After spending an unfortunate year as the No. 1 state with the most people in financial distress, Texas has slightly recovered. But the Lone Star State isn't out of the woods yet: it's still among the five most financially distressed states in America for 2026.

According to WalletHub's 2026 report, Texas sits in the No. 4 spot this year, while Kansas, Louisiana, and Florida moved up to become the top three states with the most financially distressed residents.

The personal finance website's experts compared all 50 states based on residents' average credit scores, the share of people with "accounts in distress" (meaning an account that's in forbearance or has deferred payments), the one-year change in bankruptcy filings from March 2025, and search interest indexes for "debt" and "loans."

Despite improving in the overall ranking, the study found Texas has had the fourth-biggest spike in bankruptcy filings nationally from March 2025 to March 2026. Texas residents also have the 10th worst average credit scores in the country, according to the findings.

This is how Texas ranked across the study's six key dimensions, where No. 1 means "most distressed:"

• No. 4 – Change in bankruptcy filings from March 2024 to March 2025 rank
• No. 5 – Average number of accounts in distress rank
• No. 8 – "Loans" search interest index rank
• No. 8 – People with accounts in distress rank
• No. 12 – Credit score rank
• No. 13 – “Debt” search interest index rank

It feels like inflation and affordability have been top-of-mind for many Americans over recent years, and uncertainty around the national economy also adds another level of distress. That's especially true for Austin residents, which were dubbed the 9th most financially distressed people in America earlier in 2026.

"Americans have faced significant financial challenges in recent years, as inflation, shifting unemployment levels, public health emergencies, and natural disasters have made it more difficult for many households to stay on top of their bills," the report said.

The top three states that have the least financially distressed residents are Maine (No. 50), Rhode Island (No. 49), and Hawaii (No. 48).

The top 10 most financially distressed states in America for 2026 are:

• No. 1 – Kansas
• No. 2 – Lousiana
• No. 3 – Florida
• No. 4 – Texas
• No. 5 – South Carolina
• No. 6 – Wyoming
• No. 7 – Georgia
• No. 8 – California
• No. 9 – North Carolina
• No. 10 – Kentucky