Federal Government Spending in US 2025 | Statistics & Facts

Federal Government Spending in America 2025

The United States federal government’s spending patterns in 2025 reveal unprecedented fiscal challenges as the nation navigates through a complex economic landscape. With total expenditures projected at $7.0 trillion in fiscal year 2025, representing 23.3 percent of the nation’s Gross Domestic Product, federal spending has continued its upward trajectory while simultaneously driving the budget deficit to $1.8 trillion. This massive scale of government spending touches virtually every American citizen, funding everything from national defense and Social Security benefits to Medicare, Medicaid, and interest payments on the mounting national debt that now exceeds 100 percent of GDP.

The fiscal year 2025 budget operates under unique circumstances, with ongoing debates about spending priorities and fiscal responsibility. Through the first eleven months of fiscal year 2025, spending totaled approximately $6.5 trillion, with revenues of $4.5 trillion, creating a deficit of $2.0 trillion before final September adjustments. The final reported deficit for fiscal year 2025 stands at $1.8 trillion, just $8 billion less than the previous year’s shortfall. Understanding where taxpayer dollars flow in 2025 provides critical insights into government priorities, the sustainability of current fiscal policies, and the long-term challenges facing American public finances as the nation confronts demographic shifts, rising healthcare costs, and increasing debt service obligations.

Interesting Facts About Federal Government Spending in the US 2025

Data Source: Congressional Budget Office (CBO), U.S. Department of the Treasury, Office of Management and Budget (OMB)

The federal spending landscape in 2025 demonstrates significant fiscal pressure across multiple dimensions that will shape America’s economic future for decades. The $7.0 trillion total represents continuous growth in government obligations, with spending as a share of GDP at 23.3 percent exceeding the 50-year historical average. Most notably, the budget deficit of $1.8 trillion equals 6.2 percent of GDP, nearly double the historical average and signaling ongoing structural imbalances between spending and revenues. While revenues increased by $308 billion (reaching $5.2 trillion), spending rose by $301 billion, maintaining the substantial gap between income and expenditures.

Mandatory spending now commands approximately 65 percent of all federal outlays, operating automatically based on eligibility formulas rather than annual congressional appropriations. This includes Social Security, Medicare, Medicaid, and critically, interest payments on the national debt. Discretionary spending remains constrained at $1.606 trillion under caps established by the Fiscal Responsibility Act, split between $895 billion for defense and $711 billion for non-defense programs. The national debt has reached a historic milestone of 100 percent of GDP in 2025 and is projected to climb to 118 percent by 2035, surpassing the previous World War II-era peak of 106 percent recorded in 1946. These spending levels and debt trajectories signal profound fiscal challenges requiring difficult policy choices in coming years.

Social Security Spending in the US 2025

Data Source: Social Security Administration (SSA), Social Security Trustees Report 2025, Congressional Budget Office Monthly Budget Reviews

Social Security represents the federal government’s single largest spending program in 2025, functioning as the financial foundation for over 73.9 million Americans including retirees, survivors, and disabled workers. The program distributed $134.5 billion in benefits during April 2025 alone, translating to an annualized spending level exceeding $1.6 trillion for the full fiscal year. Through the first seven months of fiscal year 2025, Social Security spending rose by $70 billion or 8 percent compared to the same period in 2024, driven by increases in the average benefit payment stemming from cost-of-living adjustments and growth in the number of beneficiaries. The average retired worker received $1,999.97 monthly as of April 2025, providing essential income security for millions of elderly Americans.

The 2.5 percent Cost-of-Living Adjustment implemented in January 2025 increased benefit payments by approximately $50 per month on average to account for inflation, directly impacting program costs. Looking ahead, the Social Security Administration announced in October 2025 that benefits will increase by 2.8 percent in 2026, providing an additional $56 monthly on average to approximately 75 million beneficiaries. The Social Security Fairness Act enacted in January 2025 further increased costs by repealing the Windfall Elimination Provision and Government Pension Offset, which had previously reduced benefits for certain workers with public pensions. The administrative budget received $15.4 billion in fiscal year 2025 to maintain operations across field offices and process 6.9 million retirement and survivor claims, 18 million Social Security number requests, and over 300 million earnings records. Most critically, the Social Security Trustees Report projects the Old-Age and Survivors Insurance Trust Fund will become depleted by 2033, just 8 years away, at which point continuing payroll tax revenues would cover only 77 percent of scheduled benefits without congressional intervention—threatening an automatic 23 percent benefit cut for all retirees unless policymakers act.

Medicare Spending in the US 2025

Data Source: Centers for Medicare & Medicaid Services (CMS), Medicare Trustees Report 2025, CMS Rate Announcements

Medicare spending in fiscal year 2025 represents the second-largest component of the federal budget, providing essential healthcare coverage to over 67 million Americans including seniors aged 65 and older and certain disabled individuals. Total Medicare expenditures reached $1,122.1 billion in calendar year 2024, with spending growing faster than the overall economy and consuming 3.9 percent of GDP. Through the first seven months of fiscal year 2025, Medicare outlays increased by $20 billion or 5 percent compared to the same period in 2024, driven by increased enrollment as more Baby Boomers age into the program and higher payment rates for medical services. The Congressional Budget Office projects Medicare costs will continue rising, reaching 6.2 percent of GDP by 2049 as the population ages and healthcare costs escalate.

The Medicare Part A Hospital Insurance Trust Fund began 2025 with assets of $237.5 billion, representing just 53 percent of projected annual expenditures—below the level trustees consider adequate. Alarmingly, the trustees now project the Part A trust fund will be depleted by 2033, three years earlier than estimated in the 2024 report, threatening the program’s ability to fully pay hospitals and other providers. For 2025, beneficiaries face a Part A inpatient hospital deductible of $1,676 (up $44), while the standard Part B monthly premium increased to $185 (up $10.30) with an annual deductible of $257. Medicare Advantage enrollment continues surging, reaching a projected 35.7 million beneficiaries in 2025, representing 51 percent of all Medicare enrollees, with the federal government paying private insurers between $500 billion and $600 billion for these plans—a $16 billion increase from 2024. Most transformatively, the Inflation Reduction Act’s redesign of Medicare Part D took full effect in 2025, capping annual out-of-pocket prescription drug spending at $2,000. This revolutionary change saves beneficiaries an estimated $7.4 billion annually, with 18.7 million enrollees (36 percent of Part D participants) benefiting from average savings of nearly $400 each—providing critical financial relief for seniors managing chronic conditions requiring expensive medications.

Defense & Military Spending in the US 2025

Data Source: U.S. Department of Defense, Office of the Under Secretary of Defense (Comptroller), Congressional Budget Office

Defense and military spending in fiscal year 2025 represents a substantial federal investment in national security, with the President’s budget request totaling $849.8 billion to fund Department of Defense operations, personnel, modernization, and readiness. This figure operates under the Fiscal Responsibility Act’s discretionary defense spending cap of $895 billion, which constrains but does not eliminate growth in military expenditures. The 2025 defense budget prioritizes maintaining operational readiness, taking care of military personnel and their families, and building a joint force capable of deterring and prevailing against 21st century security threats, particularly focusing on China as a pacing challenge while addressing ongoing concerns about Russia and regional instabilities.

A significant component of the defense budget funds personnel costs, with the 2025 budget providing a 4.5 percent pay raise for all service members—the largest increase in years—to maintain force quality and improve retention in a competitive labor market. The budget allocates substantial resources across key accounts: Operation and Maintenance receives the largest share funding day-to-day military operations, training exercises, and equipment sustainment; Procurement accounts for billions in new aircraft, naval vessels, ground vehicles, and weapons systems; and Research, Development, Test & Evaluation receives over $145 billion to develop cutting-edge military technologies including hypersonic weapons, artificial intelligence, autonomous systems, and advanced cyber capabilities. Through the first seven months of fiscal year 2025, Department of Defense spending increased by $6 billion or 10 percent compared to the same period in 2024, reflecting higher operational tempo and accelerated modernization programs. The budget also maintains America’s global military presence with ongoing operations costs and continues critical military construction projects to modernize aging facilities and infrastructure at bases worldwide. Military leaders have consistently urged Congress to pass timely appropriations rather than continuing resolutions to ensure readiness and avoid costly inefficiencies in program execution.

Interest Payments on Federal Debt in the US 2025

Data Source: U.S. Department of the Treasury, Congressional Budget Office, U.S. Treasury Fiscal Data

Interest payments on the federal debt have emerged as one of the most rapidly escalating components of the federal budget in 2025, consuming resources that could otherwise fund domestic programs or reduce the deficit. Net interest costs are projected to exceed $900 billion annually in fiscal year 2025, representing approximately 13 percent of total federal spending and approaching 3.5 percent of GDP—well above historical norms. Through the first seven months of fiscal year 2025, net interest outlays increased substantially compared to the same period in 2024, with February 2025 alone seeing interest costs rise by $7 billion or 10 percent over February 2024. This explosive growth stems from two compounding factors: the total national debt has surpassed $35 trillion (with debt held by the public exceeding $28 trillion), and interest rates have risen dramatically from the near-zero levels of the 2010s to the 3 percent range and higher.

The Congressional Budget Office projects that interest costs will continue their relentless climb, exceeding defense spending consistently from 2025 forward and surpassing non-defense discretionary spending from 2027 onward. By 2035, net interest payments are expected to reach approximately $1.7 trillion, consuming 4.1 percent of GDP and accounting for roughly one-sixth of all federal spending. This represents interest costs greater in relation to GDP than at any point since at least 1940, the earliest year for which the Office of Management and Budget reports comparable data. The federal government currently pays interest on various types of securities including Treasury notes and bonds, Treasury bills, Treasury Inflation-Protected Securities (TIPS), savings bonds, and special securities held by government trust funds like Social Security. As the debt-to-GDP ratio has reached 100 percent in 2025—a historic peacetime milestone—and is projected to surge to 118 percent by 2035, surpassing even the World War II-era peak of 106 percent in 1946, interest costs will increasingly constrain federal budgetary flexibility and crowd out other priorities unless policymakers address the underlying fiscal imbalances through revenue increases, spending restraint, or both.

Federal Revenue & Tax Collections in the US 2025

Data Source: Congressional Budget Office Monthly Budget Reviews, U.S. Department of the Treasury, Internal Revenue Service

Federal revenues in fiscal year 2025 totaled $5.2 trillion, representing 17.1 percent of GDP—slightly below the 50-year historical average of 17.3 percent but positioned to rise in coming years. Revenues increased by $308 billion or 6 percent compared to fiscal year 2024, driven primarily by growth in individual income tax and payroll tax collections as wages and employment remained strong throughout the year. Through the first seven months of fiscal year 2025, receipts totaled $3.2 trillion, an increase of $370 billion or 13 percent over the same period in the prior year, reflecting robust economic activity and employment gains. Individual income taxes remain the federal government’s largest revenue source, contributing approximately $2.5 trillion or roughly 50 percent of total receipts, while payroll taxes for Social Security and Medicare account for another $1.7 trillion or 36 percent of revenues.

Monthly revenue data from fiscal year 2025 reveals the dynamics of federal tax collection throughout the year. In February 2025, income and payroll taxes rose by $19 billion or 8 percent compared to February 2024, while corporate income taxes surged by $4 billion or 79 percent due to strong business profits and timing of estimated tax payments. April 2025—the crucial tax filing month—generated $850 billion in receipts, $74 billion or 10 percent more than April 2024, with individual income and payroll tax collections accounting for most of the increase at $58 billion or 9 percent growth. Notably, customs duties experienced explosive growth, rising by $8 billion or 130 percent in April 2025 compared to April 2024, reflecting new tariff policies implemented during the year. Looking ahead, the Congressional Budget Office projects revenues will climb to 18.2 percent of GDP by 2027, driven partly by the scheduled expiration of certain provisions from the 2017 tax act. Corporate income tax receipts are expected to decline slightly as a share of GDP after 2025 due to other scheduled tax rule changes, increased claims of business tax credits, and slower corporate profit growth relative to overall economic expansion.

Medicaid Spending in the US 2025

Data Source: Centers for Medicare & Medicaid Services (CMS), Congressional Budget Office, Kaiser Family Foundation

Medicaid spending represents a critical component of federal health expenditures in 2025, with the federal government contributing approximately $500+ billion to this joint federal-state program that provides healthcare coverage to over 90 million low-income Americans, including children, pregnant women, elderly individuals, and people with disabilities. When combined with state contributions, total Medicaid program costs exceed $800 billion annually, making it the largest source of health coverage in the United States by enrollment. Through the first seven months of fiscal year 2025, federal Medicaid outlays increased by $5 billion or 12 percent compared to the same period in 2024, reflecting enrollment changes following the end of pandemic-era continuous coverage provisions and rising healthcare costs across the system.

Medicaid serves as the healthcare safety net for America’s most vulnerable populations, covering over 40 million children—more than any other insurance program—and paying for approximately 60 percent of all nursing home residents’ long-term care costs, providing essential support that Medicare does not cover. The federal government reimburses states for 65-70 percent of Medicaid costs on average through the Federal Medical Assistance Percentage (FMAP), with higher matching rates for populations covered under Affordable Care Act expansion, which 40 states plus the District of Columbia have adopted as of 2025. The Congressional Budget Office projects Medicaid spending will grow at an average rate of 5.2 percent annually from 2023 through 2032—faster than projected GDP growth but slower than Medicare’s anticipated expansion. Following the unwinding of pandemic-era continuous enrollment provisions that began in 2023, Medicaid enrollment has stabilized as eligibility redetermination processes returned to normal operations, though millions of individuals transitioned to other coverage sources including employer insurance and Affordable Care Act marketplace plans. As healthcare costs continue rising and the population ages, Medicaid spending as a share of GDP, currently at approximately 1.9 percent, will gradually increase, placing ongoing pressure on both federal and state budgets while providing essential health coverage to populations with limited alternative options.

Veterans Affairs Spending in the US 2025

Data Source: U.S. Department of Veterans Affairs, Congressional Budget Office, VA Office of Budget

Department of Veterans Affairs spending in fiscal year 2025 reflects the nation’s commitment to supporting military veterans and their families, with a comprehensive budget exceeding $369 billion to fund healthcare, disability benefits, pensions, education assistance, housing programs, and memorial services. The VA healthcare system, America’s largest integrated healthcare network, operates with a budget surpassing $130 billion to provide medical care to over 9 million enrolled veterans across 1,300+ facilities including hospitals, outpatient clinics, and nursing homes nationwide. Through the first seven months of fiscal year 2025, VA outlays have increased substantially compared to 2024, with January 2025 alone showing a $7 billion or 26 percent surge over January 2024, reflecting expanded healthcare services, increased enrollment driven by PACT Act implementation covering toxic exposure conditions, and cost growth in medical care delivery.

Disability compensation and pension payments constitute the largest mandatory spending category within the VA budget, distributing over $150 billion annually in tax-free monthly payments to more than 5 million veterans with service-connected disabilities and to survivors of deceased veterans. These monthly payments average over $1,800 but vary significantly based on disability rating percentages ranging from 10 percent to 100 percent, with additional allowances for dependents and special monthly compensation for severe disabilities requiring aid and attendance. The Post-9/11 GI Bill and other education programs command over $15 billion in funding, providing tuition coverage, monthly housing stipends, and book allowances to hundreds of thousands of veterans and eligible family members pursuing higher education and vocational training. The VA Home Loan program continues facilitating billions in mortgage guarantees, enabling veterans to purchase homes with zero down payment and competitive interest rates—a benefit that has helped millions achieve homeownership since the program’s creation. Additionally, the VA provides needs-based pensions exceeding $6 billion annually to low-income wartime veterans aged 65 and older or permanently disabled, alongside comprehensive services including vocational rehabilitation, homeless assistance programs serving over 40,000 veterans annually, and maintenance of 155 national cemeteries honoring veterans’ service with dignity.

Discretionary Non-Defense Spending in the US 2025

Data Source: U.S. Department of Education, Congressional Budget Office, Office of Management and Budget

Non-defense discretionary spending in fiscal year 2025 operates under a tight cap of $711 billion established by the Fiscal Responsibility Act, forcing difficult tradeoffs among competing priorities including education, healthcare research, infrastructure, law enforcement, diplomacy, and domestic programs. The Education Department received $82.4 billion in discretionary funding for fiscal year 2025, representing a $3.1 billion or 4.0 percent increase from the 2024 continuing resolution level. This investment focuses on achieving academic excellence by supporting Title I grants to schools serving disadvantaged students at $18.6 billion (a $200 million increase), expanding special education funding to $15.7 billion for students with disabilities, and increasing the maximum Pell Grant award to $8,145 for low-income college students—with 7.2 million students receiving assistance to overcome financial barriers to higher education.

The education budget also strengthens the Institute of Education Sciences with $816 million to conduct critical research and the Office for Civil Rights with $162 million (a $22 million increase) to address rising complaints of discrimination including antisemitism and anti-Arab bias on campuses. For college students, Pell Grants provide estimated $7.2 million low and middle-income students with financial aid, with the budget proposing to increase the maximum award by $750 (combining a $100 discretionary increase with a $650 mandatory add-on), keeping the administration on track toward its goal of doubling the Pell Grant by 2029. Beyond education, non-defense discretionary funds support vital government functions including Health and Human Services programs exceeding $100 billion for NIH medical research, CDC disease prevention, and FDA food and drug safety; Transportation Department infrastructure investments in highways, aviation, and transit systems; Housing and Urban Development affordable housing programs and rental vouchers; Justice Department operations including the FBI, federal prisons, and courts; and Homeland Security agencies protecting borders and responding to disasters through FEMA. The $711 billion cap creates intense competition for resources as agencies struggle to maintain services, modernize aging systems, and address emerging challenges while inflation erodes purchasing power. These spending constraints stand in sharp contrast to the automatic growth in mandatory programs, forcing policymakers to make increasingly difficult choices about which government functions and priorities to fund adequately within fixed budgetary limits that fail to keep pace with growing needs and rising costs.

Disclaimer: This research report is compiled from publicly available sources. While reasonable efforts have been made to ensure accuracy, no representation or warranty, express or implied, is given as to the completeness or reliability of the information. We accept no liability for any errors, omissions, losses, or damages of any kind arising from the use of this report.

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