How The U.S. Government Generates Revenue

The U.S. government’s revenue composition has shifted over the decades, with individual income taxes consistently accounting for the largest share, growing from 43% in 1964 to 49% in 2024. Payroll taxes, which fund programs like Social Security, have also risen significantly, contributing 35% of federal revenue today compared to 20% in 1964. Meanwhile, corporate income taxes have declined as a share of revenue, dropping from 21% in 1964 to just 11% in 2024, reflecting changes in tax policies and the economy. Other sources, such as excise taxes, tariffs, and miscellaneous receipts, remain relatively minor contributors.

The U.S. government’s annual revenue has increased dramatically, growing by 3,843% from $113B in 1964 to $4.9T in 2024. Amid this evolution, policy proposals like replacing individual income taxes currently generating about half of total revenue with increased tariffs (currently contributing around 2%) highlight potential shifts in the government’s approach to revenue generation under the Trump administration. How this will eventually unfold is yet to be decided. To add further context, US government generated $2.4T from individual income taxes in 2024 but only $77B from customs duties/tariffs.