Let's stop hiding the income and outlay pie charts in an instruction booklet few read

Pie Charts from Form 1040 Instructions for 2025
see links below to get to a larger version

I've written and blogged on this topic before,* but I think it is worth repeating ...

IRC §7523 enacted in 1990 requires the IRS to include pie charts with explanation in the Form 1040 instruction booklet - actual text at §7523(a) is for "any booklet of instructions for Form 1040, 1040A, or 1040EZ."  We don't even have 1040A or 1040EZ anymore and people have not been mailed instruction booklets since 2010. While a pdf of the instructions is readily found on irs.gov, who looks at them?!  Someone might look at them to find information about a line on a return, but they likely don't get to page 121 out of 125 pages of the 2025 instruction booklet (see draft here and soon it will be here).

The charts show the percentage of income and outlays of the federal government within broad categories. The income one also show how much comes from borrowing (27% for 2024) and the outlays one shows that 13% of them go to pay interest on the this borrowing. While these are general charts, I think they are helpful for anyone to get a basic understanding of federal government activities and perhaps generate questions for elected officials and those running for office.

I suggest the following basic enhancements for this information:

• Along with the % put the dollar amount.
• Highlight that outlays are direct spending and not also spending in the tax system via special exclusions, deductions, and credits. Another pie chart showing tax expenditures by category, as the Joint Committee on Taxation and Treasury use when they present reports on tax expenditures. These categories include national defense, int'l affairs, energy, housing, transportation and education.
• Information on the tax gap should also be included such as from the IRS website which at 12/30/25 shows a net tax gap of $606 billion which is more than we collect from the corporate income tax ($530 billion for 2024 per JCT report at page 30).

And the pie charts need to be published beyond the 1040 instruction booklet and moved to the digital era.  They should be an icon perhaps on all federal government websites where people can click to get more details.

What do you think?

*"Time to move Sec. 7523 budget information into the Digital Age," AICPA Tax Insider, 11/8/12.  This article includes the first pie charts that appeared in the 1991 Form 1040 instructions + the 2010 charts.

Blog post of 11/10/12

"'Oh, I see:' Suggestions for Greater Tax Transparency," Tax Notes State, 11/20/17