Tax expenditures describe revenue losses attributable to provisions of Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability. These exceptions are often viewed as alternatives to other policy instruments, such as spending or regulatory programs.
Frequently Asked Questions Regarding Tax Expenditures
What are tax expenditures?
What are the largest tax expenditures? (Ten year, FY2023-2032 estimates)
- Exclusion of employer contributions for medical insurance premiums and medical care ($3,366,320 million)
- Exclusion of net imputed rental income ($1,679,550 million)
- Defined contribution employer plans ($1,535,700 million)
- Capital gains (except agriculture, timber, iron ore, and coal) ($1,492,400 million)
Are behavioral responses considered in the tax expenditure estimates?
Would repealing a provision bring in the equivalent revenue to the estimates in these tables?
What is the difference between current revenue effects and present value effects?
Why do some of the tax expenditures raise revenue?
What is a negative tax expenditure?
Why isn’t a total for all the tax expenditures reported?
How are expiring provisions treated?