U.S. federal tax revenue is made up of the total tax receipts received by the government each year. Most of it is paid either through income taxes or payroll taxes. The rest is made up of estate taxes, excise and customs duties, and interest on the Federal Reserve's holdings of U.S. Treasurys.
The U.S. government estimates its total revenue to be $5.49 trillion for fiscal year 2025.
Per the White House's projections, income taxes are slated to contribute $2.6 trillion. Another $2.2 trillion should come from payroll taxes. This includes $1.3 trillion for Social Security, $399 billion for Medicare, and $56 billion for unemployment insurance. Corporate taxes would add another $467 billion.
The remainder of federal revenue comes from excise taxes, tariffs on imports, miscellaneous receipts, and estate taxes.
The government's annual income doesn't cover its spending, which was projected to create a $1.8 trillion budget deficit in 2025. Deficits add to the national debt.
Many argue that Congress should only spend what it earns, but that depends on where the economy is in the business cycle. For example, some argue Congress should use deficit spending to expand economic growth in a recession and stimulus spending to create jobs. Once the recession is over, the government should then switch from expansionary to contractionary fiscal policy because it's the best time to raise taxes and reduce the deficit and national debt. It also keeps the economy from overheating and forming dangerous bubbles.
The government's 2025 tax revenue projection is roughly 18.7% of gross domestic product (GDP), which is a measurement of a nation's economic output.
Here's a record of income for each fiscal year since 1962. Tax receipts fell off during the 2007–2009 recession but started setting new records by fiscal year 2013. They fell off again during the brief 2020 recession and then resumed their upward climb until the fiscal year 2023, when lower income tax collections driven by Trump's tax cuts pushed overall revenue lower.
Fiscal Year | Revenue |
---|---|
FY 2023 | $4.44 trillion |
FY 2022 | $4.90 trillion |
FY 2021 | $4.05 trillion |
FY 2020 | $3.42 trillion |
FY 2019 | $3.46 trillion |
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 | $2.78 trillion |
FY 2012 | $2.45 trillion |
FY 2011 | $2.30 trillion |
FY 2010 | $2.16 trillion |
FY 2009 | $2.11 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 | $1.83 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 | $1.06 trillion |
FY 1990 | $1.03 trillion |
FY 1989 | $991.1 billion |
FY1988 | $909.2 billion |
FY 1987 | $854.3 billion |
FY 1986 | $769.2 billion |
FY 1985 | $734.0 billion |
FY 1984 | $666.4 billion |
FY 1983 | $600.6 billion |
FY 1982 | $617.8 billion |
FY 1981 | $599.3 billion |
FY 1980 | $517.1 billion |
FY 1979 | $463.3 billion |
FY 1978 | $399.6 billion |
FY 1977 | $355.6 billion |
FY 1976 | $298.1 billion |
FY 1975 | $279.1 billion |
FY 1974 | $263.2 billion |
FY 1973 | $230.8 billion |
FY 1972 | $207.3 billion |
FY 1971 | $187.1 billion |
FY 1970 | $192.8 billion |
FY 1969 | $186.9 billion |
FY 1968 | $153.0 billion |
FY 1967 | $148.8 billion |
FY 1966 | $130.8 billion |
FY 1965 | $116.8 billion |
FY 1964 | $112.6 billion |
FY 1963 | $106.6 billion |
FY 1962 | $99.7 billion |
Unlike the federal government, most local governments earn the majority of their revenue from property or sales taxes. Income taxes are significantly less common at the local level.
One way for the federal government to increase revenue is to boost taxes. It has several options to do this, though, and economists and policymakers frequently debate the effectiveness of each. Some examples of ways to increase federal tax revenues include directly increasing tax rates, raising rates on wealthier taxpayers, reducing tax exemptions and deductions, and boosting economic activity.
Federal income taxes are structured in graduated brackets ranging from 10% to 37% of your adjusted gross income. Long-term capital gains are taxed at a different rate, ranging from 0% to 20%.
The White House. "Budget for the U.S. Government: Fiscal Year 2025," Pages 141-146.
Congressional Budget Office. "The Budget and Economic Outlook: 2024 to 2034."
Congressional Budget Office. "Historical Budget Data."
Pew Charitable Trusts. "How Local Governments Raise Their Tax Dollars."
The Tax Policy Center. "What Options Would Increase Federal Revenues?"