Federal Budget & Taxes

Federal dollars account for one-third of the Texas state budget.

Source: Legislative Budget Board

Federal expenditures in Texas are one and a half times as much as what our state and local government revenues pay for, combined. Federal dollars account for one-third of the Texas state budget and one-tenth of preK-12 investments.


Federal grants usually pay for one-third of the Texas state budget, the same as in most other states. Some, like Medicaid, foster care, or the Children’s Health Insurance Program require state or local dollars to be spent as “match” while others are a set amount based on state demographics. Federal aid is especially critical in state health and human services (almost 60 percent federally funded overall) and nutrition benefits (almost 100 percent federally funded).

Outside the state budget, Social Security and Medicare provide near-universal income support and access to health care for Texas seniors, while federal tax credits such as the Earned Income Tax Credit and Child Tax Credit are powerful anti-poverty tools.

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Dick Lavine

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