DX Brief:
- The federal government made roughly $186 billion in improper payments last year (fiscal year 2025) — money sent to the wrong people, in the wrong amounts, or without proper paperwork.
- This is $24 billion more than the year before.
- Most of the problem comes from big health care programs like Medicare and Medicaid.
- Improper payments are not all fraud — many are honest mistakes or missing documents — but they still cost taxpayers.
- Agencies are required to track and report these issues, but challenges remain in fixing them.
GAO Report Breakdown: $186 Billion in Improper Payments Across 64 Programs
Federal agencies reported an estimated $186 billion in improper payments across 64 programs in fiscal year 2025, according to the Government Accountability Office (GAO).
The figure marks a $24 billion increase from the prior year, as noted in a May 2026 article by the Committee for a Responsible Federal Budget. Health care programs accounted for a large share of the total, with Medicare and Medicaid together contributing tens of billions (~$57B + ~$37B) in overpayments, underpayments, and other errors. The Earned Income Tax Credit and unemployment insurance programs have also historically posted large estimates.
The GAO released the updated improper payments data in late April 2026. The watchdog compiles estimates from 15 federal agencies that cover roughly three-quarters of non-interest federal spending. The GAO’s High-Risk Series, updated in February 2025, continues to flag improper payments as a persistent vulnerability. Areas such as Medicare, Medicaid, and unemployment insurance appear on the list due to susceptibility to waste, fraud, and mismanagement.
A breakdown of the improper payments includes those made to ineligible recipients, in incorrect amounts, or without proper documentation. They do not always indicate fraud; they can also include administrative errors.
Cumulative improper payments since fiscal year 2003 have reached nearly $3 trillion, the GAO has noted in related analyses.
Agencies use tools such as the Treasury Department’s Do Not Pay system to check eligibility before disbursing funds. However, not all programs fully integrate available data-matching resources, the GAO has reported in prior reviews.
Congress passed the Improper Payments Information Act in 2002, along with subsequent laws requiring reporting and reduction plans. Agencies must publish estimates on PaymentAccuracy.gov. Some programs still face challenges meeting full reporting requirements.
The 2025 total of $186 billion reflects estimates from programs totaling about $4.5 trillion in outlays. Overpayments made up the majority, roughly 82%, in recent analyses.
Path Forward: Opportunities for Improvement and Long-Term Savings
Watchdog reports have also highlighted opportunities for improvement. Better data sharing between agencies, expanded use of predictive analytics, and stronger upfront verification could reduce future losses, according to the GAO.
The issue affects multiple cabinet departments. The Department of Health and Human Services and the Department of Labor have reported some of the largest individual program estimates in past years.
Federal officials have taken steps in recent cycles to strengthen controls. These include updated guidance from the Office of Management and Budget on fraud risk management and program-specific corrective action plans. Results vary by agency.
The GAO has estimated that addressing high-risk areas could produce hundreds of billions in savings over time. Its work on the High-Risk List has contributed to roughly $759 billion in savings over nearly two decades.
Taxpayers fund these programs through payroll taxes, income taxes, and other revenue sources. Accurate payments support program integrity and public trust in government operations.
