This Is Where Your Taxation Dollars Really Go
See how your money is being spent.
The U.S. is expected to bring in close to $3.74 trillion in tax revenue in 2022 , according to Congressional Budget Office (CBO) projections. Well-nigh half of that comes from individual income taxes and one-third comes from payroll taxes, which include Social Security and Medicare taxes.
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That's correct — it's your tax dollars that keep the federal government running. So you might exist wondering, "Where does taxation coin become?" To find out, GOBankingRates looked over CBO projections for 2022. The results show an increment in acquirement of near $500 billion over 2021, when the state was notwithstanding playing catch-up from the furnishings of the pandemic the year earlier when widespread unemployment was the norm for much of the yr.
Find out which programs your tax dollars are funding .
Last updated: Oct. 14, 2021
The Federal Budget
Federal spending is projected to be close to $five.08 trillion for financial yr 2022 , co-ordinate to the CBO. With tax revenue expected to exist less than $3.74 trillion , that means there will be a deficit of $ane.34 trillion. In a rarity that reveals just how consequential 2020 was, the government really spent less in 2021 than it did the year earlier.
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Social Security
Gobbling upwards nearly one dollar in iv, Social Security benefits are the biggest single expenditure in the federal budget. The U.Due south. is expected to pay out more than $1.2 trillion to the plan in 2022 in the form of old-age, survivors and inability benefits.
Social Security is funded through a half dozen.2% payroll tax that workers pay and some other half dozen.2% that employers pay. Self-employed people have to pay the full 12.iv%. However, because the number of adults 65 and older is expected to increase dramatically by 2035, Social Security tax revenues will cover only about 75% of benefits, according to the Social Security Administration.
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Medicare
The second-biggest mandatory spending outlay and the No. 2 budget expenditure in general is Medicare, which is expected to cost $973 billion in 2022. This federal program provides wellness insurance coverage for adults 65 and older.
Medicare is funded by a payroll tax of two.ix% paid by employees and employers. Each pays i.45% of an employee's income. It's besides funded by general revenues and premiums paid by Medicare recipients.
Defence
CBO data show that the federal government is projected to spend $765 billion on defense in 2022. That's a little more than one-half of the combined $ane.45 trillion set aside for federal discretionary spending. Defense spending really dropped a fiddling in 2021 compared to 2020, but discretionary spending every bit a whole soared thanks to virus-relief costs.
Medicaid
About 10% of the federal upkeep goes toward Medicaid. In 2022, spending on this joint federal-country health insurance program for depression-income people is expected to exist $516 billion. Social Security, Medicare, and Medicaid form the bedrock of America's social safety net, but the federal government also funds the Children'due south Health Insurance Program (CHIP) for children of low-income families and health insurance premium subsidies for the Affordable Intendance Act. Combined, funding for these two health programs will be $seventy billion in 2022.
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Income Security Programs
In 2022, near $386 billion will be spent on income security programs like unemployment compensation, earned income tax credits, child diet programs and the Supplemental Diet Assistance Programme (SNAP).
That'southward a big drop from the $499 billion that was spent final year, but fifty-fifty that is peanuts compared to the more than $1.13 trillion the federal government was forced to spend on income security programs in 2020.
Federal Civilian and Armed services Retirement
Funding for retirement benefits for federal noncombatant workers and armed services members makes up less than 5% of the budget. The CBO projects that the federal regime volition spend $189 billion on these retirement benefits in 2022.
Agriculture and Other Programs
Less than two% of the upkeep — $105 billion in 2022 — goes to agronomics programs, mortgage service providers Fannie Mae and Freddie Mac, eolith insurance, higher teaching, and other authorities services. In 2020, this family unit of "other programs" got a new addition: the Coronavirus Relief Fund. That, forth with a huge increment in Small Business Administration (SBA) funding, caused this kind of spending to balloon nearly tenfold in 2020 to $969 billion before dropping off to $100 billion last year.
Interest on Debt
Last just not least, the U.S. has a lot of debt, and, yes, your tax dollars are going toward the repayment of this debt. At the terminate of 2019, the U.S. held about $16.8 trillion in debt, a number that had been slowly and steadily creeping up for years. By the cease of 2020, still, irksome and steady were things of the by. America's COVID-related borrowing and spending frenzy bumped that number upwards to $23.32 trillion, which is the amount of debt taxpayers will be grappling with in 2022.
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Cameron Huddleston contributed to the reporting for this article.
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