incremental budgeting

finance

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June 29, 2026

Quick Summary

Incremental budgeting is a method where the previous year's budget is used as a baseline, and only proposed changes or additions are evaluated. This approach assumes that existing expenditures are justified and focuses on the incremental increases or decreases for each program.1

While this method can be simpler and quicker than other budgeting techniques, it may lead to an overall increase in spending because it doesn't critically examine the full scope of existing programs. The term "increment" refers to a small, gradual increase. This contrasts with approaches like zero-base budgeting, which requires a complete re-evaluation of all expenditures annually.12

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government budget
Program budgeting and zero-base budgeting
…and then to decide on incremental expenditure for each program. Such an approach means, however, that the change is likely to increase, rather than decrease, expenditure and that little attention is paid to what the full existing program actually accomplishes.
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…and then to decide on incremental expenditure for each program. Such an approach means, however, that the change is likely to increase, rather than decrease, expenditure and that little attention is paid to what the full existing program actually accomplishes.
Read More