Most of the revenue the government collects comes from contributions from individual taxpayers, small businesses, and corporations through taxes that get collected on a yearly or quarterly basis. The remaining sources of federal revenue consist of excise, estate, and other taxes and fees.
What makes up individual income taxes? How much federal revenue is contributed by Social Security and Medicare taxes? What's included in the 10% of revenue that doesn't come from taxpayers or corporations? Explore the visualization to find out.
You may recognize these taxes on your paycheck. Unlike personal income taxes, these taxes are used to help fund specific social service programs. Funds are collected from your paycheck, and in most cases matched by your employer, then divided into the various trust fund accounts.
Social Security has two trust fund accounts: the Old Age and Survivors Insurance Trust Fund (OASI) and the Disability Trust Fund (DI). The funds in these accounts are responsible for providing workers and their families with retirement, disability and survivor's insurance benefits.
Medicare also has two accounts: the Hospital Insurance Trust Fund (HI), also known as Medicare Part A, and the Supplementary Medicare Insurance Trust Fund (SMI). These funds pay for hospital, home health, skilled nursing, and hospice care for the elderly and disabled.
The Federal Reserve Act of 1913 established the Federal Reserve System (the Fed) as the central bank for the United States. The Fed works closely with the Department of the Treasury, which manages the finances of the federal government. The Fed issues Treasury securities and conducts auctions of these securities to raise funds for the federal government. In addition, the Fed also processes monetary transactions on behalf of Treasury, including issuing payments and other government receivables.
The role of the Fed is to support the economy, not to make a profit. Once the Fed pays its expenses, any remaining profits are sent to Treasury to be used by the federal government.
Government revenue also comes from payments to federal agencies like the U.S. Department of the Interior. Have you visited a national park recently? Did you know your national park entry fee also applies towards government revenue? Other agencies generate revenue from leases, the sale of natural resources, and various usage and licensing fees.
When you're done here, explore the trends in federal revenue over the past five years.
The visualization was created using the Monthly Treasury Statement (MTS) as the data source for federal government revenue of the United States. Some categories from the MTS have been renamed in order to be more easily understood.
When payments of Individual Income and Social Security and Medicare taxes are made, the taxpayer makes a single, combined payment and does not report the amounts attributable to each tax. Thus, the MTS reports Social Security and Medicare taxes as estimated amounts and reports Individual Income taxes as the residual of the combined payments minus the Social Security and Medicare estimated amounts. When the actual amounts of Social Security and Medicare taxes are determined, the MTS reflects the difference between the initial estimates and the actual amounts as an adjustment for prior years' taxes with an offsetting adjustment to individual income taxes. In Fiscal Year 2020, estimates of Social Security and Medicare taxes were made prior to the onset of the coronavirus disease 2019 (COVID-19).