John Barnes - LPL Financial Planner

(323) 306-7024

Tax Read Time: 2 min

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?1

The accompanying chart breaks down the $6.8 trillion in federal spending for 2024 into major categories. One of the biggest categories is Social Security, which consumes 22% of the budget. Defense takes 13% of the budget, and 13% goes to Medicare.2

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.

Pieces of the Federal Pie

Over half of 2024 federal spending was used for Social Security, Medicare, defense, and Medicaid.

Source: CBO.gov, March 20, 2025. Figures represent total outlays for the 2024 fiscal year, as reported by the Congressional Budget Office.

1. ValuePenguin.com, January 10, 2024
2. CBO.gov, March 20, 2025

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Creative Ways to Motivate Your Employees

Creative Ways to Motivate Your Employees

Five creative (and inexpensive) ideas for motivating your employees.

How Will Working Affect Social Security Benefits?

How Will Working Affect Social Security Benefits?

Knowing the rules may help you decide when to start benefits.

Catch-Up Contributions

Catch-Up Contributions

Workers 50+ may make contributions to their qualified retirement plans above the limits imposed on younger workers.

 

Have A Question About This Topic?







Thank you! Oops!

Money Draining Food Myths

These food myths will really put a drain on your wallet.

How to Invest in LGBTQ+ Friendly Companies

This article allows those who support LGBTQ+ interests to explore the possibilities of Socially Responsible Investing.

Women and Financial Strategies

Most women don’t shy away from the day-to-day financial decisions, but some may be leaving their future to chance.

View all articles

Simple 401k

See how increasing your 401(k) contributions today could affect your balance at retirement.

How Compound Interest Works

Explore how compound interest can grow your money over time with this interactive tool.

Federal Capital Gains Tax Estimator

Estimate your potential federal capital gains tax liability on the sale of an asset.

View all calculators

Top 5 Things to Tell Your Financial Pro

Here are the top 5 things your team may want to hear.

The Power of Compound Interest

Learn how to harness the power of compound interest for your investments.

How to Retire Early

Retiring early sounds like a dream come true, but it’s important to take a look at the cold, hard facts.

View all videos