What is the largest source of federal revenue?

The largest source of federal revenue in the United States is individual income taxes. This revenue is collected from citizens and residents based on their earnings, including wages, salaries, and other forms of income. Individual income taxes account for a significant portion of total federal revenue, followed by payroll taxes, corporate income taxes, and various other taxes and fees.

In the fiscal year 2022, for example, individual income taxes contributed approximately half of all federal revenue. These taxes are progressive, meaning that they increase as an individual’s income rises, which is intended to promote equity within the tax system.

Understanding the structure of federal revenue is crucial for evaluating government funding, services, and fiscal policy. Discussions about tax policy often revolve around the distribution and implications of income taxation, leading to ongoing debates about tax rates, brackets, and fairness.