How Uncle Sam Spends Your Income Tax Dollars

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Every year at around this time, millions of Americans wave goodbye to a big chunk of their earnings from the previous year when they send off their tax checks. It’s never fun to give away hard-earned money, especially when is seems like you get nothing in return.

But in reality, every American’s income taxes don’t just disappear. If you’ve ever wondered exactly where each dollar you pay in taxes goes, here’s a breakdown.


Military: 27 cents

The single largest chunk of U.S. income taxes last year went to defense. Some Americans see this is a worthwhile price to sleep easy and safe at night, while others believe this money is simply eaten up by the well-established U.S. military-industrial complex. Love it or hate it, military spending accounts for 54.4 percent of the U.S. government’s annual $1.1 trillion in discretionary spending.

Healthcare: 26.5 cents

Nearly 54% of all U.S. income taxes last year went toward either defense or healthcare programs. Americans pay a high price for programs like Medicaid and the Children’s Health Insurance Program. Healthcare costs have continued to balloon out of control in recent years, driving drug pricing to the forefront of the 2016 presidential campaign.

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Interest on Federal Debt: 15.3 cents

OK, this one stings a little bit. Last year, the U.S. spent $223 billion on interest on its national debt of more than $13.5 trillion. Every year, the government spends more money than it takes in, and every year the debt rises, driving interest responsibilities even higher. The worst part is that Americans get no benefits in return for this portion of their taxes.

Social Security, Unemployment & Labor: 8.4 cents

Even though a huge amount of tax dollars are already going toward Social Security, the aging Baby Boomer Generation has begun to place a tremendous strain on the Social Security budget. In fact, some estimate that the Social Security surplus will be completely depleted by 2035, and the Social Security payroll tax will only be able to fund about 75% of the promised benefits.

Veterans Benefits: 5.8 cents

If everyone agrees that national debt interest is a horrible waste of taxpayer money, most people would agree that veterans benefits are a very worthy cause.

Food & Agriculture: 5 cents

The U.S. Department of Agriculture provides a wide range of services from natural disaster relief for farmers to education and conservation programs.

Government: 3.4 cents

Of course, all those politicians that make terrible decisions about how to spend your tax dollars have to get paid for their efforts.

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Education: 2.5 cents

This is another number that a lot of Americans believe is woefully small. At least the dawn of the Internet Age has provided U.S. kids with more easily-accessible free online educational resources than ever before.

Transportation: 1.9 cents

Over the next decade, the Department of Transportation plans to invest heavily in smarter and cleaner regional transportation innovations, expanded public transportation access, high-performance rail initiatives and many other goals.

Other: 4.3 cents

The last few cents of your tax dollar are broken up into a number of commitments, including energy, environment, international affairs, science and housing & community.


You may not agree with how your tax dollars are spent, but they don’t just disappear. The next time you get frustrated with how much of your paycheck goes to Uncle Sam, it may help to remember all the good that it’s doing for all Americans.


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By Quizzle. Helping You Make Better Financial Decisions.