United States records largest monthly budget deficit in five years

The United States recorded its largest monthly budget deficit in five years during July, with the Trump administration spending $432.31 billion more than it collected in revenue. This represents the highest monthly shortfall since the March 2021 COVID-19 stimulus period and stands as the third-largest deficit on record.

Even when adjusting for $99 billion in calendar-related shifts involving August benefits paid early, the July deficit remained $333 billion, an 18 percent increase from the previous year. The 2026 budget deficit has reached $1.8 trillion with two months remaining in the fiscal year and is projected to exceed $2 trillion.

A significant factor in the deficit is the impact of recent Supreme Court rulings. Following the declaration that “Liberation Day” tariffs were unconstitutional, the government issued $33.38 billion in tariff refunds in July, resulting in negative tariff revenue of -$8.55 billion for the month. While total tax receipts for the first ten months of fiscal 2026 reached $4.49 trillion—a 3 percent increase over the same period last year—spending continues to drive the widening deficit.