What the U.S. spends on welfare, and where the money goes

The U.S. government spent roughly $1.5 trillion on means-tested welfare programs in 2023, though the exact total depends on which programs you count. Means-tested means the program checks your income before you receive it — programs like SNAP (food information), Medicaid (health coverage), housing vouchers, and cash information all fall into this category. The federal government pays for most of this, but states contribute their own money too, so the total spending is split between federal and state budgets.

The largest single welfare program by spending is Medicaid, which covers health care for low-income people and cost the federal government about $616 billion in 2023. SNAP (the food stamp program) cost roughly $139 billion. Housing information programs, which help pay rent, cost around $80 billion combined. Cash information programs like TANF (Temporary information for Needy Families) are much smaller, around $32 billion total across federal and state funding.

These numbers change year to year because the number of people using the programs changes, because Congress adjusts funding levels, and because states spend different amounts. During economic downturns, welfare spending typically rises because more people need help. During strong economic periods, spending may fall.

Key Takeaways

  • The federal government spent approximately $1.5 trillion on means-tested welfare programs in 2023, with Medicaid being the largest single program.
  • Medicaid accounts for roughly 40 percent of total welfare spending, while SNAP (food information) accounts for about 9 percent.
  • States contribute their own funding to welfare programs alongside federal money, so total spending is split between state and federal budgets.
  • Welfare spending rises during recessions when more people need information and falls during strong economic periods.
  • The exact total varies depending on which programs are counted as "welfare" — some definitions include tax credits, others do not.

How welfare spending breaks down by program type

Medicaid is by far the largest welfare program. It covers doctor visits, hospital care, prescription drugs, and long-term care for people with low incomes. The federal government paid about 57 percent of Medicaid costs in 2023, with states paying the rest. Because Medicaid covers both poor families and elderly people in nursing homes, it accounts for a much larger share of welfare spending than cash information programs.

SNAP (Supplemental Nutrition information Program) is the second-largest program by federal spending. It provides a monthly benefit that people use like a debit card to buy food at grocery stores. The federal government pays the full cost of SNAP benefits, though states run the program and pay for some administrative costs. In 2023, the average SNAP benefit was around $200 per person per month, though this varies by state and family size.

Housing information programs include public housing, housing vouchers (Section 8), and rental information. These programs help pay rent for people with very low incomes. Unlike SNAP and Medicaid, housing information does not reach everyone who needs it — there are waiting lists in most places, and funding covers only a fraction of may be able to access people.

Cash information through TANF is much smaller than the other programs. TANF provides monthly cash payments to families with children, but the benefit amounts are low in most states and have not increased with inflation. In 2023, the average TANF benefit was around $430 per month for a family of three, though this varies widely by state.

Federal versus state welfare spending

The federal government pays for most welfare spending, but the split between federal and state money varies by program. For SNAP, the federal government pays 100 percent of benefits and about half of administrative costs. For Medicaid, the federal government pays between 50 and 77 percent depending on the state's income level — poorer states get a higher federal share. For TANF and housing information, the federal government provides a block grant (a fixed amount of money), and states decide how much additional money to add.

This split matters because it affects how much help is available in different states. A state that adds its own money to welfare programs can offer higher benefits or serve more people. A state that does not add money can only spend what the federal government provides. This is why TANF benefits, for example, range from less than $200 per month in some states to over $1,000 per month in others.

How welfare spending has changed over time

Welfare spending has grown significantly since the 1980s, though not all of this growth is because more people are receiving help. Much of the increase is because health care costs have risen faster than inflation, which pushes up Medicaid spending. SNAP spending has also grown, partly because the program expanded to reach more people and partly because benefit amounts have increased.

Welfare spending also moves with the economy. During the 2008 financial crisis, welfare spending jumped because unemployment rose and more people needed information. During the COVID-19 pandemic, welfare spending increased again as people lost jobs and Congress temporarily increased benefit amounts. When the economy recovers and unemployment falls, welfare spending typically declines.

What counts as welfare spending and what does not

The $1.5 trillion figure includes only means-tested programs — programs that check your income before you receive benefits. This includes Medicaid, SNAP, housing information, TANF, and several smaller programs like the Low Income Home Energy information Program (LIHEAP), which helps pay heating and cooling bills.

This figure does not include Social Security or Medicare, which are not means-tested. You receive Social Security and Medicare based on your age or work history, not based on how much money you have. These programs cost much more than welfare — Social Security alone cost about $1.3 trillion in 2023 — but they are not counted as welfare because they are not means-tested.

Some people also count tax credits like the Earned Income Tax Credit (EITC) as welfare spending because they reduce taxes for low-income workers. The EITC cost the federal government about $70 billion in 2023. Whether to count tax credits as welfare depends on how you define the term, so different sources may report different totals.

Why welfare spending varies by state

States have significant control over how much welfare they provide, which is why benefits and may be able to access rules differ widely. For TANF, the federal government provides each state a block grant, and the state decides the benefit amount, may be able to access rules, and time limits. Some states use their block grant to serve many people with small benefits; others serve fewer people with larger benefits. Some states add their own money; others do not.

For Medicaid, states can choose to cover more or fewer people above the federal minimum. Some states have expanded Medicaid to cover people earning up to 138 percent of the federal poverty line; others cover only people at or below the poverty line. This choice affects how much the state spends and how many people receive coverage.

Housing information funding is also limited and varies by location. Some cities and counties have long waiting lists for housing vouchers because demand far exceeds available funding. Other areas have shorter waits. The total amount of housing information available depends on federal funding and how states and localities choose to spend it.

Frequently Asked Questions

Is welfare spending the largest part of the federal budget?

No. Means-tested welfare programs cost about $1.5 trillion, but the total federal budget is about $6.7 trillion. Social Security and Medicare together cost more than welfare. Defense spending is also substantial. Welfare is a significant part of the budget, but not the largest part.

How much of welfare spending goes to people who are not working?

This varies by program. Medicaid covers working people, elderly people, disabled people, and children. SNAP covers working families, elderly people, and disabled people — about 40 percent of SNAP recipients live in households where someone works. TANF is designed for families with children, many of whom are not working. Housing information serves people across different employment situations.

Does welfare spending include unemployment benefits?

No. Unemployment insurance is a separate program funded through payroll taxes, not general tax revenue. It is not counted as welfare because it is not means-tested — you receive unemployment benefits based on your work history, not based on how much money you have.

Why does Medicaid cost so much more than other welfare programs?

Health care is expensive. A single hospital stay or surgery can cost tens of thousands of dollars. Medicaid covers all medical costs for may be able to access people, including emergency care, prescription drugs, and long-term nursing home care. SNAP and cash information provide much smaller monthly payments, so they cost less even though many more people receive them.

Can I find out how much welfare my state spends?

Yes. Your state's budget office publishes annual spending reports that break down welfare spending by program. The federal government also publishes detailed data on welfare spending by state through the Census Bureau and the Department of Health and Human Services. These reports are public and available online.