Taxes, spending & debt
Where federal money comes from, where it goes, and what to do about the gap between the two.
Last reviewed October 11, 2026
Know
Facts that are not in dispute. Guess first, then see the figure and where it comes from.
Budget figures are for fiscal year 2026 (October 2025 through September 2026) and are Congressional Budget Office estimates. The Treasury's final figures follow later and usually differ only slightly.
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Of every 100 dollars the federal government spent in 2026, about how many were borrowed?
Slide to make your guess
About 27 of every 100 dollars the federal government spent were borrowed.
The government spent about $7.4 trillion and collected about $5.4 trillion. The difference, a deficit of about $2.0 trillion, was covered by borrowing.
Source: Congressional Budget Office, Monthly Budget Review: September 2026
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Of every 100 dollars the federal government spent, about how many went to Social Security, Medicare and Medicaid together?
Slide to make your guess
About 47 of every 100 dollars the federal government spent went to Social Security, Medicare and Medicaid.
Together they cost about $3.4 trillion. Social Security alone was 22 of every 100 dollars.
Source: Congressional Budget Office, Monthly Budget Review: September 2026
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Of every 100 dollars the federal government spent, about how many went to interest on the national debt?
Slide to make your guess
About 15 of every 100 dollars the federal government spent went to interest on the debt.
Net interest came to about $1.14 trillion, more than the $916 billion spent on the military, which was 12 of every 100 dollars.
Source: Congressional Budget Office, Monthly Budget Review: September 2026
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Of every 100 dollars the federal government collected, about how many came from corporate income taxes?
Slide to make your guess
About 7 of every 100 dollars the federal government collected came from corporate income taxes.
Individual income taxes brought in 53 and payroll taxes, which fund Social Security and Medicare, 34.
Source: Congressional Budget Office, Monthly Budget Review: September 2026
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Of every 100 dollars of federal income tax, about how many are paid by the top 1% of earners?
Slide to make your guess
The top 1% of earners pay about 38 of every 100 dollars of federal income tax, and receive about 21 of every 100 dollars of income.
This is for tax year 2023, the latest with complete IRS data, and covers households with income above about $676,000. The top 10% paid 70.5% of the income tax and received 47.6% of the income. The figures count the income tax only, not payroll or other taxes. This share changes from year to year with investment income. It was 40 in 2022.
Source: Internal Revenue Service, Individual statistical tables by tax rate and income percentile (tax year 2023); Tax Foundation, Who Pays Federal Income Taxes? (summary of the IRS tables for tax year 2023)
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Of every 100 households, about how many owe no federal income tax?
Slide to make your guess
About 40 of every 100 households owe no federal income tax.
This is an estimate for 2025. Many of these households still pay payroll taxes on their wages.
Source: Tax Policy Center, Who Will Pay No Federal Individual Income Tax in 2025?
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As a share of the economy, revenue is close to its 50-year average and spending is above its own.
For 2026 the Congressional Budget Office projected revenue at 17.5% of the economy against a 50-year average of 17.3%, and spending at 23.3% against an average of 21.2%.
Source: Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036
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The national debt is about $40.3 trillion, of which about $32.5 trillion is owed to outside lenders.
The rest is owed to the government's own accounts, such as the Social Security trust funds. The outside portion is roughly the size of the whole economy, projected at 101% of it for 2026 and 120% by 2036 if current laws stay in place.
Source: U.S. Treasury, Debt to the Penny; Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036
Where the money came from in 2026
$5.4 trillion in total. Each bar is that line's share.
Source: Congressional Budget Office, Monthly Budget Review: September 2026
Where the money went in 2026
$7.4 trillion in total. Each bar is that line's share.
Source: Congressional Budget Office, Monthly Budget Review: September 2026
Charts appear here once you have answered or skipped the questions above.
Debate
Questions the facts cannot settle, with the strongest case for each side.
Who should pay, and how much?
Higher earners should pay more
The top 1% of earners receive about 21 of every 100 dollars of income reported to the IRS, and the top 10% receive nearly half. The income tax is also only part of what people pay. Payroll taxes, which fall on wages, bring in 34 of every 100 dollars of federal revenue, and corporate income taxes just 7. The government borrows 27 of every 100 dollars it spends. The Congressional Budget Office estimates that raising rates by two points in the top four brackets would bring in about $570 billion over ten years (how people would respond is disputed). Asking more of those with the most would narrow the gap with the least hardship.
Taxes should be lower and flatter
The top 1% receive about 21 of every 100 dollars of income and pay 38 of every 100 dollars of income tax. The top 10% pay 70, and 40 of every 100 households owe none. The Congressional Budget Office estimates that raising every rate by one point would bring in about $1.2 trillion over ten years, twice what a two-point rise on the top four brackets would. The money is in broad taxes, not narrow ones. It also found that the 2017 tax cut raised the economy's output by 0.7% a year on average (how much growth offsets the cost is disputed). A broader base with lower rates treats each dollar alike.
Underneath is a disagreement about what fairness means, paying according to ability or being treated alike, and about how much growth, if any, is worth trading for less inequality.
Should the gap close mainly by spending less or by taxing more?
Mainly by spending less
As a share of the economy, revenue is 17.5% against a 50-year average of 17.3%, while spending is 23.3% against an average of 21.2%. The gap is on the spending side. Social Security, Medicare and Medicaid take 47 of every 100 dollars and interest takes 15, and all four grow without any vote by Congress. Under current law the debt owed to outside lenders rises from 101% of the economy to 120% by 2036. Taxes cannot keep up. The Congressional Budget Office estimates that raising every income tax rate by one point would bring in about $1.2 trillion over ten years, against a deficit of $2.0 trillion in 2026 alone.
Mainly by taxing more
Social Security and Medicare are paid for in part by payroll taxes, which workers have contributed throughout their careers and which bring in 34 of every 100 dollars of revenue. Cutting them means cutting benefits people were promised. Interest takes 15 of every 100 dollars spent and cannot be cut. Everything else, including the military, came to about $2.8 trillion, so closing a $2.0 trillion gap from that alone would mean cutting it by more than two thirds. The Congressional Budget Office found that the 2017 tax cut added about $1.9 trillion to deficits over eleven years, after counting the growth it produced (the size of that growth is disputed).
Underneath is a disagreement about how large a role government should play in retirement and health care, and about who should bear the cost of an aging population, today's retirees, today's workers or future taxpayers.
Wording
Terms that frame the argument before it starts. Who uses each one, and what can be checked.
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"The deficit" and "the debt"
How it is used. The two words are often used as if they meant the same thing, by people on every side. A politician can truthfully claim to have cut the deficit in a year when the debt still grew.
What can be checked. The deficit is one year's gap between spending and revenue, about $2.0 trillion in 2026. The debt is everything borrowed and not yet repaid, about $40.3 trillion. The debt grows in any year with a deficit, however small.
Sources: Congressional Budget Office, Monthly Budget Review: September 2026; U.S. Treasury, Debt to the Penny
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"Pays no taxes"
How it is used. The phrase is used to say that a large part of the country contributes nothing. The reply is usually that everyone pays taxes of some kind.
What can be checked. About 40 of every 100 households owe no federal income tax. Most of them still pay payroll taxes, which bring in 34 of every 100 dollars of federal revenue. The claim is true of the income tax and false of federal taxes as a whole.
Sources: Tax Policy Center, Who Will Pay No Federal Individual Income Tax in 2025?; Congressional Budget Office, Monthly Budget Review: September 2026
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"Tax relief" and "tax cuts for the rich"
How it is used. "Relief" casts a tax as an affliction and a cut as its cure. "Tax cuts for the rich" and "giveaway" cast the same bill as a gift to those who need it least.
What can be checked. The same law can fit both descriptions. The Congressional Budget Office found that the 2017 tax cut raised the economy's output by 0.7% a year on average and added about $1.9 trillion to deficits over eleven years.
Sources: Congressional Budget Office, How the 2017 Tax Act Affects CBO's Projections
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"Entitlements" and "earned benefits"
How it is used. "Entitlements" suggests benefits people simply expect to be given. "Earned benefits" suggests they were fully paid for in advance.
What can be checked. Both names are used for Social Security and Medicare. Payroll taxes brought in about $1.8 trillion in 2026, and the two programs cost about $2.7 trillion. Workers do pay toward them, and their contributions do not cover the whole cost.
Sources: Congressional Budget Office, Monthly Budget Review: September 2026
Uncertain
Questions that have a factual answer in principle, where the evidence is still contested.
- How much do tax cuts pay for themselves?
- The Congressional Budget Office studied the 2017 tax cut. It estimated the cut would cost $1.8 trillion over eleven years before interest, and that the extra growth it produced would recover about $550 billion of that. With interest on the added borrowing, deficits still rose by about $1.9 trillion. Supporters of tax cuts argue that official models understate the growth. Opponents point out that even on these figures the cut recovered less than a third of its cost. Sources: Congressional Budget Office, How the 2017 Tax Act Affects CBO's Projections
- How much would higher taxes on top earners raise?
- The Congressional Budget Office estimates that raising rates by two points in the top four brackets would bring in about $570 billion over ten years, and that raising every rate by one point would bring in about $1.2 trillion. Both estimates depend on how much people change the way they work, invest and report income when rates rise. Supporters of higher rates argue that the response is small. Opponents argue that it is large enough to shrink the revenue well below the estimate. Sources: Congressional Budget Office, Increase Individual Income Tax Rates on Ordinary Income (budget option)
- How much debt is too much?
- There is no agreed threshold. The Congressional Budget Office projects that debt owed to outside lenders will rise from 101% of the economy in 2026 to 120% in 2036, and interest costs from 3.3% of the economy to 4.6%. Those who want action soon argue that interest will crowd out other spending and that lenders may one day demand much higher rates. Others answer that predictions of a crisis have been made for decades without one arriving. Much depends on whether interest rates stay below the economy's growth rate. Sources: Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036
Sources
- Congressional Budget Office, Monthly Budget Review: September 2026, October 8, 2026
- Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036, February 2026
- U.S. Treasury, Debt to the Penny, figures for October 8, 2026
- Internal Revenue Service, Individual statistical tables by tax rate and income percentile (tax year 2023), 2026
- Tax Foundation, Who Pays Federal Income Taxes? (summary of the IRS tables for tax year 2023), April 2026
- Tax Policy Center, Who Will Pay No Federal Individual Income Tax in 2025?, June 2025
- Congressional Budget Office, How the 2017 Tax Act Affects CBO's Projections, April 2018
- Congressional Budget Office, Increase Individual Income Tax Rates on Ordinary Income (budget option), December 2024