In a recent analysis of state finances, 24 U.S. states lack sufficient funds to meet their financial obligations. Amid this, North Dakota emerges as a standout, showcasing exceptional financial health.
According to Truth in Accounting’s 2026 Financial State of the States report, North Dakota concluded fiscal year 2025 with a substantial surplus of $21 billion, leading to the highest ‘Taxpayer Surplus’ in the nation at $72,300 per taxpayer.
This surplus doesn’t imply that residents receive these funds directly. It represents each taxpayer’s share of the state’s overall surplus as per the analysis methodology.
The distinction between states with a financial surplus and those with a deficit is significant, particularly during economic downturns. States with sound financial standings can better maintain public services and manage retiree obligations, unlike those burdened by unfunded debts, which face challenging decisions related to taxes, spending, and borrowing when revenue decreases.
“North Dakota’s economic landscape was significantly transformed by an oil boom, now generating billions annually in tax revenue,” the report notes.
The state’s robust financial status is reinforced by the Legacy Fund, an investment fund financed through oil tax revenue. Despite a downturn in energy prices, leading to decreased oil, gas, and coal tax revenues, strong investment returns and federal grant revenue helped mitigate this impact, as per the report.
Other states following North Dakota in rankings include Alaska, Wyoming, Utah, and Tennessee, featuring taxpayer surpluses spanning from $11,400 in Tennessee to $72,300 in North Dakota.
Conversely, 24 states were noted to lack sufficient assets to uphold their financial commitments. New Jersey stands last with a $162.3 billion shortfall, translating to a $45,800 ‘Taxpayer Burden,’ the highest in the U.S. Connecticut, Illinois, Massachusetts, and California also rank at the bottom, with burdens ranging from $16,000 to $45,800.
Long-term retirement commitments exert significant pressure on state finances. Across the nation, unfunded pension liabilities amounted to $775 billion, with unfunded retiree health care obligations at $490 billion in fiscal 2025. Despite these challenges, most states showed financial improvement in 2025 due to favorable investment returns that bolstered pension assets and reduced pension liabilities. However, Truth in Accounting advises careful observance as such gains may revise negatively if market conditions decline.