What Do Your Taxes Pay For?

Taxes are one of the biggest budget items for most taxpayers, yet many have no idea what they’re getting for their money. The average household spends more on taxes than on groceries, clothing, or healthcare. In fact, 11% of our income, on average, goes to personal income taxes, which doesn’t include sales tax, property tax, Social Security payments, or Medicare payments.

So what do we get in return? The accompanying chart breaks down the $6.27 trillion in federal spending for 2022 into major categories. One of the biggest categories is Social Security, which consumes almost one-fourth of the budget. Safety net programs, which includes food assistance and unemployment compensation, takes another 11%. Defense and related items take 18% of the budget, and 24% goes to Medicare and health programs.

Are taxes one of your biggest budget items? Take steps to make sure you’re managing your overall tax bill. Please consult a tax professional for specific information regarding your individual situation.