The US budget deficit for fiscal 2026 reached nearly $2 trillion, the Treasury Department reported Friday. The $1.992 trillion figure was about 12% higher than the $1.775 trillion deficit recorded in fiscal 2025. It marks the third-highest annual deficit in US history, exceeded only by the deficits in 2020 and 2021, when the federal government issued trillions in pandemic relief spending. The 2026 fiscal year marked the 25th consecutive year the US has operated at a deficit, with the last budget surplus occurring in 2001.
Spending pressures continued to mount across major programmes. Social Security consumed nearly $1.7 trillion for the full fiscal year, up modestly from roughly $1.6 trillion in 2025. Medicare cost almost $1.1 trillion, compared to slightly under $1 trillion the previous year. Net interest payments exceeded $1 trillion for the first time, rising from $970 billion in fiscal 2025. Interest on the national public debt totalled more than $1.3 trillion during the year, with total national debt exceeding $40 trillion.
Revenue growth proved insufficient to offset spending increases. Individual income taxes brought in more than $2.8 trillion, up about 7% year-over-year, while corporate income tax provided $381 billion, down about $70 billion from fiscal 2025 due to tax cuts passed in the One Big Beautiful Bill act. The Treasury saw record gross customs duties but lost billions in revenue due to refunds required following a Supreme Court ruling on tariffs.
September's monthly deficit came in at $27 billion, reversing the prior year's surplus of $198 billion for that month.