Improper US Government Payments Rose To $186 Billion In 2025: Watchdog

Authored by Sylvia Xu via The Epoch Times (emphasis ours),

Federal government agencies reported a total estimate of about $186 billion in improper payments in fiscal year 2025, an increase of $24 billion from 2024.

About $153 billion—roughly 82 percent—of this total arose from overpayments.

The Government Accountability Office estimated that cumulative improper payments have reached about $3 trillion since fiscal year 2003. The actual amount may be much higher, the federal watchdog acknowledged in an April 27 report.

These improper payments represent false distributions—such as payments made to the wrong people, paid without proper documentation, or issued in the incorrect amount—from 64 programs reported by 15 federal agencies, and have been a government-wide issue for more than 20 years.

For fiscal year 2025, eight federal programs reported improper payment estimates of $5 billion or more.

Medicaid ($37 billion), Traditional Medicare ($28.8 billion), and Medicare Advantage ($23.7 billion) accounted for more than 50 percent of these erroneous payments.

Medicaid improper payments expanded by $6.3 billion in 2025, compared to the previous year. The Department of Health and Human Services stated that this was due to increased errors in eligibility redeterminations and provider screening as COVID-19 enrollment flexibilities phased out.

The Earned Income Tax Credit ($21 billion), Supplemental Nutrition Assistance Program ($10 billion), and the Shuttered Venue Operators Grant program ($10 billion) added up to more than 20 percent of the total improper payments.

Improper payments arising from the Earned Income Tax Credit—a refundable federal tax credit for low-to-moderate-income working individuals and families—increased by $5.2 billion. The Department of the Treasury has not provided reasons for the improper payments.

Improper Payment Rates

Of the programs reporting improper payment estimates, 19 reported improper payment rates of at least 10 percent, including six programs whose rates exceeded 25 percent.

The Small Business Administration reported improper payments in the Shuttered Venue Operators Grant program for the first time in fiscal year 2025.

The grant program aimed to help the live arts and entertainment industry survive the COVID-19 pandemic. In total, Congress provided $16.25 billion to the Small Business Administration, which awarded grants to 13,011 different businesses and organizations.

Nearly 70 percent of these distributions were erroneous payments, according to the federal watchdog.

As of October 2024, the small-business agency identified $544 million in potential improper payments that need to be recovered. However, the agency sent only one demand letter in January 2024 and paused the issuance of additional demand letters, according to a 2025 audit report.

As of March 2025, no cases had been referred to the Treasury Department for debt collection.

The improper payment rate in the Emergency Conservation Program for disasters—providing funding and technical assistance to farmers and ranchers to repair and restore farmland affected by natural disasters—reached 55.5 percent in 2025, up from 45.2 percent in 2024 and 40.4 percent in 2023.

The causes of improper payments can range from unintentional administrative errors to fraud, according to a 2024 federal watchdog report. An error could occur when an agency failed to obtain a required signature in a contract prior to payment. Fraud occurred when a recipient used a fake or stolen identity to apply for and receive benefits.

Agencies also suspected significant improper payments in the Temporary Assistance for Needy Families program, which spent around $16.5 billion in fiscal year 2025. As of April 2026, Congress had not yet enacted legislation to require states to report the data needed to estimate and report on improper payments for this program.

Lawrence Wilson contributed to the report.