You Might Be Surprised to Know Where Your Federal Tax Dollars Really Go

Every year, the average American taxpayer contributes over $10,000 to the federal budget. Ask that average American taxpayer where their money is going, and they’ll probably list the military, their least-favorite government programs, and “the deficit.” In other words, they don’t really know. Most people have a vague idea how the government spends their tax money, but the specifics can be hard to grasp.

The government doesn’t always do a great job of communicating about its finances to its citizens, and making sense of annual federal budget reports isn’t exactly a rainy day project for most of us. But, as a taxpayer, you deserve to know where your money is going.

Few people are likely to be happy with every single thing the government spends money on. However, knowing that some of your tax money gets spent on important, beneficial projects might help us feel a little better about how much we have to pay each year.

The National Priorities Project, a non-profit organization dedicated to helping Americans understand the federal budget better, recently published a breakdown of how our 2017 income taxes were spent. From the biggest expense to the smallest, here’s where the money went:

29.8% – Healthcare

Politicians are still debating how much the government should be doing to provide medical insurance to its citizens, but covering Americans’ healthcare costs is already the government’s biggest expense. Healthcare is nearly a third of the budget, and it’s split almost evenly between Medicare and Medicaid.

This line item also includes occupational and consumer health and safety programs.

23.8% – The Military

You might be surprised this isn’t the biggest expense, but Pentagon spending is less than a quarter of the entire federal budget. That includes supporting, maintaining, and equipping all five branches of the armed services, all overseas military operations, our nuclear weapons program, and everything else related to national defense.

14.2% – Interest On Federal Debt

Next time the APR on your credit card statement makes you cringe, remind yourself that even the federal government has to pay interest on the money it borrows. The impact of government debt can be overstated at times, but there’s no debating the fact that paying interest on that debt is the third largest government expense.

7.4% – Unemployment & Labor

Many people resent the idea that their taxes pay for programs that help people who can’t or won’t hold down jobs, but it’s only a little more than seven cents out of every dollar that go toward programs like job training, Temporary Assistance for Needy Families, and retirement funds for federal employees.

6% – Veterans’ Benefits

Funding for programs that take care of military veterans make up just six percent of federal spending. That includes programs for income security, housing and job training, health care, medical and prosthetic research, and VA hospitals.

4.1% – Food & Agriculture

Everybody’s got to eat, but agriculture and nutritional assistance programs get scarcely more than four cents out of every tax dollar. That goes toward farm subsidies, disaster relief programs, the National School Lunch Program, and SNAP—also known as food stamps.

4% – Education

Another four cents per dollar is enough to cover everything the federal government invests in elementary, secondary, college, and vocational schools each year. This money gets put toward Pell Grants, special education programs, Title I grants, and other education-related costs.

3.9% – Government

The entire payroll of the federal government—law enforcement, the justice department, Congress, and every other department—as well as overhead costs, are covered under this category. While nearly four percent of the federal budget is still a lot of money, the feds keep their own operating costs fairly small relative to the other budget items.

6.7% – Everything Else

All the other programs and expenses paid for by the federal government make up the remainder of the budget. That includes:

  • Housing assistance, community development, Head Start, and the Federal Emergency Management Agency
  • Clear water, energy efficiency, and the Environmental Protection Agency
  • The State Department; the Peace Corps; and the Global Fund to Fight AIDS, Tuberculosis, and Malaria
  • NASA, the National Science Foundation, and other investments in scientific research
  • Transportation-related programs and agencies like the TSA and the Federal Aviation Administration

Whether this breakdown leaves you feeling better or worse about paying your taxes probably depends a lot on your values and opinions, but at least you have a more fact-based picture of how your tax dollars are spent than you may have had before.

Whatever your beliefs, there’s probably at least one thing on this list that seems like a case of misplaced priorities. There’s probably no way to come up with a federal budget that everyone can agree on, but we can always keep writing and calling our representatives to remind them to focus on the issues that matter most to us.

After all, getting representation with our taxation is part of the American deal, right?