Waste of the Day: Improper Payments Totaled $186 Billion in 2025

Topline: The federal government lost $186 billion to improper payments in fiscal year 2025, according to newly released data from the Office of Management and Budget. That’s more than $350,000 in taxpayer money every minute, all sent to the wrong person, for the wrong amount, or for the wrong reason.

Where the improper payments went

Key facts: Medicare was responsible for $56.7 billion of the improper payments, and Medicaid lost $37.4 billion. 

The other biggest offenders included the Internal Revenue Service, the Department of Agriculture, and the Small Business Administration.

The $186 billion total is almost certainly an underestimate. As of 2024, 15 federal agencies — including the Pentagon and the Treasury — were “noncompliant” with improper payment laws. That means they either did not report all of their improper payments or spent more than 10% of their money improperly.

The total is greater than the $161 billion the Biden administration reported in 2024. Still, it’s an improvement from the high mistake rates of the Covid-19 era. From 2020 to 2023, the government made at least $200 billion in improper payments every year, including a record $281.4 billion in 2021.

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com.

Timing of the report

Background: Improper payments data is typically released in November, but the Trump administration waited until February to publicize the numbers. 

The report is also less detailed than in the past. It does not explain what caused each improper payment — for example, how much was sent to dead people, or how much unemployment insurance was sent to people who were employed — or how much of the money is “confirmed fraud.”

Open the Books asked the Treasury and the Office of Management and Budget why there is missing information, but there was no response.

“Confirmed fraud” totaled $7 billion in 2024. That’s only the amount that has led to a criminal conviction. When including undetected fraud, previous estimates have placed the amount anywhere from $233 billion to $750 billion per year.

Summary: Improper payments eat up huge portions of the federal budget and are often due to simple, preventable mistakes. Eliminating them should be one of Washington’s top priorities.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.