The federal government issued an estimated $186 billion in improper payments in fiscal year 2025, according to a new report from the Government Accountability Office. That’s up $24 billion from the year prior. While some of the increase reflects improved reporting rather than a surge in errors, the figures still highlight where taxpayer dollars are most at risk.
What Counts as an Improper Payment
An improper payment isn’t always fraud. It includes any payment made in the wrong amount, sent to the wrong recipient, or issued without enough documentation to verify it. Of the $186 billion total, about 82%, roughly $153 billion, were overpayments. Another $10 billion were underpayments, meaning funds that should have gone out but didn’t.
Where the Money Is Going Wrong
A relatively small number of programs account for the bulk of the issue.
Medicaid topped the list with $37.4 billion in improper payments, up $6.3 billion year over year. Its size and complexity, spanning state agencies, providers, and millions of beneficiaries, make it especially vulnerable.
Medicare Fee-for-Service followed at $28.8 billion, though that marked a $2.9 billion improvement, one of the few declines in the report.
The Earned Income Tax Credit accounted for $21.1 billion, a $5.2 billion increase. Meanwhile, the Supplemental Nutrition Assistance Program also ranked among the largest contributors, though a precise figure wasn’t disclosed in the summary.
The Unemployment Insurance program reported $5.6 billion in improper payments, with a 14.9% error rate. Outdated state systems remain a major factor, despite ongoing modernization efforts.
One notable addition was the Shuttered Venue Operators Grant program, which reported $10.1 billion in improper payments for the first time, contributing significantly to the overall increase.
There were some improvements. The Paycheck Protection Program and FEMA’s Public Assistance Validate As You Go program both saw meaningful declines.
What Comes Next
Efforts to reduce improper payments are gaining attention. The administration has made it a priority, and Congress recently passed the Ending Improper Payments to Deceased People Act to improve data sharing and prevent certain errors.
Still, many experts argue that the issue is structural. Agencies often rely on a “pay and chase” model, sending funds out quickly and attempting recovery later. As fraud tactics grow more sophisticated, that approach is becoming harder to justify. These trends are likely to fuel ongoing discussions around oversight, eligibility rules, and long-term program reform.
