US federal budget deficit reaches $1.97 trillion for fiscal 2026

The United States federal budget deficit reached $1.97 trillion for the first 11 months of fiscal year 2026, according to data released by the U.S. Treasury. This figure represents one of the highest levels on record, placing the national debt trajectory toward historic levels.

For the month of August, the deficit was $166.8 billion. Total federal spending for the 11-month period reached $6.81 trillion, a 3% increase, while revenues totaled $4.85 trillion. While revenues also rose by 3% on an adjusted basis compared to the previous year, spending continues to outpace income.

A significant driver of the deficit is the rising cost of debt interest. Net interest payments for the 11 months through August totaled $1 trillion, surpassing defense spending and becoming the third-largest expenditure category behind Social Security and Health and Human Services. This increase is attributed to rising Treasury yields, with the average rate on marketable Treasuries climbing to 3.48% by the end of August.

Other contributing factors to federal outlays include increased spending on entitlement programs, such as Social Security and Medicare, driven by a growing number of retirees. Additionally, tariff refunds have recently added to the deficit total.