The United States lost an estimated $1.8 trillion in revenues through tax expenditures in 2023, according to the Joint Committee on Taxation (JCT). In their recent report, JCT notes that tax expenditures — also known as “tax breaks” — “include any reductions in income tax liabilities that result from special tax provisions or regulations that provide tax benefits to particular taxpayers. Special income tax provisions are referred to as tax expenditures because they may be analogous to direct outlay programs and may be considered alternative means of accomplishing similar budget policy objectives.” Below are six key takeaways from JCT’s latest report on tax expenditures:
Tax expenditures are the most costly “program” for the federal government, causing revenue loss totaling $1.8 trillion in 2023. Over the next four years, the JCT estimates that they will only become more expensive. As policymakers consider reforms to federal taxes and the U.S. budget, tax breaks are a key piece of the puzzle for fixing the imbalance between spending and revenues.
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