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How Are My State Taxes Spent?

Updated for Tax Year 2016


OVERVIEW

Each state is free to choose where to spend tax revenue.  Here are some common uses.


Taxes are an important part of every person’s life, and where and how they’re spent influence a region or locale’s quality of living.

Although states receive federal assistance for many programs, each state is also responsible for raising revenue through taxes. While not all states levy a personal income tax on state residents, other taxes such as sales taxes also contribute to state revenue.

Each state is free to choose where to spend tax revenue, with the most common uses being education, health care, transportation, corrections and low income assistance

Education spending

According to the Center on Budget and Policy Priorities, an average of about 25 percent of state spending goes towards public K-12 education, about $275 billion for 2013. States typically allocate education expenditures to local school districts for distribution rather than paying expenses directly.

On average, an additional 13 percent of state expenditures fund higher education, including vocational institutions, community colleges and university systems. In fiscal 2013 this equaled about $143 billion nationwide.

Health care allocation

The next largest average state expenditure is on Medicaid programs, amounting to about $176 billion in fiscal year 2013.

State health care expenditures primarily fund Medicaid and the Children's Health Insurance Program or CHIP. In an average month, more than 45 million children, parents, elderly and disabled persons benefit from these programs.

Transportation expenses

State transportation expenses include funding for public transit systems, such as light rail, and infrastructure spending, including building and repairing roads and bridges. On average, states expend about 5 percent of their budgets for transportation projects, or about $55 billion.

Corrections facilities

In addition to state prison costs, corrections expenses include juvenile justice programs and parole programs. Total corrections expenditures approximate $44 billion per year nationwide, or about 5 percent of state budgets.

Low-income assistance

At about 1 percent of state spending, low income assistance programs take up a small amount of state budgets. These programs, totaling about $11 billion annually, include both the Temporary Assistance to Needy Families program, as well as general assistance given in addition to low income health care programs.

Additional programs

While no remaining state programs claim a large individual percentage of state budgets, additional programs overall consume about 35 percent of state budgets on a nationwide basis.

Included in this category are:

  • Expenditures for state police
  • Environmental programs
  • Health benefits for public employees
  • Pensions
  • Care for residents with disabilities
  • Parks and recreation
  • Economic development
  • General aid to local governments

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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