Final answer:
Residual powers are held by the State Government as per the Tenth Amendment, which designates powers not explicitly given to the federal government to the states.
Step-by-step explanation:
The level of government that holds residual powers in the United States is the State Government. According to the Tenth Amendment, any powers not specifically granted to the federal government by the Constitution are reserved to the states. These are known as reserved powers. Residual powers allow states freedom to pass laws on matters such as intrastate commerce and marriage. While both federal and state governments share some concurrent powers, residual powers are exclusive to the states.