Improper Payments: $186 Billion a Year, a GAO Fraud Estimate Up to $521 Billion, and Treasury's Do Not Pay Push

Federal agencies reported $186 billion in improper payments for fiscal 2025. About $153 billion of that was overpayments. The rest is mostly payments that agencies can’t show were correct, because the paperwork is missing.

Since 2003, the cumulative total is about $2.8 trillion, according to GAO. Most of it comes from a handful of large programmes.

Where the money goes

Medicare is the biggest source, at about $57 billion across its parts. Medicaid reported $37.39 billion. In Medicaid, about 77% of improper payments come from insufficient documentation, often eligibility files that states couldn’t produce, so the figure overstates outright waste.

The Earned Income Tax Credit had about $21 billion improper, a rate above 25% that has barely moved in two decades. SNAP, the food aid programme, reported a rate of 10.62%, or about $10.1 billion. The 2025 tax and spending law now ties state SNAP cost shares to their error rates, starting in fiscal 2028, which gives states a direct budget reason to bring rates down.

Pandemic programmes left the worst numbers. The Shuttered Venue Operators Grant programme had an improper payment rate of 68.9%.

Fraud is a separate number

Improper payments aren’t the same as fraud. Fraud requires intent, and agencies rarely estimate it. In 2024 GAO did, putting government-wide direct annual losses to fraud at between $233 billion and $521 billion, based on fiscal 2018 to 2022 data. That range is wide because so much fraud goes undetected.

Executive Order 14249

In March 2025 the President signed Executive Order 14249, “Protecting America’s Bank Account Against Fraud, Waste, and Abuse.” It tells agencies to check payments against Treasury’s Do Not Pay system before money goes out and gives Treasury more authority to verify payee data.

On 6 October 2026 Treasury reported results. Almost all agencies now have access to Do Not Pay, about 99% by its count. The system holds about 2.3 billion records, including death records from Social Security. Treasury says it screened about $3.7 trillion in payments and stopped about $175 million before they went out.

That’s a small fraction of the problem, which matters for expectations. Do Not Pay catches payments to dead people, debarred contractors and known bad actors. It doesn’t fix eligibility errors in benefit programmes, which is where most of the improper money is. That requires state data, verification at enrolment and staff to do it.

The budget angle

At $186 billion, improper payments are about a tenth of the annual deficit. Not all of it is recoverable or even lost: some is underpayment, and documentation gaps sometimes hide correct payments. But it’s the rare budget line both parties agree should be smaller.

GAO keeps improper payments and fraud risk on its high-risk list. Its recommendations point the same way each year: better data sharing with states, consistent use of the Social Security death file, and fraud risk management that agencies actually carry out.