OTHER INFORMATION (UNAUDITED) 204

United States Government

Other Information (Unaudited) for the 

Years Ended September 30, 2023, and 2022

Tax Burden

The IRC provides for progressive tax rates, whereby higher earned income is generally subject to higher tax rates. The 

following tables present the latest available information on income tax and related income, deductions, and credit for 

individuals by income level, and for corporations by size of assets.

Individual Income Tax Liability for Tax Year 2021

Average Average

Total Adjusted Income Income

Number of Adjusted Income Gross Income Tax per Tax as a 

Taxable Gross Income Tax per Return Return Percentage

Returns (In millions (In millions (In whole (In whole of Adjusted

Adjusted Gross Income (In thousands) of dollars) of dollars) dollars) dollars) Gross Income

Under $15,000 30,714 160,421 535 5,223 17 0.3%

$15,000 under $30,000 27,410 610,846 12,033 22,286 439 2.0%

$30,000 under $50,000 28,926 1,135,403 50,662 39,252 1,751 4.5%

$50,000 under $100,000 37,547 2,681,108 200,702 71,407 5,345 7.5%

$100,000 under $200,000 24,180 3,318,595 367,380 137,245 15,194 11.1%

$200,000 under $500,000 3,728 828,814 123,563 222,321 33,145 14.9%

$500,000 or more 7,888 6,117,860 1,421,518 775,591 180,213 23.2%

 Total 160,393 14,853,047 2,176,393
205 OTHER INFORMATION (UNAUDITED)

Corporate Income Tax Liability for Tax Year 2020

Percentage of

Income Subject Total Income Tax Income Tax After

Total Assets to Tax After Credits Credits to 

(In thousands of dollars) (In millions of dollars) (In millions of dollars) Taxable Income

Zero assets 21,064 4,439 21.1%

$1 under $500 6,908 1,426 20.6%

$500 under $1,000 4,364 886 20.3%

$1,000 under $5,000 21,444 4,312 20.1%

$5,000 under $10,000 13,079 2,640 20.2%

$10,000 under $25,000 19,851 3,900 19.6%

$25,000 under $50,000 17,342 3,389 19.5%

$50,000 under $100,000 19,750 3,854 19.5%

$100,000 under $250,000 33,865 6,584 19.4%

$250,000 under $500,000 32,033 6,189 19.3%

$500,000 under $2,500,000 117,758 21,388 18.2%

$2,500,000 or more 1,472,847 217,604 14.8%

 Total 1,780,305 276,611

Tax Gap

The gross tax gap is the difference between the amount of tax imposed by law and what taxpayers actually pay on time

and/or timely. The tax gap provides an estimate of the level of overall noncompliance compliance during the relevant tax 

periods. Tax gap estimates provide periodic appraisals about the nature and extent of noncompliance for use in formulating 

tax administration strategies. Given the complexity of the tax system and available data, a single approach cannot be used for 

estimating all the components of the tax gap. The most recent estimates covering the tax year 2014-2016 timeframe were 

released in FY 2023. In October 2023, the tax gap projections were issued for tax year 2020 and 2021. The tax gap 

projections for tax years 2020 and 2021 assume compliance behavior that has not changed since the 2014-2016 tax gap 

estimates.

The gross tax gap is the amount of a tax liability that is not paid voluntarily and on time. The projected gross tax gap 

increased to $688.0 billion in tax year 2021. The gross tax gap is comprised of three components: non-filing, underreporting, 

and underpayment. The projected gross tax gap for each of these components is $77.0 billion, $542.0 billion, and $68.0 

billion, respectively. The gross tax gap projections are also segmented by type of tax: individual income tax, corporation 

income tax, employment tax, and estate and excise tax. The projected gross tax gap for each of these types of tax is $520.0 

billion, $45.0 billion, $118.0 billion, and $4.0 billion, respectively.

The net tax gap is the gross tax gap less tax that subsequently will be paid either late through voluntary payments or 

collected through IRS administrative and enforcement activities and is the portion of the gross tax gap that will not be paid. It 

is projected that $63.0 billion of the gross tax gap will eventually be paid resulting in a net tax gap of $625.0 billion. The net 

tax gap projections are also segmented by type of tax: individual income tax, corporation income tax, employment tax, and 

estate and excise tax. The projected net tax gap for each of these types of tax is $475.0 billion, $37.0 billion, $112.0 billion, 

and $1.0 billion, respectively.1 For additional information on the tax gap, refer to Treasury’s financial statements.

Tax Expenditures

As discussed in greater detail in Note 19—Collections and Refunds of Federal Revenue, tax and other revenues reported 

reflect the effects of tax expenditures, which are special exclusions, exemptions, deductions, tax credits, preferential tax rates,

and tax deferrals that allow individuals and businesses to reduce taxes they may otherwise owe.

1 Individual amounts may not add to totals due to rounding.
OTHER INFORMATION (UNAUDITED) 206

Tax expenditures are estimated using data from previous years and the economic forecast from the FY 2023 Midsession 

Review as reported in the FY 2024 Budget. The largest tax expenditures in FY 2023 are the following (and see the table

below):

• The exclusion from workers’ taxable income of employers’ contributions for health care, health insurance 

premiums, and premiums for long-term care insurance;

• The exclusion of contributions to and the earnings of employer defined benefit and defined contribution pension 

funds (minus pension benefits that are included in taxable income);

• Imputed rental income forms part of the total value of goods and services produced in a country. But unlike returns 

from other investments, the return on homeownership “imputed rent” is excluded from taxable income. In contrast, 

landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is 

effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their 

simultaneous role as their own landlords and exempting potential rent they would have paid themselves;

• Preferential tax rates on long-term capital gains; and

• In taxable years 2022 through 2025, a taxpayer may claim a $2,000 per child partially refundable child tax credit. In 

2023, up to $1,600 per child of unclaimed credit due to insufficient tax liability may be refundable; a taxpayer may 

claim a refund for 15 percent of earnings in excess of a $2,500 floor, up to the lesser of the amount of unused credit 

or $1,600 per child. A taxpayer may also claim a nonrefundable credit of $500 for each qualifying child not eligible 

for the $2,000 credit.

Largest Income Tax Expenditures

(In billions of dollars) 2023

Exclusion of employer contributions for medical insurance premiums & health care 237.4

Defined benefit & defined contribution pension funds 185.1

Exclusion of net imputed rental income 133.7

Preferential tax rates on long-term capital gains 118.3

Child tax credit 67.5

Generally, identifying and measuring a tax expenditure requires defining a baseline tax system against which identified 

tax provisions are exceptions. The tax expenditures prepared for the Budget are estimated relative to a simplified 

comprehensive income tax, which defines income as the sum of consumption and the change in net wealth in a given period 

of time. Tax expenditure estimates do not necessarily equal the increase in federal revenues (or the change in the Budget

balance) that would result from repealing these special provisions, for the following reasons:

• Eliminating a tax expenditure may have incentive effects that alter economic behavior, which can affect the resulting 

magnitudes of the activity or of other tax provisions or government programs. For example, if capital gains were 

taxed at ordinary rates, capital gain realizations would be expected to decline, resulting in lower tax receipts. Such 

behavioral effects are not reflected in the estimates.

• Tax expenditures are interdependent even without incentive effects. Repeal of a tax expenditure provision can 

increase or decrease the tax revenue effect of other provisions. For example, even if behavior does not change, 

repeal of an itemized deduction could increase revenue costs from other deductions as some taxpayers move into 

higher tax brackets. Alternatively, an itemized deduction repeal could lower the revenue foregone from other 

deductions if taxpayers choose to claim the standard deduction over itemizing. Similarly, if two provisions were 

repealed simultaneously, the tax liability increase could be greater or less than the sum of the two separate tax 

expenditures, because each is estimated assuming that the other remains in force.

• Repeal effects may depend on concurrent tax rate changes. Lowering or raising tax rates can decrease or increase the 

estimated revenues from a particular provision. A $10,000 charitable contributions deduction is worth $3,500 in 

corporate tax revenues at a 35.0 percent tax rate, but only $2,100 at a 21.0 percent tax rate.

A more comprehensive ranking, including rankings over a 10-year period, and descriptions of tax expenditures can be 

found at the following location from Treasury’s Office of Tax Policy: https://home.treasury.gov/policy-issues/tax-policy/taxexpenditures.
207 OTHER INFORMATION (UNAUDITED)

Unmatched Transactions and Balances

Unmatched Transactions and Balances as of September 30, 2023, and 2022

(In millions of dollars) 2023 2022

Statement of Net Cost:

Buy/sell cost/revenue - 603.5

Benefit program revenue/cost - 309.6

Non-reciprocating - (357.0)

- 556.1

Statement of Operations and Changes in Net Position:

Non-reciprocating - (1,630.2)

Custodial and non-entity collections transferred out/in - 586.8

Accrual amounts collected/transferred in - (83.9)

Other - 1,000.9

- (126.4)

Balance Sheet:

Accounts payable/receivable - 270.2

Advances from/to others & deferred credits/prepayments - (778.8)

Non-reciprocating - (205.6)

Other - (576.4)

- (1,290.6)

Unmatched transactions and balances, net - (860.9)

( ) Parentheses indicate a decrease to Net Position.

The unmatched transactions and balances are needed to balance the accrual-based financial statements. The Statement 

of Net Cost, the Statement of Operations and Changes in Net Position and the Balance Sheet include a line for the unmatched 

transactions and balances. Transactions and balances between federal entities must be eliminated in consolidation to calculate 

the financial position of the government. The amounts included in the table represent intra-governmental activity and 

balances that differed between federal entity trading partners and often totaled significantly more in the absolute than the net 

amounts shown. The table also reflects other consolidating adjustments and other adjustments that contributed to the 

unmatched transactions and balances amount. The adjustments were added to, or subtracted from, gross cost in the Statement 

of Net Cost and other liabilities in the Balance Sheet in the year they were recorded. Unresolved intra-governmental 

differences (i.e., unmatched transactions and balances) result in errors in the consolidated financial statements.

Unmatched transactions and balances between federal entities impact not only in the period in which differences 

originate but also in the periods where differences are resolved. As a result, it would not be proper to conclude that increases 

or decreases in the unmatched amounts shown in the “Unmatched Transactions and Balances” table reflect improvements or 

deteriorations in the government’s ability to resolve intra-governmental transactions. The federal community considers the 

identification and accurate reporting of intra-governmental activity a priority.

Due to the change in presentation of the reported unmatched transactions and balances on the Statement of Net Cost, 

Statement of Operations and Changes in Net Position, and Unmatched Transactions and Balances in Other Information 

(unaudited), the FY 2022 Statement of Net Cost was adjusted by $0.1 billion to report the associated unmatched transactions 

and balances that were previously reported on the Statement of Operations and Changes in Net Position unmatched 

transactions and balances line and the buy/sell costs that were previously included in the gross cost recorded on the Statement 

of Net Cost. They are now reported on the standalone unmatched transaction and balances line on the Statement of Net Cost. 

Additionally, the Unmatched Transactions and Balances table was updated to show the details of the unmatched transactions 

and balances by statement.

The unmatched transactions and balances, net reflects the combined impact that each statement line has on the overall 

net position of the Financial Report.