What is the most important source of revenue and the major type of expenditure at the Federal level? At the state level? At the local level? At the Federal level, the most important source of revenue is the personal income tax. The main expenditure is for income security. At the state level the most important sources of revenue are sales, excise, and gross receipts taxes, followed by personal income taxes. The main expenditures are for public welfare, with education running a very close second. At the local level the most important source of revenue is, by far, property taxes. Education is by far the most important expenditure