US budget deficit reaches $1.99 trillion in fiscal 2026, up 12% and third-largest on record
The Treasury Department reported a $1.992 trillion shortfall for fiscal 2026, the third-highest in US history and the 25th consecutive year the government ran a deficit.
At a glance
- The US budget deficit for fiscal 2026 was $1.992 trillion, about 12% higher than the $1.775 trillion recorded a year earlier.
- It is the third-largest annual deficit in US history, behind only 2020 and 2021, and the 25th straight year without a surplus.
- Social Security cost nearly $1.7 trillion, Medicare almost $1.1 trillion, and net interest topped $1 trillion for the year.
The United States ended fiscal 2026 with a budget deficit of $1.992 trillion, the Treasury Department reported Friday, about 12% higher than the $1.775 trillion shortfall recorded in the prior fiscal year.
It is the third-largest annual deficit in US history, exceeded only by 2020 and 2021, when the federal government distributed trillions of dollars in pandemic stimulus. A Treasury official said the fiscal year set records for both receipts and outlays.
The report marks the 25th straight fiscal year in which the government spent more than it collected. The last surplus came in 2001.
Spending: Social Security, Medicare and interest
Social Security was the largest single category of spending at nearly $1.7 trillion, up modestly from roughly $1.6 trillion in fiscal 2025. Medicare followed at almost $1.1 trillion, compared with slightly under $1 trillion the year before.
Net interest — gross Treasury interest minus interest received — also topped $1 trillion, after totaling $970 billion in fiscal 2025. The government paid more than $1.3 trillion in interest on the national public debt during the year. Total debt passed $40 trillion earlier this year and has more than doubled over the past decade.
Rising debt costs have unsettled bond traders, who pushed 10-year and 30-year Treasury yields to 24-year highs last week, according to the report.
Revenue and tariffs
Individual income taxes brought in more than $2.8 trillion, an increase of about 7% year over year. Corporate income tax contributed $381 billion, down about $70 billion from fiscal 2025, a decline the report attributes to tax cuts in the One Big Beautiful Bill act passed by Congress last year.
Gross customs duties reached a record high for the fiscal year, a Treasury official said, but total customs revenue was reduced by refunds required after the Supreme Court ruled earlier this year that many of President Donald Trump's tariffs were unconstitutional. The refunds returned billions of dollars to retailers.
Treasury Secretary Scott Bessent told CNBC in August that the US can "grow our way out of" its growing debt. "Our message to our allies, our trading partners, is that global growth is the way to take care of this mountain of debt," he said.
September's monthly deficit was $27 billion, a reversal from the same month a year earlier, when the department recorded a $198 billion surplus.
Source: CNBC Top News.
Questions and answers
- How big was the US budget deficit in fiscal 2026?
- The Treasury Department reported a deficit of $1.992 trillion for fiscal 2026, about 12% higher than the $1.775 trillion shortfall in the prior fiscal year.
- What was the largest category of US government spending in fiscal 2026?
- Social Security was the biggest slice at nearly $1.7 trillion, followed by Medicare at almost $1.1 trillion. Net interest also topped $1 trillion for the year.
- Why did corporate tax receipts fall in fiscal 2026?
- Corporate income tax brought in $381 billion, about $70 billion less than fiscal 2025, a decrease the report links to tax cuts in the One Big Beautiful Bill act passed by Congress last year.
