Which State Carries the Heaviest Debt Burden? A State-by-State Financial Breakdown

American households aren’t the only entities wrestling with mounting debt—entire states face similar financial pressures. From managing massive liabilities to maintaining solvency, state governments across the nation display vastly different economic health profiles. Understanding which state has the most debt requires examining the relationship between what states owe and what they own.

The Financial Health Snapshot: How States Compare

To evaluate fiscal stability across the nation, researchers analyzed comprehensive financial data from state government reports, measuring three key indicators: total liabilities, total assets, and the resulting debt ratio. A debt ratio exceeding 100% signals a critical situation where a state’s obligations surpass its available resources—a warning sign that demands attention.

The analysis revealed significant disparities. Some states maintain remarkably lean debt positions, while others operate under crushing financial strain. Examining which state has the most debt and which enjoy fiscal advantages provides insight into broader economic trends affecting public services, taxes, and future financial stability.

States Operating With Minimal Debt Burdens

At the healthier end of the spectrum, several states demonstrate strong financial footing. Idaho leads with a mere 10.68% debt ratio, holding $24.25 billion in assets against only $4.43 billion in liabilities. Alaska follows closely at 14.68%, while Utah maintains a 15.93% ratio. These three states exemplify fiscal responsibility, with their asset bases substantially exceeding their obligations.

The pattern continues through Nebraska (22.99%), South Dakota (23.88%), and New Hampshire (24.64%), establishing a tier of financially stable states. North Dakota, Oklahoma, Iowa, and New Mexico each maintain debt ratios below 32%, suggesting prudent financial management despite facing similar revenue pressures as other regions.

The Middle Ground: Moderate Debt Ratios

A substantial group of states operates in the 30-60% debt ratio range, including North Carolina, Montana, Wyoming, Arkansas, and Florida. These jurisdictions carry moderate debt loads relative to their asset bases. Florida, despite holding $204.32 billion in total assets, carries $61.83 billion in liabilities for a 35.98% ratio.

States like Arizona, Alabama, Kansas, South Carolina, and Mississippi hover in the 35-43% range. This moderate tier includes economically diverse regions ranging from industrial centers to agricultural states, suggesting that geographic or industry focus alone doesn’t determine fiscal health.

Wisconsin, Oregon, Tennessee, and Missouri all exceed 44% debt ratios, pushing toward the higher-burden category. Minnesota and Virginia join this group around the 44-50% threshold, signaling increasing financial strain despite maintaining asset levels above liabilities.

States Facing Severe Fiscal Challenges

The situation becomes increasingly concerning as debt ratios climb above 50%. Massachusetts, Nevada, and Michigan all exceed 56% ratios. Ohio carries $53.40 billion in liabilities against $96.69 billion in assets (57.65%), while Texas—the nation’s second-most populous state—reaches 59.39% with a staggering $221.17 billion in total liabilities.

Colorado crosses into 65.56% territory, and the District of Columbia reaches 71.77%. Washington state carries $94.85 billion in liabilities, translating to a 77.52% debt ratio. Maine and Louisiana both approach 81%, operating dangerously close to insolvency.

States in Fiscal Distress

When debt ratios exceed 90%, states enter genuinely problematic territory. Vermont registered 93.67%, while Kentucky hit 94.95%. Maryland follows at 96.63%, and Delaware approaches the critical 100% threshold at 99.08%.

Hawaii actually crosses that line, becoming the first state to owe more than it possesses—107.31% debt ratio with $28.25 billion in liabilities against $28.08 billion in assets. This represents a fiscal emergency requiring immediate intervention.

The Most Indebted States: Where Debt Eclipses Assets

California, despite its $491.46 billion asset base, owes $480.81 billion, creating a 111.04% debt ratio. Connecticut faces far more dire circumstances with a 172.44% ratio—liabilities of $97.47 billion against only $48.11 billion in assets.

New York carries the highest absolute liabilities at $304.34 billion, but with only $144.97 billion in assets, this creates a devastating 218.12% debt ratio. New Jersey reaches 249.64%—liabilities exceed assets by more than two and a half times.

Illinois represents perhaps the most alarming case. With $247.94 billion in liabilities against merely $76.21 billion in assets, the state carries a 295.58% debt ratio. This extreme position means Illinois owes nearly three dollars for every dollar in assets it possesses.

Understanding State Debt Dynamics

The variation across states reflects multiple factors: population size (larger states accumulate greater absolute liabilities), pension obligations, infrastructure investments, bond issuance practices, and historical fiscal decisions. Texas, despite exceeding 59% debt ratio, manages this through its massive asset base and diversified economy.

Conversely, states like Illinois and New Jersey face structural challenges where current liabilities far outpace available resources, creating long-term fiscal vulnerability. These conditions constrain governments’ ability to invest in schools, infrastructure, and services while maintaining solvency.

The Bottom Line

When examining which state has the most debt, the answer requires distinguishing between absolute liability volume and debt-to-asset ratios. Illinois carries among the most severe proportional debt burdens at 295.58%, while Texas holds the largest absolute liability amount at $221 billion but manages it more effectively through greater assets.

States operating above 90% debt ratios face genuine fiscal emergencies. The wide spectrum from Idaho’s 10.68% to Illinois’s 295.58% demonstrates vastly different financial realities. For taxpayers and policymakers alike, these figures underscore how fiscal health varies dramatically across American states, with profound implications for public services and future financial stability.

Methodology Note: Data sourced from the most recent Annual Comprehensive Financial Reports from each state’s government office, compiled as of November 2023 (2022 data for most states, 2021 for Nevada and California). Analysis calculated total assets, total liabilities, and debt ratios to provide comprehensive financial assessment across all 50 states and the District of Columbia.