OTHER INFORMATION (UNAUDITED) 208

United States Government

Other Information (Unaudited) for the 

Years Ended September 30, 2022, and 2021

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 2020

Average Average

Total Adjusted Income Income

Number of Adjusted Income Gross 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 ................. 31,045 232,112 491 7,477 16 0.2%

$15,000 under $30,000 ..... 29,265 655,347 12,849 22,394 439 2.0%

$30,000 under $50,000 ..... 29,930 1,173,046 50,346 39,193 1,682 4.3%

$50,000 under $100,000 ... 36,983 2,635,417 192,163 71,260 5,196 7.3%

$100,000 under $200,000 . 22,415 3,060,066 334,648 136,519 14,930 10.9%

$200,000 under $500,000 . 7,615 2,187,229 366,794 287,226 48,167 16.8%

$500,000 or more ............. 1,845 2,923,397 753,251 1,584,497 408,266 25.8%

 Total............................. 159,098 12,866,614 1,710,542
 209 OTHER INFORMATION (UNAUDITED)

Corporate Income Tax Liability for Tax Year 2019

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 ................................... 26,676 5,240 19.6%

$1 under $500............................... 8,235 1,669 20.0%

$500 under $1,000 ........................ 5,279 1,080 20.5%

$1,000 under $5,000...................... 18,004 3,629 20.2%

$5,000 under $10,000.................... 11,642 2,281 19.6%

$10,000 under $25,000 .................. 15,884 3,122 19.7%

$25,000 under $50,000 .................. 14,549 2,821 19.4%

$50,000 under $100,000 ................ 16,588 3,166 19.1%

$100,000 under $250,000 .............. 25,381 4,781 18.8%

$250,000 under $500,000 .............. 25,573 4,652 18.2%

$500,000 under $2,500,000 ........... 111,437 19,156 17.2%

$2,500,000 or more ....................... 1,453,939 205,533 14.1%

 Total......................................... 1,733,187 257,130

Tax Gap

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

The tax gap provides an estimate of the level of overall noncompliance and voluntary 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. Estimating the tax gap is inherently challenging and requires assessing the merits of alternative 

methods, assumptions, and data sources. There is no single approach that can be used for estimating all the components of the

tax gap, so multiple methods are used. The most recent estimates covering the Tax Year 2014-2016 timeframe were released 

in FY 2022.

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

gross tax gap is $496.0 billion. The gross tax gap is comprised of three components: non-filing, underreporting, and

underpayment. The estimated gross tax gap for each of these components is $39.0 billion, $398.0 billion, and $59.0 billion,

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

employment tax, and estate and excise tax. The estimated gross tax gap for each of these types of tax is $357.0 billion, $41.0

billion, $93.0 billion, and $5.0 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 estimated that $68.0 billion of the gross tax gap will eventually be paid resulting in a net tax gap of $428.0 billion. The net

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

estate and excise tax. The estimated net tax gap for each of these types of tax is $306.0 billion, $34.0 billion, $87.0 billion,

and $2.0 billion, respectively. 1 For additional information on the tax gap, refer to Treasury’s financial statements.

1 Individual amounts may not add to totals due to rounding.
OTHER INFORMATION (UNAUDITED) 210

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.

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

Review. The largest tax expenditures in FY 2022 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

• Taxpayers who donate capital assets to charitable organizations can deduct the asset’s current value without being 

taxed on any appreciation in value.

Largest Income Tax Expenditures as of September 30, 2022

(In billions of dollars) 2022

Exclusion of employer contributions for medical insurance premiums & health care ............................ 224.5

Defined benefit & defined contribution pension funds ........................................................................ 176.1

Exclusion of net imputed rental income ............................................................................................ 129.0

Preferential tax rates on long term capital gains................................................................................ 112.1

Deductibility of charitable contributions, other than education and health............................................ 55.5

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.
 211 OTHER INFORMATION (UNAUDITED)

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.

Unmatched Transactions and Balances

Unmatched Transactions and Balances as of September 30, 2022, and 2021

(In millions of dollars) 2022 2021

Statement of Operations and Changes in Net Position:

Custodial transfers non-exchange ..................................................................... - (532.4)

Benefit program revenue/cost............................................................................ 309.6 651.5

Non-reciprocating ............................................................................................. (1,987.2) (3,761.3)

Custodial and non-entity collections transferred out/in......................................... 586.8 629.5

Accrual amounts collected/transferred in............................................................ (83.9) (209.4)

Other............................................................................................................... 1,000.9 3,057.0

(173.8) (165.1)

Balance Sheet:

Accounts payable/receivable............................................................................. 270.2 556.3

Advances from/to others & deferred credits/prepayments.................................... (778.8) (898.3)

Non-reciprocating ............................................................................................. (205.6) (320.2)

Fund balance with Treasury .............................................................................. - (899.2)

Other............................................................................................................... (576.4) (116.1)

(1,290.6) (1,677.5)

Unmatched transactions and balances, net........................................................... (1,464.4) (1,842.6)

( ) Parentheses indicate a decrease to Net Position.

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

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

balances, while the unmatched transactions and balances are recorded in existing lines in the Statement of Net Cost, and thus, 

are not reported in the table above. 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. A number of lines in the “Unmatched Transactions and Balances” table were 

adjusted to zero after intra-governmental difference analysis determined they were immaterial at or below $0.1 billion, and 

thus, are not reported in the table above. The adjustments were added to, or subtracted from, gross cost in the Statement of 

Net Cost 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.

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

net position of the Financial Report.