Federal Improper Payments Reach $186 Billion in FY 2025

A new federal watchdog report shows Washington sent out $186 billion in payments it never should have made last year. As the number keeps climbing, taxpayers are left asking a simple question: who is actually in charge of this money?

$186 billion. That is what the federal government admits it got wrong last year alone.

The Government Accountability Office released its latest improper payments report this year, and the number should stop every taxpayer in their tracks. Fifteen federal agencies, spanning 64 programs, reported sending out payments that were too large, too small, sent to the wrong person, or issued without enough documentation to confirm they were valid at all. This is not a partisan talking point. It is GAO’s own accounting, and it lands during a period when Washington is already fighting over how to close a federal deficit projected at $2 trillion this year.

Why Does This Number Matter Right Now?

The $186 billion figure represents a $24 billion increase from the prior fiscal year, when agencies reported $162 billion in errors. That is not a rounding error. It is a jump large enough to fund entire federal agencies for a year, and it comes at the exact moment lawmakers are debating spending caps, entitlement reform, and how to manage a national debt that has now grown larger than the entire U.S. economy for the first time since World War II.

Acting Comptroller General Orice W. Brown put it plainly in the report: federal agencies must do more to protect taxpayer dollars from the errors that drive improper payments. That statement, from the head of Congress’s own watchdog agency, is not a criticism from the outside. It is an admission from the inside.

Where Is the Money Actually Going?

GAO found that roughly 73 percent of all improper payments were concentrated in just five programs: Medicare, Medicaid, the Earned Income Tax Credit, the Supplemental Nutrition Assistance Program, and the Small Business Administration’s Shuttered Venue Operators Grant program, a pandemic-era relief fund.

Medicare topped the list at approximately $57 billion in improper payments. Medicaid followed at roughly $37 billion, with its error rate climbing to 6.12 percent, up from 5.09 percent the year before. The Department of Health and Human Services attributed the increase to breakdowns in eligibility redeterminations and provider screening as pandemic-era flexibilities were phased out. The Earned Income Tax Credit accounted for another $21 billion sent to people who did not qualify for it.

Nearly a third of every improper dollar spent by the federal government last year flowed through just one program: Medicare.

That is not a fringe agency losing track of paperwork. That is the program tens of millions of American seniors depend on, and it is also the single largest source of improper payments in the entire federal government.

Who Is Really Paying for This?

Every dollar sent in error still comes from the same place: the taxpayer. GAO’s data shows that about 82 percent of the $186 billion, roughly $153 billion, consisted of overpayments, meaning money that should never have left the Treasury in the first place. The remaining balance was split between underpayments and payments that could not be confirmed as accurate at all due to missing documentation.

Nineteen federal programs reported improper payment rates of at least 10 percent last year. Six programs exceeded 25 percent, meaning at least one in every four dollars those programs spent was paid incorrectly. That is not a rare exception. It is a structural pattern that has persisted across administrations of both parties for more than two decades.

If a private company misspent one dollar out of every four, would its executives still have a job by Friday?

Is This a New Problem, or an Old One Getting Worse?

Neither administration has solved this on its own, and the numbers prove it. GAO has tracked improper payments since 2003, and the cumulative total now stands at approximately $3 trillion. That is not a single scandal. It is a two-decade pattern of federal agencies failing to verify who they are paying and how much they owe.

To be fair, part of this year’s increase came from better disclosure rather than new errors, since some of the $24 billion jump reflects programs that simply did not report estimates the prior year. That distinction matters. But the underlying error rates in Medicare and Medicaid still grew, and the trend remains upward relative to reform promises made by multiple administrations.

“Federal agencies must do more to protect taxpayer dollars from the errors that drive improper payments.”

That line, from the acting head of GAO itself, is not rhetoric. It is a formal warning to Congress, and it has now been repeated, in one form or another, for over twenty years.

What Do Supporters of Current Federal Spending Practices Actually Believe?

Defenders of current federal spending practices make a real point: improper payments are not the same thing as fraud, and GAO itself draws that distinction. Many errors stem from outdated eligibility systems, overwhelmed caseworkers, and the sheer scale of programs serving tens of millions of Americans monthly. A six percent error rate in Medicaid, they argue, reflects the complexity of verifying eligibility across fifty state systems, not corruption. There is also a fair point about the pandemic hangover: programs like the Shuttered Venue Operators Grant were built quickly during a national emergency, prioritizing speed over verification, and some of today’s error rates are that tradeoff working itself out of the system.

Those arguments explain part of the picture, but not all of it. Complexity is a reason errors happen. It is not a reason twenty years of GAO warnings have failed to bend the curve. Congress has had two decades to fund the fixes GAO has recommended, and the $3 trillion cumulative total suggests urgency has consistently lost out to inertia.

What Happens If Congress Keeps Ignoring This?

Every dollar lost to an improper payment is a dollar that either adds to the deficit or gets justified as a reason to raise taxes elsewhere. With the national debt now exceeding the size of the entire U.S. economy, the margin for waste has never been thinner. Continuing to treat a $186 billion annual error rate as background noise is itself a policy choice, and it is one that voters rarely get asked to weigh in on directly.

Twenty years and $3 trillion in improper payments later, the real question is not whether Washington can fix this. It’s whether it wants to.

Key Questions This Report Raises

• Why has the federal government failed to meaningfully reduce improper payments despite two decades of GAO warnings?
• Should Congress tie future funding increases for Medicare and Medicaid to measurable improvements in payment accuracy?
• If a $186 billion error rate persists year after year, at what point does inaction become a policy failure rather than an accident?

Has Washington Reached an Accountability Moment?

The GAO report does not accuse anyone of a crime. It does something arguably more damning: it documents, in the government’s own words, a pattern of failure that has outlasted multiple presidents, multiple congressional majorities, and multiple promises of reform. Improper payments are not a talking point invented by any political faction. They are a number, audited and published by Congress’s own watchdog, and that number has not meaningfully improved since GAO started tracking it.

The question voters deserve an answer to is not whether errors happen in a government this large. Some inevitably will. The question is why the same failures keep recurring at the same scale, year after year, without consequence for the agencies responsible for fixing them.

The real question isn’t whether $186 billion is a lot of money. It’s whether anyone in Washington is ever going to be held responsible for losing track of it.

What do you think — should Congress tie federal funding to measurable fixes, or is this simply the cost of running programs this large? Share this article and let us know.

Still have questions about where your tax dollars are going? Subscribe for daily coverage of federal spending and accountability. Think others need to see these numbers? Share this article. Want your voice to count? Contact your member of Congress and ask what they are doing to support GAO’s recommendations on reducing improper payments — find your representative at house.gov and senate.gov.