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What is the Difference Between a State and a Territory?

By Ron Andersen
Updated May 23, 2024
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There are usually quite a few differences between a state and a territory, but the biggest usually have to do with the type of government at play in each, as well as the way citizens and residents are represented within the larger governmental structure. It’s important at the outset to understand the ways in which the terms “state” and “territory” are used, too. These words can and often do mean slightly different things in different places. Sometimes “state” is used to describe governmental authority generally, and national governments are often referred to with this term in the international arena. Within a country, a state is usually a localized form of internal government, as is the case with the 50 United States or the six states of Australia. Territories, on the other hand, are usually areas that are claimed by national governments, but not always incorporated into them. Residents don’t always have the same voting powers or taxation requirements and may not enjoy all the same privileges as do the citizens of states.

Defining and Understanding “State”

In most cases, a state is a piece of a larger government, and often acts as an autonomous structure in its own right. Countries sometimes divide regions into states, each of which then acts as self-governing pieces of the larger whole. States are usually bound by the larger overarching national laws, but are also free to set their own internal rules and regulations — most of which are created and overseen by elected local officials. State rules can’t usually be broader than national regulations, but they can often be narrower.

Another way to think about a state in this sense is as a distinct geographical area with its own autonomous government and national representatives. The difference between a state and a territory in this regard typically revolves around the legal standing of the residents. State residents are usually first and foremost citizens of the nation as a whole, but also usually have a stake in and are subject to state laws. Most pay taxes to both state and national treasuries, but are also afforded benefits like voting, school enrollment, and library privileges as a consequence.

Common Characteristics of Territories

Territories can be incorporated or unincorporated, organized or unorganized, resulting in four possible combinations or classifications. Generally, when people speak of territories, they mean an unincorporated organized territory. This type of territory has elected governors and legislatures, but citizens cannot vote in national elections and have only a non-voting representative in the national legislature. At the other end of the spectrum, an unorganized unincorporated territory is an area, such as coastal waters or airspace, where nobody lives but that is claimed by a national government.

Countries can have both states and territories. The United States is a good example: it has 50 incorporated states, but also maintains territories in places like Puerto Rico and the U.S. Virgin Islands. Some of the privileges in these places are the same. Residents don’t get to elect representatives to Congress, however, and don’t have their own localized laws; they are affiliated with the U.S. and people who live there are usually considered citizens, but they are subject to the nation’s laws rather than participants in it.

As Related to Border Expansion

When a country expands its borders, the new area is usually called a territory. Nearly all of the states in the U.S. started as territories, for instance. As populations increased and lines of communication improved, the people petitioned the federal government for statehood. The modern Australian states followed a similar trajectory. In both of these cases, in order for the territories to become states, they first had to become organized incorporated territories.

Special Considerations for Ships

In a broader sense, a territory can be any area that’s been claimed by a national government. Even a ship at sea can be considered the territory of whatever country’s flag it is flying. Whenever a commercial ship is sold, it can be “re-flagged,” and it becomes the sovereign territory of the new country. Commercial vessels are usually considered organized unincorporated territories.

Jurisdictional Differences

A state and a territory can mean different things in different countries. Some countries can have territories but do not have states. Oftentimes, small islands are territories of a larger country. These can also be called possessions. In the case of uninhabited islands, they are legally referred to as incorporated unorganized territories.

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Discussion Comments
By B707 — On Sep 27, 2011

People who live in U.S. territories can't vote, or send senators and representatives to Washington, but do they have to obey the laws of the U.S? I don't know if they pay taxes to the U.S. or if they have their own laws and policies.

The U.S. must have a good relationship with say, Puerto Rico and vice versa, or Puerto Rico would probably just pull apart from the U.S.

By BoniJ — On Sep 26, 2011

I'm curious to know why territories of the United States, such as Puerto Rico, don't pay taxes. Since they receive funds from the U.S. government, I would think that they should pay taxes.

I would think that American companies would take advantage of "no taxes" and bring their company down to Puerto Rico. Maybe there is an exception here, I'm not sure.

By Sunny27 — On Sep 26, 2011

I know that there was a small movement awhile ago to make Puerto Rico the 51st state, but the measure failed. It would have allowed Puerto Ricans to receive governmental representation in the form of House members and two members of the Senate. It would have also afforded them the right to vote for President which they currently are not able to do.

This would have also required Puerto Ricans to pay federal taxes and many businesses would have lost their tax exempt status. I think that it would have been nice to add them as another state to our Union but I guess it wasn’t meant to be. They do receive aid from the United States as well as protection so maybe this is why they decided against statehood. They had a lot of the perks of being a state, but did not have to pay any taxes to the federal government.

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