The federal government spends roughly $1 trillion each year on means-tested welfare programs, and the figure climbs to about $3.5 trillion once Social Security and Medicare are counted alongside them. Which number answers the question of how much the US spends on welfare each year depends entirely on what you’re willing to call welfare. The narrower definition covers programs like Medicaid, food assistance, and housing vouchers that check your income before paying out. The broader definition sweeps in the social insurance programs that most retirees rely on. Both figures matter, and the gap between them is where most of the political argument lives.
What Gets Counted as Welfare
In federal budget accounting, “welfare” usually refers to means-tested programs, meaning you qualify based on low income or limited assets. Medicaid, the Supplemental Nutrition Assistance Program, Supplemental Security Income, Temporary Assistance for Needy Families, housing vouchers, and the Earned Income Tax Credit all fit that description. The government looks at your finances first, then decides whether you get help.
Social Security and Medicare work on a different logic. They’re funded through payroll taxes you pay while working, and eligibility hinges on your work history rather than your current bank balance. People don’t usually call them welfare, but they carry most of the weight of the American safety net and cost far more than the means-tested programs put together. Any honest count of what the country spends on its safety net has to keep both categories in view.
Federal Spending on Means-Tested Programs
The big means-tested programs each cover a different basic need. Together they push federal spending past the trillion-dollar mark every year.
Medicaid
Medicaid is the largest means-tested program by a wide margin. In fiscal year 2023, the federal government spent $619.9 billion on Medicaid, and states added another $280.4 billion, bringing total program spending to $900.3 billion.1MACPAC. Spending It covers health care for low-income children, pregnant women, people with disabilities, and many elderly nursing home residents. The federal share of costs varies by state under a formula tied to per capita income.2Congress.gov. Medicaid’s Federal Medical Assistance Percentage (FMAP)
SNAP
SNAP, still commonly called food stamps, runs second. Federal spending is projected at roughly $110 billion for fiscal year 2025, down from pandemic-era peaks when emergency allotments inflated costs. Households use electronic benefit cards to buy food, and most adults between 18 and 64 without dependents must work or train at least 20 hours a week to keep benefits beyond three months.
Supplemental Security Income
SSI delivers monthly cash to people who are aged, blind, or disabled and have very limited income and assets. Federal spending runs about $60 billion a year. The money comes from general tax revenue rather than the payroll tax system that funds Social Security retirement benefits. Many states add supplemental payments on top.
TANF
TANF is what most people picture when they hear the word “welfare,” but it’s one of the smaller items on the list. The federal block grant has been fixed at $16.5 billion a year since the 1996 welfare overhaul. Because that amount has never been adjusted for inflation, its real purchasing power has fallen roughly 40 percent. Federal law limits families to 60 cumulative months of benefits paid with federal TANF dollars, though states can exempt up to 20 percent of their caseload for hardship.3Office of the Law Revision Counsel. 42 USC 608 – Prohibitions; Requirements
Housing Assistance
Federal housing aid includes Housing Choice Vouchers (formerly Section 8), project-based rental assistance, and public housing. Congress appropriated $77.3 billion for HUD programs in fiscal year 2026, with roughly $35 billion of that going to renew tenant-based rental assistance contracts, $5 billion to public housing operations, and $3.2 billion to public housing capital needs. Funding reaches only a fraction of eligible households, which is why waiting lists in many areas run years long.
Earned Income Tax Credit
The EITC is one of the largest anti-poverty tools in the budget, and its cost is often left out of welfare discussions because it moves through the tax code. As of December 2025, roughly 24 million workers and families received about $70 billion in EITC payments.4Internal Revenue Service. EITC Reports and Statistics Because the credit is refundable, most of that money goes out as direct payments to filers whose credit exceeds their tax bill. For tax year 2026, the maximum credit ranges from $664 for a worker with no children to $8,231 for a family with three or more children.
Adding It Up
Combine Medicaid, SNAP, SSI, TANF, housing assistance, the EITC, and smaller programs like WIC and school lunch subsidies, and total federal means-tested spending clears $1 trillion a year. That figure leaves out the hundreds of billions states put in on top. The exact total rises during recessions and falls during expansions, but the trillion-dollar line has become the baseline.
Social Security and Medicare Dwarf the Rest
Social Security is the single largest program in the federal budget. For fiscal year 2025, total outlays for Old-Age, Survivors, and Disability Insurance are projected at about $1.55 trillion, with $1.38 trillion going to retirees and survivors and $161 billion to disability beneficiaries.5Social Security Administration. FY 2025 Congressional Justification Roughly 68.6 million people receive a monthly payment.6Social Security Administration. Monthly Statistical Snapshot, January 2025 Benefits received a 2.8 percent cost-of-living adjustment for 2026.7Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
Payments are funded mainly by the 6.2 percent payroll tax that workers and employers each pay on earnings up to the taxable maximum. Social Security is mandatory spending, so Congress doesn’t vote each year on the total. Everyone who meets the rules gets paid.
Medicare covers hospital care, doctor visits, and prescription drugs for people 65 and older and for some younger people with disabilities. Total Medicare spending reached about $850 billion in fiscal year 2023 and has kept climbing as health care costs rise and the baby boom generation ages in. Funding comes from a mix of payroll taxes, general revenue, and premiums. Medicare doesn’t check income or assets before providing coverage, though higher earners pay larger premiums for Parts B and D.
Together, Social Security and Medicare account for roughly $2.4 trillion in federal spending each year. That’s more than double what the government spends on all means-tested programs combined, and it explains why the safety net dominates the federal budget.
What States Add On Top
Federal totals alone understate public safety net spending because states carry a real share of the cost. Medicaid is the clearest example: states put in $280.4 billion in fiscal year 2023 on top of the federal $619.9 billion.1MACPAC. Spending States fund their share through income taxes, sales taxes, and provider taxes on health care facilities.
TANF requires ongoing state investment as well. Under maintenance-of-effort rules, total state spending has hovered between $11 billion and $15 billion a year. For SNAP, the federal government pays the full cost of benefits but historically splits administrative expenses evenly with states; beginning in October 2026, states will pick up an additional 25 percent of those administrative costs. States also run unemployment insurance systems, general assistance programs for people who don’t qualify for federal aid, and local emergency relief. Add it all together and state and local governments contribute several hundred billion more, pushing total public safety net spending well above $4 trillion.
How Big a Slice of the Budget and the Economy
The Congressional Budget Office projects total federal outlays of $7.4 trillion for fiscal year 2026, with mandatory spending alone at roughly $4.5 trillion.8House Budget Committee. CBO Baseline February 2026 Because Social Security, Medicare, Medicaid, and other safety net programs make up most of that mandatory total, the broad safety net consumes well over half of federal spending. Means-tested welfare on its own, stripped of Social Security and Medicare, comes to roughly 15 percent of the federal budget.
Against the economy, U.S. GDP was approximately $31.4 trillion in late 2025.9Federal Reserve Bank of St. Louis. Gross Domestic Product (GDP) Federal means-tested spending at $1 trillion comes to about 3 percent of GDP. Add Social Security and Medicare and the federal safety net reaches 11 to 12 percent of GDP. Include state contributions and the total approaches 13 to 14 percent of the economy. Those ratios rise during recessions by design, as more people qualify for benefits and tax revenue falls.
Where the Numbers Are Headed
The long-term sustainability of the two biggest programs is the fiscal question that overshadows the rest. According to the Social Security trustees’ most recent projections, the Old-Age and Survivors Insurance trust fund can pay full scheduled benefits only through 2033. After that, incoming payroll tax revenue would cover 77 percent of promised benefits.10Social Security Administration. A Summary of the Annual Reports Combining the retirement and disability trust funds extends full payment through 2034, with 81 percent covered after depletion.
Medicare’s Hospital Insurance trust fund is on a similar timeline, projected to be depleted in 2033 with continuing revenue enough for 89 percent of costs.10Social Security Administration. A Summary of the Annual Reports The Disability Insurance trust fund is in much better shape and is projected to stay solvent through at least 2099.
Depletion wouldn’t end the programs. Without legislative action, benefits would automatically be trimmed to match incoming revenue. Congress has stepped in before, as it did in 1983 when Social Security was last on the brink. Whatever it does this time, the size of these programs means welfare spending, however you define it, will keep dominating the federal budget for years to come.