The federal government reported $186 billion in improper payments in fiscal year 2025, according to the Government Accountability Office — an increase of $24 billion from the prior year. The figure spans 15 agencies and 64 different programs, and it puts a concrete number on a problem that’s persisted for more than two decades: getting the right payment to the right person at the right time.
What Counts as an "Improper Payment"
An improper payment isn’t necessarily fraud. The GAO’s definition covers any payment that shouldn’t have been made or was made in the wrong amount — that includes overpayments, underpayments, payments to ineligible recipients, and payments where the agency simply couldn’t verify eligibility with adequate documentation. The overwhelming majority of the FY2025 total, about $153 billion or roughly 82%, came specifically from overpayments — money that went out the door in amounts higher than what recipients were actually entitled to.
Where the Money Went Wrong
Health care programs account for more than half of the total improper payment estimate. Medicare alone represents $57 billion (31% of the total), and Medicaid adds another $37 billion (20%). Combined, these two health programs make up just over half of all improper payments government-wide.
Refundable tax credits are the next largest category, contributing roughly 15% of the total: the Earned Income Tax Credit accounts for $21 billion, the refundable portion of the Child Tax Credit for $5 billion, and the American Opportunity Tax Credit for $2 billion.
COVID-era relief programs still show up in the FY2025 numbers too, at around 5% of the total — most notably $10 billion tied to the Shuttered Venue Operators Grant Program, which supported live entertainment venues during the pandemic. That a pandemic-era program launched years ago is still generating billions in improper payment estimates illustrates how long these issues can take to fully resolve, audit, and recover.
| Program | Improper payments (FY2025) | Share of total |
|---|---|---|
| Medicare | $57 billion | 31% |
| Medicaid | $37 billion | 20% |
| Earned Income Tax Credit | $21 billion | ~11% |
| Shuttered Venue Operators Grant | $10 billion | ~5% |
| Child Tax Credit (refundable portion) | $5 billion | ~3% |
| American Opportunity Tax Credit | $2 billion | ~1% |
This Is a Long-Running, Not New, Problem
Improper payments have been flagged as a government-wide issue for more than 20 years — cumulative estimates since fiscal year 2003 add up to roughly $3 trillion. That context matters: FY2025’s $186 billion isn’t a sudden failure, it’s the latest data point in a persistent structural challenge that spans multiple administrations and hasn’t been solved by any single reform effort so far.
Agencies Are Still Falling Short on Basic Compliance
Beyond the dollar figures, the GAO and agency inspectors general also track whether agencies are even following the required improper-payment reporting and prevention process — the Payment Integrity Information Act (PIIA). For fiscal year 2024, only half of the 24 agencies responsible for the bulk of the government’s improper payment estimates fully complied with PIIA criteria. The other 12 fell short of at least one requirement: inspectors general flagged inadequate risk assessments at five agencies and unreliable improper-payment estimates at seven others. In plain terms, a meaningful share of the agencies generating the largest improper-payment totals aren’t yet meeting the government’s own standards for measuring and managing the problem.
Frequently Asked Questions
Does "improper payment" mean the recipient committed fraud?
Not necessarily. The category covers overpayments, underpayments, payments to ineligible people, and payments an agency couldn’t properly document — fraud is one possible cause among several, not a synonym for the whole category.
Which two programs account for the largest share of improper payments?
Medicare ($57 billion) and Medicaid ($37 billion) together make up just over half of the FY2025 total.
Is this a new problem specific to 2025?
No. Improper payments have been identified as a government-wide issue for more than 20 years, with cumulative estimates since FY2003 totaling around $3 trillion. FY2025’s $186 billion is a continuation of a long-standing pattern, not an isolated spike.
Are federal agencies required to report and fix this, and are they doing it?
Yes, under the Payment Integrity Information Act (PIIA) — but compliance is inconsistent. For FY2024, only half of the 24 agencies responsible for the largest improper-payment totals fully met PIIA’s reporting and risk-assessment requirements.