March 28, 2017
Tax Day shows how your individual income taxes were spent. Those are a portion of the taxes withheld from your paycheck, and due this year on April 18 (not April 15, as usual).
Tax Day materials do not include corporate taxes or the individual payroll taxes that directly fund Social Security and Medicare. To read more about where federal revenues come from, visit Where the Money Comes From.
Our Tax Day materials show how federal funds were spent during fiscal year 2016, the time period that most closely corresponds to the calendar year for which income taxes are due.
In order to do this analysis, we separate federal funds from trust funds. Trust funds, generated from sources such as payroll taxes, can only be used for specific programs like Social Security and Medicare. All other funds are federal funds, including revenue from your federal income taxes, and can be used for a wide variety of purposes.
We use projected federal fund “outlays” for fiscal year 2016 as reported by the White House Office of Management and Budget’s (OMB) Public Budget Database, released in February 2016. These are the most recent available data at the time of publishing.
When OMB publishes federal budget data, it uses several categories of spending called functions, and within those, subfunctions.
NPP uses 13 different budget categories to sort federal spending. These do not correspond exactly to the official government functions. Rather, they are meant to organize the many government subfunctions into more intuitive groupings. In order to create our Tax Day materials, federal fund outlays were sorted into the following categories:
Elementary, secondary, higher and vocational education.
Subfunctions: 501, 502, 503
Example programs:
Natural resources and environment, conservation, and supply and use of energy.
Subfunctions: 271, 272, 274, 276, 301, 302, 303, 304, 306
Example programs:
Agriculture as well as nutritional assistance programs.
Subfunctions: 351, 352, 605
Example programs:
Law enforcement and the justice system, commerce, overhead costs of the federal government, and undistributed offsetting receipts.
Subfunctions: 372, 373, 376, 751, 752, 753, 754, 801, 802, 803, 804, 805, 806, 808, 809, 922, 929, 951, 952, 953, 954, 959
Example programs:
Housing assistance and credit, community development, disaster relief, and services supporting social needs.
Subfunctions: 371, 451, 452, 453, 506, 604, 925
Example programs:
Annual interest paid on the national debt, net of interest income received by assets the federal government owns.
Subfunctions: 901, 902, 903, 908, 909
Diplomatic, development, and humanitarian activities abroad.
Subfunctions: 151, 153, 154, 155
Example programs:
Health care programs and services, and occupational and consumer health & safety.
Subfunctions: 551, 552, 554, 571, 921, 926
Example programs:
National defense, nuclear weapons activities, war costs, and international security assistance.
Subfunctions: 051, 053, 054, 152
Example programs:
General science research and space flight research and activities.
Subfunctions: 251, 252
Example programs:
Income security programs, federal employee retirement and disability, and job training.
Subfunctions 504, 505, 601, 602, 603, 609, 651, 923
Example programs:
Development and support of air, water, ground, and other transportation.
Subfunctions: 401, 402, 403, 407
Example programs:
Health care, housing, education and income security for veterans.
Subfunctions: 701, 702, 703, 704, 705
Example programs:
NPP’s personalized and state average tax receipts shows how much of your federal income taxes went to each of the 13 categories specified above, using federal fund outlays data from the OMB Public Budget Database, as described.
In addition, the receipt shows how much of your taxes went to particular programs within each of those categories, using data from OMB’s Public Budget Database, as follows:
Includes outlays under Education subfunctions for the Account, “Student Financial Assistance.”
Includes outlays under Education subfunctions for the Bureau, “Office of Elementary and Secondary Education.”
Includes outlays under Education subfunctions for the Agency, “National Endowment for the Arts.”
Includes outlays under Energy & Environment subfunctions for the Bureau, “Environmental Protection Agency.”
Includes outlays under Energy & Environment subfunctions for the Account, “Energy efficiency and renewable energy.”
Includes outlays under Food & Agriculture subfunctions for the Account, “Supplemental Nutrition Assistance Program.”
Includes under Food & Agriculture subfunctions for the Account, “Federal Crop Insurance.”
Includes outlays under Government subfunctions for the Bureau, “U.S. Customs and Border Protection.”
Includes outlays under Government subfunctions for the Bureau, “Federal Prison System.”
Includes outlays under Government subfunctions, for the Bureau, “U.S. Immigration and Customs Enforcement.”
Includes outlays under Health Care subfunctions for the Account, “Medicaid.”
Includes outlays under Health Care subfunction 571, “Medicare.”
Includes outlays under Health Care subfunctions for the Account, “Children’s Health Insurance Program.”
Includes outlays under Housing & Community subfunctions for the Account, “Children and Family Services.”
Includes outlays under Housing & Community subfunctions for the Account, “Homeless Assistance Grants.”
Includes outlays under International Affairs subfunctions for the Agency, “Department of State.”
Includes outlays under International Affairs subfunctions for the Bureau, “Agency for International Development.”
Includes outlays under Military subfunctions for the Bureau, “Military Personnel.”
Includes Department of Defense FY 2016 contracts for Lockheed Martin, according to USASpending.gov; accessed April 6, 2017.
Includes outlays for subfunction 053, “Atomic Energy Defense Activities.”
Includes outlays under Science subfunctions for the Bureau, “National Aeronautics and Space Administration.”
Includes outlays under Science subfunctions for the Bureau, “National Science Foundation.”
Includes outlays under Transportation subfunctions for the Bureau, “Transportation Security Administration.”
Includes outlays under Transportation subfunctions for the Bureau, “Federal Aviation Administration.”
Includes outlays under Unemployment & Labor subfunctions for the Account, “Temporary Assistance for Needy Families.”
Includes outlays for subfunction 504, “Training and Employment.”
Includes outlays under Veterans Benefits subfunctions for the Account, “Compensation.”
Includes outlays under Veterans Benefits subfunctions for the Bureau, “Veterans Health Administration.”
To generate average taxes paid for the U.S. and for each state, we used tax return data from the IRS. Our receipts are generated using information for tax year 2014, the latest available, state-level information at the time of publication: https://www.irs.gov/uac/SOI-Tax-Stats-Historic-Table-2.
The averages are calculated by dividing income tax amount by the total number of applicable returns. The income tax amount represents total income taxes owed after deductions and credits but does not reflect refundable tax credits, such as the refundable portion of the EITC.
Totals were then adjusted for inflation from calendar year 2014 to 2016 dollars using deflators from OMB's FY 2017 budget materials, Table 10.1. in the Historical Tables.
