How Much Money Does Texas Get From the Federal Government?

Texas is projected to receive about $102 billion in federal funds through its state budget for the 2026–2027 two-year cycle, and that figure is only part of what the federal government sends into the state. Add defense contracts, military payroll, and direct payments to residents like Social Security and Medicare, and the total climbs much higher. So the short answer to how much money Texas gets from the federal government depends on where you draw the line: roughly $100 billion a biennium runs through state and local government accounts, and considerably more reaches Texans directly.¹

The Headline Number: Federal Funds in the State Budget

Texas writes a two-year budget, and federal dollars are a major line inside it. The Legislative Budget Board projects about $102 billion in federal funds for the 2026–2027 biennium.¹ That is down from the $108.4 billion projected for 2024–2025 by the Comptroller.²

The drop reflects the end of pandemic spending. During COVID-19, roughly $85 billion in relief funds arrived in Texas across six congressional bills.³ Federal transfers reached about 48% of state revenue in 2021, then fell roughly 27% from that peak, with 2024 alone losing nearly $10 billion.

For the most recent complete fiscal year on record, Texas took in $88.9 billion in federal transfers in FY 2022, which came to 25.7% of state and local government revenue and represented an 11.6% decrease from the year before.⁴

What the Budget Number Leaves Out

Federal funds in the state budget only capture money that passes through government ledgers. Plenty of federal spending in Texas never touches a state agency account.

Defense is the clearest example. In FY 2024, the Department of Defense spent $47.4 billion in Texas: $34 billion in contracts with private companies, $12.9 billion in military and civilian payroll, and about $425 million in grants.⁵ Texas hosts more than a dozen major installations, including Fort Cavazos, Joint Base San Antonio, and Fort Bliss. The scale of defense spending in the state is comparable to all Medicaid funding combined.

Then there are direct payments to individuals. Social Security retirement checks, Medicare reimbursements to hospitals and doctors, veterans’ benefits, and federal employee salaries all flow into Texas without appearing in the state budget. Once these are added to the state and defense figures, the full amount of federal money reaching Texas is substantially larger than the $102 billion budget number alone suggests.

Does Texas Get More Than It Pays In?

Yes. Based on 2022 data, Texas received roughly $71 billion more from the federal government than its residents and businesses paid in federal taxes. Even stripping out temporary COVID-related spending, the gap was about $45 billion. That makes Texas a net recipient of federal dollars.

A few things drive it. The population is large and growing, which raises demand for Medicaid, education, and infrastructure funding. The heavy military footprint pulls in defense billions. And per capita income in Texas is modest compared with states like New York or Connecticut, which produces a higher federal Medicaid matching rate. On a per-person basis Texas ranks around 43rd in federal grants received; the total dollars are enormous, but the large population dilutes the per-capita figure.

Where the Money Goes

Healthcare Takes the Biggest Share

Healthcare dominates everything else. In FY 2022, public welfare programs, mainly Medicaid, accounted for 48% of all federal transfers to Texas state and local governments, with health and hospitals adding another 20%.⁴ Together, more than two-thirds of federal funds coming into the state fall in those two buckets.

Medicaid is the single largest program. For state fiscal year 2025, federal Medicaid funding to Texas came to about $22.4 billion, or 93% of all federal money flowing through the Health and Human Services system.⁶ Washington currently pays about 59.83% of Texas’s Medicaid costs for most services, with the state covering the rest.⁷ That rate, the Federal Medical Assistance Percentage, is recalculated each year based on a state’s per capita income compared with the national average; poorer states get a larger federal share.⁸

Texas has not expanded Medicaid under the Affordable Care Act. States that expand receive a 90% federal match on the expansion population, compared with the roughly 60% Texas gets on its traditional program. That single policy choice is the largest factor shaping how much federal healthcare money Texas draws.

Education

Federal money is a meaningful minority of school funding in Texas. In the 2021–2022 school year, federal sources supplied 18.3% of total public school funding, local sources (mostly property taxes) 47.8%, and state programs 33.9%.⁹ The federal share was pushed up by pandemic aid; in a normal year it runs lower.

Federal education dollars target specific needs. Title I supports schools with high concentrations of low-income students. IDEA funds special education services for students with disabilities.¹⁰ Federal grants also fund most adult education and workforce training programs. This money typically flows through the Texas Education Agency or the Texas Workforce Commission and is passed along to districts and local providers.

Transportation and Infrastructure

Texas has the largest state-maintained highway system in the country, and federal highway aid keeps it running. Under the Infrastructure Investment and Jobs Act signed in 2021, Texas was allocated about $25.4 billion for Federal-Aid Highway programs over five years, plus $3.7 billion for public transit.¹¹

The same law directed additional funding across several categories for FY 2022–2026:

$577 million for bridge repairs
$408 million for electric vehicle charging
$1.2 billion for aviation infrastructure
$3.3 billion for broadband deployment
Over $2 billion across multiple drinking water programs
About $434 million for grid resilience and energy efficiency

Safety-Net and Disaster Programs

Several federal programs reach Texans directly or through short-term relief:

SNAP fully funds monthly food benefits, while Texas shares administrative costs.
WIC is a categorical grant supporting food and nutrition for women, infants, and young children, with strict federal rules on eligibility and use.¹²
TANF is a block grant, giving Texas discretion to spend on cash assistance, job training, child care, and other family support.
Disaster declarations unlock FEMA money for debris removal, infrastructure repair, and payments to affected families. Hurricane Harvey in 2017 triggered tens of billions in federal emergency spending, and the 2021 winter storm and recurring Gulf Coast flooding have brought more.

How the Money Actually Arrives

Federal funds reach Texas through a mix of channels, and the differences matter for how flexibly the state can spend them:

Formula grants distribute money based on set criteria like population or per capita income. Medicaid’s FMAP is the biggest example.¹³
Categorical grants are earmarked for narrow purposes with detailed rules; WIC and Title I fit here.
Block grants like TANF cover a broad program area and leave allocation to the state.
Competitive grants are awarded on application, with agencies, universities, and local governments in Texas competing.
Pass-through funding routes through the state treasury to school districts, cities, and other local recipients. Much of federal education and transportation money works this way.

Most large programs require the state to put up matching funds to draw the federal share. For Medicaid, Texas must cover roughly 40% of costs to unlock the federal 60%. Local governments and hospital districts sometimes contribute in ways that count toward the state match, which stretches state dollars.

Federal money also carries conditions. Medicaid participation locks Texas into certain eligibility floors and service standards. Highway dollars require compliance with design standards, environmental reviews, and prevailing wage rules. Those strings shape how state agencies operate well beyond the dollar totals.

Where the Trend Is Heading

Federal funding to Texas has been volatile. Pandemic transfers pushed the federal share of state revenue to about 48% in 2021, roughly double the normal level. It has since fallen about 27% from that peak, and the biennial budget projections have moved from $108.4 billion in 2024–2025 to about $102 billion in 2026–2027.¹²

Congressional budget proposals have targeted hundreds of billions in cuts to Health and Human Services and agricultural programs over the next decade. Because Medicaid accounts for the vast majority of federal health money flowing to Texas, even modest changes to the FMAP formula or eligibility rules could cost the state billions. Shifts in defense spending would also carry real weight given the roughly $47.4 billion the military spends in Texas each year.⁵ At the same time, population growth keeps pushing demand for Medicaid, Title I, and highway funding upward. Whether the roughly $100 billion per biennium holds steady, grows, or falls will depend on how those pressures resolve.

1
Legislative Budget Board. Fiscal Size-up 2026-27 Biennium
2
Texas Comptroller of Public Accounts. Biennial Revenue Estimate 2024-2025
3
Legislative Budget Board. COVID-19 Reporting
4
USAFacts. How Much Federal Money Goes Toward Texas State and Local Government
5
Office of Local Defense Community Cooperation. Defense Spending by State, Fiscal Year 2024
6
Texas Health and Human Services Commission. HHS System Annual Federal Funds Report for State Fiscal Year 2025
7
TMHP. FMAP and EFMAP to Change on October 1, 2025
8
Medicaid and CHIP Payment and Access Commission. Medicaid 101 – Financing
9
USAFacts. How Are Public Schools in Texas Funded?
10
U.S. Department of Education. Texas – Individuals with Disabilities Education Act
11
Texas Comptroller of Public Accounts. The Infrastructure Investment and Jobs Act
12
eCFR. 7 CFR Part 246 – Special Supplemental Nutrition Program for Women, Infants and Children
13
U.S. Department of Health and Human Services. Federal Medical Assistance Percentages or Federal Financial Participation in State Assistance Expenditures