March 16, 2015
Tax Day shows how your income taxes were spent. Those are a portion of the taxes withheld from your paycheck, and due each year on April 15.
Tax Day materials do not include the payroll taxes that directly fund Social Security and Medicare.
Tax Day 2015 shows how federal funds were spent during fiscal year 2014, the time period that most closely corresponds to the calendar year for which income taxes are due.
In order to do this analysis, National Priorities Project (NPP) separates federal funds from trust funds. Trust funds, generated from sources such as payroll taxes, can only be used for specific programs like Social Security and Medicare. All other funds are federal funds, including revenue from your federal income taxes, and can be used for a wide variety of purposes.
We use projected federal fund “outlays” for fiscal year 2014 as reported by the White House Office of Management and Budget’s (OMB) Public Budget Database, released in February 2015.
When OMB publishes federal budget data, it uses several categories of spending called functions, and within those, subfunctions. While NPP uses 13 different budget categories to sort federal spending, these do not correspond to the official government functions. Rather, they are meant to organize the many government subfunctions into intuitive groupings. In order to create Tax Day 2015, federal fund outlays were sorted into the following categories:
Elementary, secondary, higher and vocational education.
Subfunctions: 501, 502, 503
Natural resources and environment, conservation, and supply and use of energy.
Subfunctions: 271, 272, 274, 276, 301, 302, 303, 304, 306
Agriculture as well as nutritional assistance programs.
Subfunctions: 351, 352, 605
Law enforcement and the justice system, commerce, overhead costs of the federal government, and undistributed offsetting receipts.
Subfunctions: 372, 373, 376, 751, 752, 753, 754, 801, 802, 803, 804, 805, 806, 808, 809, 922, 929, 951, 952, 953, 954, 959
Housing assistance and credit, community development, disaster relief, and services supporting social needs.
Subfunctions: 371, 451, 452, 453, 506, 604, 925
Annual interest paid on the national debt, net of interest income received by assets the federal government owns.
Subfunctions: 901, 902, 903, 908, 909
Diplomatic, development, and humanitarian activities abroad.
Subfunctions: 151, 153, 154, 155
Health care programs and services, and occupational and consumer health & safety.
Subfunctions: 551, 552, 554, 571, 921, 926
National defense, nuclear weapons activities, war costs, and international security assistance.
Subfunctions: 051, 053, 054, 152
General science research and space flight research and activities.
Subfunctions: 251, 252
Income security programs, federal employee retirement and disability, and job training.
Subfunctions 504, 505, 601, 602, 603, 609, 651, 923
Development and support of air, water, ground, and other transportation.
Subfunctions: 401, 402, 403, 407
Health care, housing, education and income security for veterans.
Subfunctions: 701, 702, 703, 704, 705
NPP’s personalized and state average tax receipts shows how much of your federal income taxes went to each of the 13 categories specified above, using federal fund outlays data from the OMB Public Budget Database, as described. In addition, the receipt shows how much of your taxes went to particular programs within each of those categories, using data from OMB’s Public Budget Database, as follows:
Includes outlays under Military subfunctions for the Bureau, “Military Personnel.”
Includes outlays for subfunction 053, “Atomic Energy Defense Activities.”
Includes outlays under Health Care subfunctions for the Account, “Medicaid.”
Includes outlays under Health Care subfunctions for the Account, “Children’s Health Insurance Program.”
Includes outlays under Unemployment & Labor subfunctions for the Account, “Temporary Assistance for Needy Families.”
Includes outlays for subfunction 504, “Training and Employment.”
Includes outlays under Veterans Benefits subfunctions for the Account, “Compensation.”
Includes outlays under Veterans Benefits subfunctions for the Bureau, “Veterans Health Administration.”
Includes outlays under Food & Agriculture subfunctions for the Account, “Supplemental Nutrition Assistance Program.”
Includes under Food & Agriculture subfunctions for the Account, “Federal Crop Insurance.”
Includes outlays under Government subfunctions for the Bureau, “U.S. Customs and Border Protection.”
Includes outlays under Government subfunctions for the Bureau, “Federal Prison System.”
Includes outlays under Education subfunctions for the Account, “Student Financial Assistance.”
Includes outlays under Education subfunctions for the Account, “Special Education.”
Includes outlays under Energy & Environment subfunctions for the Bureau, “National Park Service.”
Includes outlays under Energy & Environment subfunctions for the Account, “Energy efficiency and renewable energy.”
Includes outlays under International Affairs subfunctions for the Account, “Diplomatic and consular affairs.”
Includes outlays under International Affairs subfunctions for the Account, “Global Health Programs.”
Includes outlays under Transportation subfunctions for the Bureau, “Transportation Security Administration.”
Includes outlays under Transportation subfunctions for the Bureau, “Federal Aviation Administration.”
Includes outlays under Science subfunctions for the Bureau, “National Aeronautics and Space Administration.”
Includes outlays under Science subfunctions for the Bureau, “National Science Foundation.”
To generate average taxpayer receipts for the U.S. and for each state, we used tax return data from the IRS. Our receipts are generated using information for tax year 2012, the latest available, state-level information at the time of publication: http://www.irs.gov/uac/SOI-Tax-Stats-Historic-Table-2.
The averages are calculated by dividing income tax amount (line 108 in the 2012 version of the IRS spreadsheets) by the total number of applicable returns (line 107). The income tax amount represents total income taxes owed after deductions and credits but does not reflect refundable tax credits, such as the refundable portion of the EITC. Note that we didn’t use the Total Tax Liability field because it includes some payroll taxes, which we don’t include in our Tax Day materials.
Totals were then adjusted for inflation from calendar year 2012 to 2015 dollars using deflators from OMB's Table 101. in the Historical Tables.
NPP’s Federal Priorities Database maps these average individual income taxes by state and has them available for download: https://www.nationalpriorities.org/interactive-data/database/. Select “Individual Taxes: Income Only.”
Education tax breaks include American Opportunity Tax Credit, Deductibility of Student-Loan Interest, Deduction for Higher Education Expenses, Discharge of Student Loan Indebtedness, Education Individual Retirement Accounts, Exclusion of Employer-Provided Educational Assistance, Exclusion of Interest on Savings Bonds Redeemed to Finance Educational Expenses, Exclusion of Scholarship and Fellowship Income, Hope Tax Credit, Lifetime Learning Tax Credit, Parental Personal Exemption for Students Age 19 or Over, and Qualified Tuition Programs.