Q:

What do states do with the money from vehicle sales tax?

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Quick Answer

State tax dollars mainly go towards funding kindergarten through 12th grade education, higher education, and health care, according to the Center on Budget and Policy Priorities. State tax revenue also goes towards transportation and corrections costs, as well as toward providing assistance to low-income individuals. State taxes are also used for public employees' pensions and health benefits, and to provide financial support to local governments.

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Full Answer

Although the exact amounts vary between states, on average states use 25 percent of tax revenue to fund kindergarten through 12th grade education, reports the Center on Budget and Policy Priorities. States typically fund education expenses by issuing grants to local school districts, which are responsible for administering the funds for expenses such as teacher salaries. Medicare and the Children's Health Insurance Program expenses utilize 16 percent of a state's tax funds. Higher education expenses account for 13 percent of a state's spending on average.

Transportation expenses account for 5 percent of a state's spending, as stated by the Center on Budget and Policy Priorities. Money allocated to transportation costs is used to fund public transit, and to build and repair roadways. Approximately 1 percent of a state's spending is allocated towards providing assistance to low-income individuals, through programs such as Temporary Assistance for Needy Families.

Other expenses account for 35 percent of state expenditures, reports the Center on Budget and Policy Priorities. The expenses that fall into this category vary by state, but some of the common larger expenses that states fund include pensions and health benefits for public employees and aid for local governments.

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