North Dakota Leads U.S. in State Financial Health with Massive Taxpayer Surplus

Key points

• North Dakota ended fiscal year 2025 with $21 billion more than needed to cover state bills, resulting in the highest taxpayer surplus in the nation at $72,300 per person.
• The state’s financial strength is attributed to its Legacy Fund, an investment vehicle funded by oil tax revenue, which helped offset declines in energy sector taxes.
• Alaska, Wyoming, Utah, and Tennessee followed North Dakota in the rankings, with taxpayer surpluses ranging from $11,400 to $72,300.
• Twenty-four states lacked sufficient assets to cover their financial obligations, with New Jersey ranking last due to a $162.3 billion shortfall and a $45,800 taxpayer burden.
• Nationally, states faced $775 billion in unfunded pension liabilities and $490 billion in unfunded retiree health care obligations in fiscal 2025, though most states saw improvements due to strong investment returns.

Background

This report highlights the disparity in state fiscal health, where energy-rich states like North Dakota benefit from robust reserves. Previous coverage noted North Dakota’s economic shifts, including its transition in higher education and public health challenges, but this financial report focuses on long-term budget stability and investment performance.

Why it matters

State financial health determines a government’s ability to weather economic downturns, maintain public services, and meet long-term obligations like pensions. North Dakota’s surplus provides a buffer against revenue drops, while states with deficits face difficult choices regarding taxes, spending, and borrowing.

What to watch

Analysts will monitor whether North Dakota’s surplus can sustain itself if energy prices decline further. Other states may look to North Dakota’s Legacy Fund model as a strategy for managing volatile revenue streams and reducing long-term liabilities.