The United States concluded its fiscal year 2026 with a budget deficit of nearly $2 trillion, which is the latest data highlighting the immense financial pressure on the country.
The U.S. Treasury Department reported on Friday that the deficit for fiscal year 2026 was $1.992 trillion, which is about 12% higher than the $1.775 trillion of the previous fiscal year.
Calculated on an annual basis, this deficit ranks third in U.S. history, only behind 2020 and 2021. During that time, the federal government distributed trillions of dollars in fiscal stimulus during the COVID-19 pandemic. An official from the Treasury Department stated that both revenues and expenditures for the 2026 fiscal year set records.
With the release of this report on Friday, the United States officially recorded a deficit for the 25th consecutive fiscal year. The last time the U.S. recorded a surplus—meaning revenues exceeded expenditures—was in 2001.
This report further demonstrates how the rapidly growing debt scale in the United States is dragging down overall fiscal health. The increasing debt burden has also exacerbated concerns among bond traders, who last week pushed the yields on U.S. 10-year and 30-year Treasury bonds to their highest levels in 24 years.
Where does debt come from?
Social security is the largest item in government spending, amounting to nearly $1.7 trillion throughout the year, a slight increase from about $1.6 trillion in fiscal year 2025.
Healthcare is the second largest expense item, with annual costs approaching 1.1 trillion dollars. In contrast, this government-operated healthcare program will cost slightly less than 1 trillion dollars in the fiscal year 2025.
Net interest – that is, the total interest expenses of the Treasury Department minus the interest it receives – also exceeded one trillion dollars in that fiscal year. The total net interest for the fiscal year 2025 was 970 billion dollars.
Personal income tax revenue exceeded $2.8 trillion, helping to alleviate the deficit, with a year-on-year increase of about 7%. Corporate income tax generated $381 billion in revenue for the fiscal year 2026, which is about $70 billion less than in fiscal year 2025, due to the tax reduction measures included in the One Big Beautiful Bill act passed by Congress last year.
In fiscal year 2026, the United States paid over $1.3 trillion in interest on its national public debt. The total U.S. debt exceeded $40 trillion earlier this year and has more than doubled over the past decade.
U.S. Treasury Secretary Scott Bosworth stated in August regarding CNBC that the United States could "get rid of" its continuously expanding debt burden through growth.
In August, Bessent said, "The message we convey to our allies and trading partners is that global growth is the solution to this mountain of debt."
U.S. President Donald Trump has described his extensive and high tariffs as a way to increase revenue and reduce government debt. Despite the U.S. Supreme Court ruling earlier this year that many of Trump's tariff measures were unconstitutional, the White House continues to pursue its strategy of raising taxes on trade partners.
An official from the Treasury Department stated that in fiscal year 2026, the total customs tariff revenue of the United States set a record. However, due to the need to refund some amounts after a ruling by the Supreme Court, the overall customs revenue was impacted, with billions of dollars being returned to retailers.
The Treasury Department also reported on Friday that the monthly deficit in September was $27 billion, a reversal from the same period last year; in September last year, the department recorded a surplus of $198 billion.
