US Federal Government Tax Revenue

Who Really Pays Uncle Sam's Bills?

Federal government revenue
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U.S. federal tax revenue is the total tax receipts received by the federal government each year. Most of it is paid by you either through income taxes or payroll taxes.

The percentage breakout is income taxes at 50% and payroll taxes at 36%, for a total of 86%. Corporate taxes supply 7% while excise taxes and tariffs contribute 4%. Earnings from the Federal Reserve's holdings add 2% and the remaining 2% is from estate taxes and other miscellaneous fees.

Current Revenue

The U.S. government's total revenue is estimated to be $3.643 trillion for Fiscal Year 2020. That's the most recent budget forecast from the Office of Management and Budget for October 1, 2019, through September 30, 2020.

So where does the federal government's revenue come from? Individual taxpayers like you provide most of it. Income taxes contribute $1.822 trillion, over half of the total. Another third, $1.295 trillion, comes from your payroll taxes. This includes $949 billion for Social Security, $289 billion for Medicare, and $46 billion for unemployment insurance.

Corporate taxes add $256 billion, only 7%. The Tax Cut and Jobs Act cut taxes for corporations much more than it did for individuals. In 2015, corporations paid 11% and income taxpayers paid 47%.

The Federal Reserve contributes $49 billion. Its revenue comes from a variety of activities. For example, the Fed is the bank for federal government agencies. It pays interest on the billions of dollars in operating funds deposited by these agencies. In addition, the Fed owns $4 trillion in U.S. Treasury securities that it acquired through quantitative easing.

Excise taxes and tariffs on imports contribute $157 billion. The remaining $64 billion of federal income comes from estate taxes and miscellaneous receipts.

How Revenue Relates to the Deficit, Debt, and GDP

The government's annual income only pays for 77% of spending. It creates a $1.1 trillion budget deficit.

Many argue that Congress should only spend what it earns, just like you and me. But that depends on where the economy is in the business cycle. Congress should use deficit spending to boost economic growth in a recession. It uses this stimulus spending to create jobs.

Once the recession is over, the government should switch from expansionary to contractionary fiscal policy.That’s the best time to raise taxes and reduce the deficit and the debt. It also keeps the economy from overheating and forming dangerous bubbles. 

Current revenue collected equals 16.3% of gross domestic product. That's the nation's measurement of economic output. That's like saying the average tax rate for the United States itself is 16.3%. 

When that much production is going to the federal government, it’s best to reinvest it into the economy to support future growth.

It's also much lower than the historical 19% target. But that's because President Donald Trump cut taxes. The OMB estimates GDP will increase by 3.1% in FY 2020. That's higher than the ideal growth rate

Revenues were also lowered by the extension of the Bush tax cuts and the Obama tax cuts. They fought the 2001 recession and the 2008 recession by spurring the consumer spending that drives almost 70% of economic growth.

U.S. Tax Revenue by Year

Here's a record of income for each fiscal year since 1960. There are links to more details about the revenue back to the FY 2006 budget. Tax receipts fell off during the recession but started setting new records by FY 2013.

  • FY 2020 - $3.64 trillion, budgeted
  • FY 2019 - $3.44 trillion, estimated
  • FY 2018 - $3.33 trillion
  • FY 2017 - $3.32 trillion
  • FY 2016 - $3.27 trillion
  • FY 2015 - $3.25 trillion
  • FY 2014 - $3.02 trillion
  • FY 2013 - $2.77 trillion
  • FY 2012 - $2.45 trillion
  • FY 2011 - $2.30 trillion
  • FY 2010 - $2.16 trillion
  • FY 2009 - $2.10 trillion
  • FY 2008 - $2.52 trillion
  • FY 2007 - $2.57 trillion
  • FY 2006 - $2.41 trillion
  • FY 2005 - $2.15 trillion
  • FY 2004 - $1.88 trillion
  • FY 2003 - $1.78 trillion
  • FY 2002 - $1.85 trillion
  • FY 2001 - $1.99 trillion
  • FY 2000 - $2.03 trillion
  • FY 1999 - $1.82 trillion
  • FY 1998 - $1.72 trillion
  • FY 1997 - $1.58 trillion
  • FY 1996 - $1.45 trillion
  • FY 1995 - $1.35 trillion
  • FY 1994 - $1.26 trillion
  • FY 1993 - $1.15 trillion
  • FY 1992 - $1.09 trillion
  • FY 1991 - $1.05 trillion
  • FY 1990 - $1.03 trillion
  • FY 1989 - $991 billion
  • FY 1988 - $909 billion
  • FY 1987 - $854 billion
  • FY 1986 - $769 billion
  • FY 1985 - $734 billion
  • FY 1984 - $666 billion
  • FY 1983 - $601 billion
  • FY 1982 - $618 billion
  • FY 1981 - $599 billion
  • FY 1980 - $517 billion
  • FY 1979 - $463 billion
  • FY 1978 - $399 billion
  • FY 1977 - $356 billion
  • FY 1976 - $298 billion
  • FY 1975 - $279 billion
  • FY 1974 - $263 billion
  • FY 1973 - $231 billion
  • FY 1972 - $207 billion
  • FY 1971 - $187 billion
  • FY 1970 - $193 billion
  • FY 1969 - $187 billion
  • FY 1968 - $153 billion
  • FY 1967 - $149 billion
  • FY 1966 - $131 billion
  • FY 1965 - $117 billion
  • FY 1964 - $113 billion
  • FY 1963 - $107 billion
  • FY 1962 - $100 billion
  • FY 1961 - $94 billion
  • FY 1960 - $93 billion
  • FY 1789-1959 - $1.1 trillion

The Bottom Line

The federal income tax is an annual levy by the IRS on earnings of individuals, corporations, trusts, and other legal organizations. Even the Federal Reserve pays taxes as it is a taxable entity.

The national government gets most of its revenue from federal income taxes. Income taxes and payroll taxes make up the bulk of federal income taxes. So, the federal government’s revenues are mostly derived from a portion of U.S. citizens’ earnings.

Despite federal tax revenues now running into the trillion dollar level, this income cannot cover the even bigger federal debt the government has accrued. Tax cuts mean federal government revenues won’t be enough to pay off U.S. debt. 

Understand the Current Federal Budget

Article Sources

  1. WhiteHouse.gov. “A Budget for a Better America, Fiscal Year 2020, Budget of the U.S. Government,” Accessed Nov. 9, 2019.

  2. Bureau of Economic Analysis. “National Income and Product Accounts Tables: Table 1.1.5. Nominal GDP,” Divide the figure for "Personal Consumption Expenditures" by total GDP. Accessed Jan. 6, 2020.

  3. Office of Management and Budget. "Budget of the U.S Government for Fiscal Year 2019," Table S-1. Budget Totals. Accessed Dec. 21, 2019.

  4. Office of Management and Budget. "Mid-Session Review Budget of the U.S. Government Fiscal Year 2018," Table S-1. Budget Totals. Accessed Dec. 21, 2019.

  5. For FY 1789 - 2015. Office of Management and Budget. “Historical Tables,” Download Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits, Accessed Dec 20, 2019.