Benjamin Franklin once said, “Our new Constitution is now established, and has an appearance that promises permanency; but in this work nothing can be said to be certain, except death and taxes.”
We know enough about death, but have you ever thought about where your Federal Income Taxes go? It’s a question I’m often asked, so this article outlines my reply, updated annually as Federal income tax revenue changes.
So Exactly Where Did Your Federal Income Taxes Go Last Year?
The National Priorities Project recently broke down the United States’ $4.2 trillion-dollar Federal budget detailing where your tax dollars were allocated. As you might have expected, the majority of your Federal income tax dollars go to Social Security, health programs, defense and interest on the national debt.
In 2015, the average U.S. household paid $13,000 in Federal income taxes. CNNMoney designed this easy-to-understand infographic based on a dollar bill to highlight where the Government spent the average tax receipts. The breakdown of your tax dollar includes:
The Details:
- Health: Medicare, Medicaid, Children’s Health Insurance Program (CHIP) and Affordable Care Act (ACA) marketplace subsidies – This area combined four healthcare insurance programs to account for 28.7% or about $3,729 per household. Approximately two-thirds of this amount went to Medicare to provide healthcare coverage for 55 million people over 65 or with disabilities.
- Pentagon and Military: 4% of the budget or about $3,299 per household was distributed to the Pentagon, defense and international activities for security. The majority of this money from your federal income taxes in 2015 was ticketed for Defense Department operations in Afghanistan, other global conflicts, and costs to maintain U.S. bases around the world.
- Interest on Federal Debt: 7% of the budget or $1,776 per U.S. household of your federal income taxes in 2015 went to make regularly scheduled interest payments on the national debt.
- Unemployment and Labor Programs: 8% of where your Federal income tax dollars went in 2015, or $1,041 per household, went to programs to support U.S. citizens who were unemployed and for labor programs.
- Veterans Benefits: This portion was equal to 5% of the total budget or $771 per household. Federal government spending supported various public services such as healthcare and retirement benefits to retired federal employees and veterans.
- Food and Agriculture Programs: Programs to sustain farmers and ranchers across our country accounted for 4.6% or $598 per household.
- Education Programs: To invest in education, 3.6% of your federal income tax dollars last year went to schools, which was the equivalent of $462 per household.
- Government Expenses: Miscellaneous government expenses totaled 2.9% of the federal budget, or $378 per household.
- Housing and Community Programs: Government-funded housing and programs across local communities accounted for 1.9% of the total cost, or $250 on average per household.
- Energy and Environmental Programs: To protect our environment and other projects, you spent 1.6% or $208 per household.
- International Affairs Programs: International projects funded by the U.S. government were 1.5% of the total or $194 per household.
- Transportation Funding: For basic infrastructure costs of roads, bridges and airports, the cost was 1.2% or $151 per household.
- Science Funding: Finally, for scientific and medical research projects, the portion of your taxes was 1.1% or $143 per household.
How You Can Minimize Your Federal Taxes
If you’re tired of paying too much in taxes annually per the figures in this article, it’s time to schedule a consultation. Please contact me at BooksinBalance.com today to discuss your bookkeeping, accounting and tax planning for 2017.
- Preparing Your Tax Documents - February 1, 2024
- Making of a Successful Team Environment - December 31, 2023
- Got a Mistake on Your Tax Returns? - September 3, 2023