US States With the Most Debt

This article ranks the US states with the highest total debt, including both state government debt and household debt, and explains what those numbers mean. You’ll find the top states by absolute dollar amount, per-capita figures, and the factors that drive each state’s borrowing.

Formula

The calculator above converts a state’s total debt (in billions of dollars) and its population (in millions) into two common metrics:

• Debt per capita = (Total debt in dollars) ÷ (Population in people)
• Debt as % of GDP = (Total debt ÷ State GDP) × 100

For the second formula, the calculator uses a placeholder GDP of $2,000 billion (i.e., $2 trillion) – you must replace that with the state’s actual GDP to get a meaningful percentage.

Worked Example

Using the default values: total debt = $1,000 billion ($1 trillion), population = 20 million.

1. Debt per capita = $1,000,000,000,000 ÷ 20,000,000 = $50,000
2. Debt as % of GDP (with placeholder GDP of $2,000 billion) = (1000 ÷ 2000) × 100 = 50%

So for a state with $1 trillion in debt and 20 million residents, each resident would owe $50,000 if the debt were divided equally.

Top States by Total Debt

When people ask “which US states have the most debt,� they usually mean total outstanding debt – including bonds, loans, and other liabilities. By that measure, the largest states dominate simply because they have bigger economies and more residents. As of recent fiscal data, the states with the highest total state government debt are:

• California – roughly $500 billion in state and local debt
• New York – around $400 billion
• Texas – about $350 billion
• Illinois – approximately $300 billion (including pension liabilities)
• Florida – near $250 billion

These figures come from the U.S. Census Bureau’s Annual Survey of State and Local Government Finances, which counts all long-term debt outstanding. They include bonds issued for infrastructure, schools, and other public projects.

Debt per Capita vs. Total Debt

Total debt tells you about the size of the obligation, but not the burden on each resident. Per-capita debt gives a fairer comparison between a large state like California and a smaller one like Rhode Island. States with the highest debt per capita are often those with heavy borrowing for public works or large unfunded pension promises:

• New York – about $20,000 per resident
• Connecticut – around $19,000
• Massachusetts – roughly $18,000
• Hawaii – near $17,000
• California – about $13,000

Note that these per-capita figures include state and local government debt, not household debt. If you include household mortgages, credit cards, and student loans, the ranking shifts – states like California and Hawaii have very high household debt per capita as well.

What Counts as State Debt?

State debt comes in several forms, and the way it’s measured affects the ranking:

• General obligation bonds – backed by the state’s full taxing power.
• Revenue bonds – repaid from a specific project’s income, like tolls or utility fees.
• Pension and OPEB liabilities – promised retirement benefits that aren’t fully funded. These are often the largest hidden debt.
• Short-term debt – cash-flow borrowing that must be repaid within a year.

Most official state debt figures include bonds but exclude pension liabilities. When pension shortfalls are added, states like Illinois, New Jersey, and Connecticut jump dramatically in the rankings – Illinois’ total debt nearly doubles when its unfunded pension obligations are counted.

Why Do Some States Borrow More?

Several factors drive a state’s debt level:

• Population and economy – larger states need more infrastructure (roads, schools, hospitals) and can borrow more because their tax base is bigger.
• Debt capacity – states with strong credit ratings can borrow at lower interest rates, encouraging more issuance.
• Political choices – some states prefer “pay-as-you-goâ€� funding (using current taxes) while others spread costs over decades via bonds.
• Pension funding practices – states that underfund pensions today create large future liabilities that count as debt in economic analyses.
• Natural disasters – states like Louisiana and Florida often issue debt for recovery and rebuilding after hurricanes.

Common Misconceptions

One frequent misunderstanding is that “state debt� equals “state budget deficit.� A deficit is the shortfall in a single year’s budget; debt is the accumulated borrowing over many years. A state can have a balanced budget yet still carry a large debt load from past projects.

Another misconception is that all debt is bad. States borrow to build assets that last decades – highways, universities, water systems – which benefits future residents who also pay taxes. The problem arises when debt grows faster than the economy or when it’s used for day-to-day operating expenses, which is generally prohibited by state constitutions.

How to Compare States Fairly

If you want to evaluate which state is “most indebted� in a meaningful way, look at multiple metrics together:

• Debt per capita – shows the burden on each resident.
• Debt as a percentage of GDP – shows the debt relative to the state’s economic output.
• Debt service ratio – annual debt payments as a share of state revenue.
• Pension funded ratio – how much of promised benefits are actually set aside.

For example, California has the highest total debt, but its debt-to-GDP ratio is moderate because its economy is enormous. Connecticut, with a much smaller economy, has a higher debt-to-GDP ratio, indicating a heavier relative burden.

Frequently Asked Questions

Which state has the highest debt per capita?

New York typically leads in state and local government debt per capita, at around $20,000 per resident. When including household debt, states like Hawaii and California also rank very high due to expensive housing and consumer borrowing.

Does the federal government’s debt count as state debt?

No. Federal debt is separate from state debt. Each state has its own constitution and laws that regulate borrowing, and state debt is not the responsibility of the federal government (and vice versa).

Why does Illinois have such a large debt?

Illinois has one of the worst-funded pension systems in the country. Years of underfunding retirement benefits for public employees have created a massive unfunded liability – often estimated at over $200 billion – which dwarfs its bond debt.

Can a state declare bankruptcy?

No. The U.S. Constitution does not allow states to declare bankruptcy like cities can (Chapter 9). However, states can restructure debt through negotiation, and some have come close to default, but no state has ever defaulted on its general obligation bonds in modern history.

How can I find the latest state debt figures?

The U.S. Census Bureau publishes annual data on state and local government finances. The National Association of State Budget Officers (NASBO) also releases state expenditure reports, and nonprofit organizations like the Tax Policy Center provide analyses of state debt trends.

Is state debt increasing or decreasing?

Overall, state debt has been rising steadily for decades, driven by infrastructure needs and growing pension obligations. However, some states have reduced debt in recent years by paying off bonds early or reforming pension systems, so the trend varies by state.

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in t | Total debt ($ billion) | $B | 1000 | 0
in p | Population (millions) | M | 20 | 0
out per_capita | Debt per capita | $ | (t * 1e9) / (p * 1e6) | 0
out debt_pct_gdp | Debt as % of GDP | % | (t / 2000) * 100 | 1