Taxes are one of the biggest budget items for most taxpayers, yet many have no idea what they’re getting for their money.
We all want to mitigate taxes and make sure you pay exactly what you owe – and not a penny more – but that doesn’t always make it feel any easier when writing that tax check to the IRS. Knowing where it goes and what it pays for may help a bit.
In recent years, Americans spent more on taxes than on groceries, clothing, and shelter combined. In fact, we worked until late April just to earn enough money to pay our taxes. So, what do all those weeks of work get us?
The $4.22 trillion in federal spending for 2018 can be broken down into major categories. One of the biggest categories is Social Security, which consumes one-fourth of the budget. Income security, which includes food assistance and unemployment compensation, takes another 12%. Defense and related items take 15% of the budget, and 27% goes to Medicare and health programs.
More than 60% of 2018 federal spending was used for Social Security, Medicare, defense, and related programs.
Here’s how it breaks down:
- Social Security: $987.8 billion or 23.4% of total federal spending
- National defense: $631.2 billion or 15% of total spending
- Medicare: $588.7 billion or 14% of total spending
- Health: $551.2 billion or 13.1% of total spending
- Social safety net programs: $495.3 billion or 11.8% of total spending
- Interest on debt: $325 billion or 7.7% of total spending
- Veterans benefits and services: $178.9 billion or 4.2% of total spending
- Education, training, employment and social services: $95.5 billion or 2.3% of total spending
- Transportation: $92.8 billion or 2.2% of total spending
- International affairs: $49 billion or 1.2% of total spending
- Administration of justice: $60.4 billion or 1.4% of total spending
- Community and regional development: $42.2 billion or 1% of total spending
- Natural resources and environment: $39.1 billion or 0.9% of total spending
- General science, space and technology: $31.5 billion or 0.8% of total spending
- General government: $23.9 billion or 0.6% of total spending
- Agriculture: $21.8 billion or 0.5% of total spending
- Energy: $2.2 billion or 0.05% of total spending
Are taxes one of your biggest budget items?
Take steps to make sure you’re managing your overall tax bill and take care regarding your individual situation.
Kevin Theissen is the owner of HWC Financial in Ludlow.