Special report: Running in the Red

Building the U.S. tax code, break by break

The U.S. government gives away more than $1 trillion a year in tax breaks — subsidies for individuals and companies that are often substitutes for direct government spending.
Once written into the tax code, they tend to stick around.

Use the menu at left to see tax breaks by sector and roll over the charts for details.

Total number of tax breaks in 2011:

This chart shows the 172 tax breaks currently on the books and the year
each one was first reported by the U.S. Treasury.

The housing sector benefits from some of the largest tax breaks, with the vast majority supporting homeownership.

This category covers a wide range of tax breaks, from deductions for charitable contributions and student loan interest to assistance for adopted foster children and a credit for children 17 and under.

The federal government relies heavily on the tax code to implement energy policy. Fossil fuels have generally been the largest beneficiaries, but incentives for renewables and efficiency improvements have been added more recently.

The costliest benefit in this category is the exemption for contributions to employer-based savings accounts like 401k plans. Income security also includes subsidies to low-income individuals, persons with disabilities and the unemployed.

With a value of about $174 billion in 2011, the tax-free treatment of employer contributions to health insurance is the most expensive tax break of any category. Other health-related tax breaks include deductions for health savings accounts and a credit for drug research.

Compared to some of the other categories, these breaks are relatively inexpensive. Subsidies include tax incentives for preserving historic structures, deductions for spending for endangered species recovery, and tax credits for CO2 capture.

Showing:

  • All (172)
  • Mostly individual (#)
  • Mostly corporate (#)

Each horizontal line
represents one individual tax
break from the year it began.

Hover on the charts for details
on each tax break.


In 1974, the government began reporting tax breaks, some of which had existed for years. There are dozens still on the books from 1974 or earlier.

The vast bulk of tax breaks benefit individual taxpayers.

Corporations benefit from just one-tenth of the value of all tax breaks.

To boost demand for the housing market, the government provided tax credits for first-time homebuyers in 2008.

After a Republican Congress refused to increase spending for federal student loans, Bill Clinton turned to the tax code to house a slew of new higher education credits and deductions.

President Bush added nearly
a dozen energy-related tax breaks to the code in 2005.

Congress approved the earned interest tax credit in 1975 to offset the burden of Social Security taxes for low to moderate income families.

The 2010 health-care law gives a tax credit to certain small employers that provide health-care coverage to their employees.

The tax credit for industrial CO2 capture and sequestration, enacted in 2008,
cost about $30 million in 2011.

Total value of tax breaks in 2011, by year first reported by U.S. Treasury

labels

  • Most valuable tax break:
    Name of this one is long, XXm

  • Most valuable tax break:
    Name of this one is long, XXm

  • Most valuable tax break:
    Name of this one is long, XXm

  • Most valuable
    commerce/housing
    tax break:
    Deductibility of
    mortgage
    interest
    on owner-
    occupied
    homes,
    $88.7 billion

    Most valuable tax break: Name of this one is long, XXm

  • Most valuable: Deductibility of charitable contributions, other than education and health, $39.6 billion

    Most valuable tax break:
    Name of this one is long, XXm

  • Most valuable tax break: Name of this one is long, XXm

  • Most valuable tax break: Name of this one is long, XXm

  • Most valuable tax break:
    Name of this one is long, XXm

  • Most valuable tax break:
    Name of this one is long, XXm

x axis of chart
x axis of chart

Last year, tax breaks nearly matched
income tax revenue

The 1986 tax reform repealed or modified dozens of tax breaks, but many survived and their value has grown.

gdp-chart

If tax breaks didn't exist, how might your taxes change?

Average increase

If individual tax breaks did
not exist in 2011

Average baseline

If nothing changed

gdp-chart

NOTE: This analysis includes only tax expenditures reported by the U.S. Treasury.
SOURCE: Pew's Tax Expenditure Database on Subsidyscope, Tax Policy Center, Congressional Research Service, U.S. Government Accountability Office, Center for American Progress
GRAPHIC: Kat Downs, Laura Stanton and Karen Yourish - The Washington Post. Published Sept. 18, 2011.

Interactive

Answers to key questions about taxes

There are a lot of numbers being thrown around in the debate over who pays what in taxes. These graphics examine what's behind those numbers.

Special report

Running in the red

Capitol

A continuing series examining the origins and consequences of the nation's escalating debt