US federal budget deficit reaches $2 trillion in fiscal year 2026

The United States federal budget deficit has reached significant new levels during fiscal year 2026. Data from the U.S. Treasury Department shows that the unadjusted deficit for July hit a record $432 billion, driven by increased spending and negative tariff revenues. When adjusted for calendar shifts, the July deficit stood at $333 billion.

By the first 10 months of the fiscal year, the unadjusted deficit reached $1.799 trillion, surpassing the total deficit of the entire 2025 fiscal year. A primary driver of the expanding gap is rising interest costs on public debt, which reached $1.17 trillion year-to-date, a 15% increase largely due to higher Treasury yields.

According to the Congressional Budget Office, the federal budget deficit totaled $2.0 trillion in the first 11 months of fiscal year 2026. While this figure is $6 billion less than the deficit recorded during the same period last fiscal year, officials noted that the comparison is affected by the timing of certain payments.