Tax expenditures are provisions in the tax code—like deductions, exemptions, or credits—that reduce tax liability below what it would otherwise be. Defined by the Congressional Budget Act of 1974, they include high-cost items like tax-free employer health benefits and 401(k) contributions, as well as smaller breaks.

Some tax expenditures are temporary—so-called “tax extenders”—while others become permanent. Regardless of duration, they represent a large, often overlooked form of federal spending.

At Taxpayers for Common Sense, we shine a light on these hidden costs. Our work highlights how certain tax breaks disproportionately benefit select industries or groups, often distorting markets and complicating the tax code. We advocate for greater transparency, accountability, and reforms to eliminate inefficient tax breaks, helping ensure tax dollars are spent wisely and equitably.

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