Total federal spending on welfare is roughly $1 trillion per year, but the exact number depends on what you count as welfare

The U.S. federal government spent approximately $1 trillion on means-tested welfare programs in fiscal year 2023, according to the Congressional Budget Office. That figure includes cash assistance, food programs, housing vouchers, Medicaid, and other aid for people below certain income thresholds. The number shifts year to year based on how many people receive benefits, inflation, and changes in program rules.

The confusion around "how much" comes from disagreement about what counts. Some people include only direct cash payments and food stamps. Others add Medicaid, which is the largest single program by cost. Still others include tax credits like the Earned Income Tax Credit, which function as welfare but appear in the tax code rather than the welfare budget. The $1 trillion figure is the broadest measure and includes all of these.

For context: total federal spending in 2023 was about $6.1 trillion. Welfare spending represented roughly 16 percent of that. Social Security and Medicare, which are not means-tested, cost more than welfare but are separate programs with their own funding sources.

Key Takeaways

  • Federal welfare spending totaled approximately $1 trillion in 2023, covering programs like SNAP, housing vouchers, Medicaid, and cash assistance.
  • The exact total depends on which programs you include — some counts exclude tax credits or Medicaid, which changes the number significantly.
  • Welfare spending is about 16 percent of total federal spending, smaller than Social Security and Medicare combined.
  • The amount spent varies by state because federal money is distributed based on population, poverty rates, and state matching requirements.
  • Year-to-year changes in welfare spending reflect both changes in the number of people receiving aid and inflation adjusting benefit amounts.

Which programs are included in the welfare spending total

Medicaid is the largest welfare program by cost, accounting for roughly $600 billion of the $1 trillion total. It covers medical care for low-income people and is jointly funded by federal and state governments. Each state runs its own Medicaid program within federal guidelines, so the benefit amount and income limits vary by state.

SNAP (Supplemental Nutrition Assistance Program, formerly food stamps) costs about $200 billion per year and serves roughly 42 million people. Housing vouchers and other housing assistance programs cost around $75 billion annually. Temporary Assistance for Needy Families (TANF), which is cash assistance, costs about $35 billion per year. The Earned Income Tax Credit, which reduces taxes for low-wage workers, costs roughly $70 billion annually and is sometimes counted as welfare spending.

Smaller programs include child care subsidies, energy assistance, and various state-specific programs. When researchers cite different welfare spending totals — ranging from $500 billion to $1.5 trillion — the difference usually comes from whether they include Medicaid, tax credits, or both.

How welfare spending breaks down by state

Federal welfare money is not distributed equally across states. The federal government sends more money to states with higher poverty rates and larger populations. A state like California receives far more total welfare funding than Wyoming, but Wyoming may spend more per capita on its residents.

States also control how much of their own money they add to federal welfare programs. Some states match federal Medicaid funding at higher rates than required, which increases total spending in that state. Others spend the minimum. This means a person on SNAP in one state may receive a different monthly amount than someone on SNAP in another state, depending on state policy.

The federal government does not publish a simple state-by-state breakdown of total welfare spending. Individual programs publish their own state data — the USDA publishes SNAP spending by state, for example — but adding them together requires manual work and produces different totals depending on which programs you include.

How welfare spending has changed over time

Welfare spending has grown significantly since the 1980s, but not at a constant rate. The largest increases happened during economic recessions, when more people fell below income thresholds and became may be able to access for programs. The 2008 financial crisis and the 2020 COVID-19 pandemic both caused temporary spikes in welfare spending as unemployment rose.

Medicaid expansion under the Affordable Care Act (2014 onward) increased federal welfare spending substantially in states that chose to expand the program. States that did not expand Medicaid have lower welfare spending totals but also cover fewer low-income people.

Inflation also affects year-to-year spending totals. When the cost of living rises, benefit amounts often rise automatically to keep pace, which increases total program costs even if the number of people receiving benefits stays the same. The inflation spike in 2021–2023 caused welfare spending to rise faster than in previous years.

The difference between welfare spending and welfare recipients

The total amount spent does not tell you how many people receive benefits or how much each person gets. A program can cost $100 billion and serve 10 million people (an average of $10,000 per person per year) or serve 50 million people (an average of $2,000 per person per year). The spending total alone does not distinguish between these scenarios.

Medicaid is expensive partly because it covers medical care, which is inherently costly. SNAP is less expensive per recipient because it provides food assistance only. A person can receive benefits from multiple programs at once — someone might be on both Medicaid and SNAP simultaneously — so adding up program costs can overcount if you are trying to measure how many distinct people receive welfare.

The Congressional Budget Office and the Urban Institute publish separate data on the number of people receiving each program, which allows you to calculate average benefit amounts. These numbers change seasonally and year to year as people move in and out of programs.

How welfare spending compares to other federal programs

Social Security costs roughly $1.3 trillion per year and serves about 67 million people, mostly retirees. Medicare costs about $848 billion per year. Defense spending is approximately $820 billion per year. Welfare spending of $1 trillion is substantial but smaller than Social Security and comparable to Medicare and defense.

The key difference is that Social Security and Medicare are not means-tested — you receive them based on age or work history, not income. Welfare programs are means-tested, meaning you must be below a certain income to receive benefits. This distinction matters for understanding the budget: Social Security serves middle-class and wealthy retirees as well as poor ones, while welfare serves only people below income thresholds.

Interest on the national debt now costs more than welfare spending — roughly $1.2 trillion per year as of 2024. This is a recent development and reflects rising interest rates on existing debt.

Why welfare spending numbers vary depending on the source

Different organizations count welfare spending differently because there is no single official definition of "welfare." The Congressional Budget Office, the Office of Management and Budget, the Urban Institute, and academic researchers all publish welfare spending figures, and they often disagree.

The main sources of disagreement are: whether to include Medicaid (the largest program), whether to include tax credits like the Earned Income Tax Credit, whether to include state spending or only federal spending, and how to handle programs that serve both low-income and middle-income people. A program that serves both groups might be counted as half welfare or fully welfare depending on the methodology.

When you see a welfare spending figure in the news or in a report, check the source's definition. A number that includes Medicaid will be roughly $400 billion higher than a number that does not. This is not a mistake — it is a choice about what to measure.

Frequently Asked Questions

Is welfare spending increasing or decreasing?

Welfare spending has generally increased over the past 40 years, but the year-to-year trend depends on the economy and policy changes. Spending rises during recessions and falls during economic expansions. Medicaid expansion in some states increased spending; policy changes in other states decreased it. Recent inflation has pushed spending up faster than in the previous decade.

How much of my taxes go to welfare?

If the federal government collects roughly $4 trillion in taxes and spends $1 trillion on welfare, roughly 25 cents of every federal tax dollar goes to welfare programs. This varies by tax type — income tax funds welfare differently than payroll tax — and does not account for state and local taxes, which fund additional welfare spending.

Why does welfare cost so much?

Medicaid is expensive because medical care is expensive. SNAP and cash assistance are less costly per person but serve millions of people. The total reflects both the number of people receiving benefits and the cost of providing those benefits. During recessions, more people become may be able to access, which increases total spending even if benefit amounts stay the same.

Do other countries spend more or less on welfare than the U.S.?

Comparisons are difficult because countries define welfare differently and have different tax systems. Some European countries spend a higher percentage of their GDP on social programs, but they also have higher tax rates. The U.S. spends roughly 16 percent of federal spending on means-tested welfare; other developed countries vary widely.

Where can I find the exact welfare spending number for a specific program?

Each program publishes its own spending data. SNAP data comes from the USDA, Medicaid from the Centers for Medicare and Medicaid Services, housing vouchers from HUD, and TANF from the Department of Health and Human Services. The Congressional Budget Office also publishes annual reports on means-tested spending that aggregate these programs.