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[BUSINESS] · United States · 30 sources

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United States budget deficit rises to nearly $2 trillion in fiscal year 2026

The United States federal budget deficit reached $1.99 trillion in fiscal year 2026, a 12% increase from the $1.78 trillion recorded in fiscal year 2025. This marks the third-largest annual deficit in U.S. history, surpassed only by the pandemic-era deficits of 2020 and 2021.

Total federal spending rose by 6% to a record $7.4 trillion, while federal revenues increased by 3% to $5.4 trillion. Major expenditure drivers included Social Security, which cost nearly $1.7 trillion, and Medicare, which cost approximately $1.1 trillion. Defense spending also saw an increase, rising by $48 billion to reach $917 billion.

A significant factor in the widening gap was the rising cost of servicing the national debt. Interest payments reached a record $1.36 trillion, with net interest outlays exceeding $1 trillion for the first time. This surge follows the total national debt surpassing the $40 trillion milestone earlier this year.

Additionally, the deficit was impacted by approximately $145 billion in tariff refunds. These refunds were triggered by a Supreme Court ruling that invalidated various global duties imposed by the Trump administration. Consequently, net tariff income declined by 11% to approximately $173 billion.

Entities

Congressional Budget Office · Donald Trump · Scott Bessent · Supreme Court of the United States · U.S. Department of the Treasury · United States · United States Department of the Treasury · United States Supreme Court

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