12 Biggest U.S. Life, Health and Retirement Tax Breaks: 2024

The U.S. federal government expects to post a loss this year of about $1.9 trillion on $5 trillion in revenue.

The United States is a lot different from a household that spends 38% more than its total income in a given year. It has about $144 trillion in net wealth it can use to support its debt.

But analysts at the White House Office of Management and Budget look hungrily every year at all of the tax revenue that the federal government gives up by providing income tax deductions, tax credits and other tax incentives.

OMB analysts call the revenue lost to the tax breaks “tax expenditures” and list them in a supplement to the president’s budget, the Analytical Perspectives report, every year.

The value of all tax expenditures listed in this year’s report amounts to $1.6 trillion.

A dozen breaks related to life insurance, health insurance and retirement planning account for about $677 billion this year. OMB expects them to cost the government a total of $9.7 trillion, and leave $9.7 trillion extra in taxpayers’ hands, over the 10-year period from 2024 through 2033.

Those tax breaks all rank in the top 30 on the tax expenditure list, meaning that they take up 40% of the top 30 tax expenditure ranking slots.

One reason the tax breaks are so big is that they’re hard to reduce. They encourage Americans to spend money on important personal financial arrangements, such as health insurance and retirement planning, for themselves and their employees.

Advocates of a tax incentive-based approach contend that use of tax incentives, rather than programs run directly by the government, is more efficient, can reach more people and can give people much more control over the details.

See the accompanying gallery for a look at the 12 biggest tax expenditures life, health and retirement tax expenditures. The top-ranking item here is also the top item on OMB’s overall list and is about 50% bigger than the item that ranks second, which is an item related to the deduction for home mortgage interest.

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