Spending in the federal budget is grouped into categories, which are known as budget functions. Each function includes a group of activities or programs that have a similar public purpose, which is helpful for comparing and analyzing overall spending priorities. The 10 largest budget functions for 2025 are listed below.
- Social Security ($1,581 billion). Social Security includes the two programs administered by the Social Security Administration: Old-Age and Survivors Insurance and Disability Insurance. This function includes both benefit payments to retired and disabled workers (and their spouses, survivors, and dependent children) as well as the cost of administering the programs.
- Medicare ($997 billion). Medicare consists entirely of the Medicare program, which provides health insurance to Americans 65 and over as well as people with disabilities. Most of the spending goes toward hospital care, physician services, and prescription drugs.
- Health ($979 billion). The health function includes most direct healthcare services funded by the federal government (other than Medicare); health benefits for federal employees and certain retirees; and the treatment, assessment, and prevention of health-related issues in the United States. Examples include Medicaid, the Children’s Health Insurance Program, and activities carried out by agencies such as the National Institutes of Health, Centers for Disease Control and Prevention, and Food and Drug Administration.
- Net Interest ($970 billion). The net Interest function includes interest payments on the federal debt paid to private holders of U.S. Treasury securities. It is partially offset by interest income on loans as well as earnings from the National Railroad Retirement Investment Trust.
- National Defense ($916 billion). The national defense function covers the military activities of the Department of Defense. In addition, some funding in this function goes toward the defense-related activities of other departments, such as Department of Energy nuclear programs and the Federal Bureau of Investigation.
- Income Security ($702 billion). The income security function includes programs that provide cash and other government assistance to individuals in need, such as those who are unemployed or earning a low income. Examples include unemployment compensation, the Supplemental Nutrition Assistance Program, Supplemental Security Income, Temporary Assistance for Needy Families, certain federal retirement programs (other than Social Security), and housing assistance. In addition, refundable tax credits (payments that exceed taxes owed) fall into this budget function.
- Veterans Benefits and Services ($377 billion). The veterans benefits and services function includes the spending of the Department of Veterans Affairs and affiliated programs. Most of the spending in this function is for veterans’ compensation, pensions, and health care.
- Transportation ($145 billion). The transportation function covers the maintenance and development of highways, public transit, and aviation infrastructure. These activities are carried out through agencies such as the Federal Transit Administration, Federal Railroad Administration, U.S. Coast Guard, and Federal Aviation Administration.
- Natural Resources and Environment ($90 billion). The natural resources and environment function funds the development, maintenance, and environmental conservation of federal lands, mineral and water resources. The National Park Service, Forest Service, Bureau of Land Management, U.S. Geological Survey, and Army Corps of Engineers are examples of some of the agencies covered under this function.
- Administration of Justice ($83 billion). The administration of justice function covers judicial services and federal law enforcement services carried out by agencies such as the courts of appeals, district courts and other judicial services, Federal Bureau of Investigation, Federal Prison System, U.S. Customs and Border Protection, and U.S. Immigration and Customs Enforcement.
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Further Reading
Chart Pack: The U.S. Budget
A selection of key charts that give an overview of the major components in the U.S. federal budget.
Budget Basics: Who Pays Taxes?
The fairness of our federal tax system is a hotly debated issue. Too often, however, those debates confuse or misrepresent important facts.
Debt vs. Deficits: What’s the Difference?
The words debt and deficit come up frequently in debates about policy decisions. The two concepts are similar, but are often confused.