, managed accounts, hedge funds, structured products, ETFs, cash accounts, annuities and cash value life insurance policies. Data on household incomes and home values are from the U.S. Census Bureau. Living costs are based on the Council for Community and Economic Research's Cost of Living Index. Tax information is as of 2017.
Millionaire households: 17,772
Total households: 349,397
Concentration of millionaires: 5.09%
Median income for all households: $52,078 (U.S. median: $55,322)
Median home value: $146,700 (U.S. median: $184,700)
South Dakota is better known for Mount Rushmore, agriculture and the great outdoors than millionaires, but more than 1 in 20 households have at least $1 million in investable assets. That’s despite having a lower median income and lower median home value than the nation as a whole.
South Dakota also happens to be a great place to retire. Affordability is a main factor. The cost of living is 9.4% below the national average. It’s also one of the most tax-friendly states. And since South Dakota ranks third in the U.S. for fiscal soundness, according to a recent report from George Mason University’s Mercatus Center, you can have high confidence that it can keep up with short-term expenses and long-term financial obligations.
The richest South Dakotan is T. Denny Sanford, who made his $2.5 billion fortune in the banking business.
Millionaire households: 243,118
Total households: 4,685,647
Concentration of millionaires: 5.19%
Median income for all households: $50,674
Median home value: $131,900
NBA superstar LeBron James might have forsaken the Cleveland Cavaliers for the Los Angeles Lakers, but the great state of Ohio has plenty of other millionaires to fill his sizable shoes. Nearly a quarter of a million households – out of 4.7 million total – have at least $1 million in investable assets in the Buckeye State.
Although Ohio can’t compete with L.A. for glamour, LBJ may come to miss Ohio’s affordability and comparatively lighter tax bite. The cost of living in Ohio is 14% below the national average. (Los Angeles happens to be the ninth most expensive city in the U.S.)
And although Ohio isn’t exactly tax-friendly, no state goes after big earners quite like the Golden State.
For the record, with a fortune of $5.4 billion, L Brands (LB) founder, chairman and CEO Les Wexner is Ohio’s richest resident.
Millionaire households: 137,359
Total households: 2,595,635
Concentration of millionaires: 5.29%
Median income for all households: $51,340
Median home value: $176,900
Although the overall cost of living in Arizona is only equal to the national average, incomes and home values are well below U.S. medians. And yet 5.3% of all households can still claim millionaire status.
That’s because Arizona is a retirement haven, and one of the tax-friendliest states in the U.S. for millionaires and non-millionaires alike. While the Grand Canyon State does have an income tax, the rates are notably low.
With a net worth of $3 billion, Mark Shoen, who owns roughly 20% of U-Haul parent company Amerco (UHAL), is Arizona’s wealthiest person.
Millionaire households: 210,957
Total households: 3,939,976
Concentration of millionaires: 5.35%
Median income for all households: $50,803
Median home value: $127,800
Michigan has a pretty high concentration of millionaires given its relatively low median household incomes and home values. It also happens to be among the top states for billionaires. Quicken Loans founder Daniel Gilbert, worth $6.3 billion, is the wealthiest of “the Mitten’s” 11 billionaires, according to Forbes.
At the other end of the spectrum, Michigan is home to one of the least expensive places to live in the U.S. The cost of living in Kalamazoo is 20.5% below the U.S. average. Overall, Michigan is 14.1% cheaper than the national average.
Michigan’s tax situation is mixed. It’s one of just a handful of U.S. states with a flat tax – the rate is a modest 4.25%. But property taxes, particularly in Detroit, are steep.
Millionaire households: 127,260
Total households: 2,354,510
Concentration of millionaires: 5.40%
Median income for all households: $54,610
Median home value:$167,000
Bucolic Wisconsin’s median household income and median home value stand comfortably below national levels, and its 127,260 millionaire households enjoy a relatively affordable cost of living. Taxes, however, in the Badger State can be a bit of a burden.
Wisconsin recently lowered income tax rates and reduced the number of brackets. But many residents of the Badger State will find themselves in the 6.27% bracket, which kicks in on income above only $22,230 for singles and $29,640 for joint filers. At the same time, property taxes are high. On the other hand, it’s 7.3% cheaper to live in Wisconsin than the country as a whole.
John Menard Jr., who founded a chain of home-improvement stores that bear his name, is the state’s richest resident, with a net worth of $10.5 billion.
Millionaire households: 62,168
Total households: 1,144,287
Concentration of millionaires: 5.43%
Median income for all households: $53,571
Median home value: $135,300
Kansas is known more for affordable living than it is for putting on the ritz. Indeed, Salina and Pittsburg, Kansas, are two of the cheapest small towns in America. Statewide, the cost of living in Kansas is 11.3% cheaper than the national average.
Offsetting that somewhat is the fact that Kansas is not the friendliest state when it comes to taxes. The state has an average combined sales-tax rate of 8.62%, for example. Sales tax rates apply to groceries as well.
And yet the Sunflower State still has 62,168 millionaire households out of a total of about 1.1 million households. The wealthiest by far is that of Charles Koch, CEO of Koch Industries, with a fortune of $51.5 billion.
Millionaire households: 41,348
Total households: 760,510
Concentration of millionaires: 5.44%
Median income for all households: $54,384
Median home value: $137,300
Warren Buffett, chairman and CEO of Berkshire Hathaway, is Nebraska’s richest – and most famous – resident. Of course! His net worth of $65 billion makes him one of the wealthiest people in the world. While Uncle Warren clearly is in a league if his own, the Cornhusker State does have 41,347 other households with at least a million bucks.
The cost of living in Nebraska is 10% lower than the national average, according to Council for Community and Economic Research. Median income is only slightly below the national level. Nebraska home values, however, are a whopping $47,400 less than the U.S. median. Warren Buffett famously lives in the same house he bought for $31,500 in 1958.
When it comes to paying taxes, Nebraska is ranked as “not tax-friendly” by Kiplinger. Property taxes are the seventh-highest in the country, while the average combined sales tax rate comes to 6.89%, according to the Tax Foundation.
Millionaire households: 71,212
Total households: 1,270,566
Concentration of millionaires: 5.60%
Median income for all households: $54,570
Median home value: $132,800
Median household incomes and home values in Iowa wouldn’t suggest that it’s exactly loaded with millionaires. The farming and food-processing powerhouse has a relatively low cost of living, too. And yet Iowa has a concentration of millionaires pretty darn close to the national average.
The downside? Iowa can be tough on residents’ wallets when it comes to paying taxes. It has a top tax bracket of almost 9% and brings it to bear on a relatively low level of taxable income. Heck, the Hawkeye State takes an income tax bite that exceeds many East Coast states. Easing the sting a bit is a cost-of-living index that’s 11.9% lower than the U.S. average.
Harry Stine, founder of seed genetics company Stine Seed, is the state’s richest person, with a fortune estimated at $3.2 billion, according to Forbes.
Millionaire households: 566,578
Total households: 10,005,417
Concentration of millionaires: 5.66%
Median income for all households: $54,727
Median home value: $142,700
Everything is bigger in Texas. No, it doesn’t have the highest concentration of millionaires, but in terms of raw numbers, only California has more than the Lone Star State’s 566,578 millionaire households.
And yet for all its wealth, median incomes and home values fall short of national levels.
Heck, Texas is so big it not only has two of the smallest towns with the most millionaires in the U.S. – Andrews and Fredericksburg – but it’s also home to four of the 10 cheapest U.S. in which to live. (Those would be Brownsville, Wichita Falls, Harlingen and McAllen.) On average, the cost of living in Texas is 8.7% lower than the U.S. average.
Texas is a place of extremes when it comes to taxes, too. There’s no income tax at all, but sales taxes run high, as do property taxes.
Walmart heiress Alice Walton, with a net worth of $40 billion, is the richest Texan – and the richest woman in the world.
Millionaire households: 294,002
Total households: 5,099,166
Concentration of millionaires: 5.77%
Median income for all households: $54,895
Median home value: $167,700
A bit less than 5.8% of Pennsylvania’s 5 million-plus households have investable assets of $1 million or more, excluding the value of real estate, employer-sponsored retirement plans and business partnerships. That puts the state’s concentration of millionaires on par with the national average, even as median incomes and home values come up short against national measures. The cost of living in the Keystone State is 1.1% lower than the U.S. average, too.
The Keystone State has a flat income tax rate of 3.07%, but property taxes can be steep in some communities. There’s a 6% sales tax, but food, clothing, textbooks, heating fuels, and prescription and nonprescription drugs are exempt.
Victoria Mars, heir to candy and pet food company Mars Inc., is the state’s wealthiest person with net worth of $6 billion.
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