An electronic display shows Washington’s national debt as of August 19, 2026.
Mandel Gunn | AFP | Getty Images
The United States ended fiscal year 2026 with a nearly $2 trillion budget deficit, the latest measure to highlight the extent of the country’s fiscal stress.
The $1.992 trillion figure is about 12% higher than the previous fiscal year’s deficit of $1.775 trillion, the Treasury Department said Friday.
This is the third-highest annual budget deficit in U.S. history, behind 2020 and 2021, when the federal government provided trillions of dollars in fiscal stimulus amid the coronavirus pandemic. Fiscal year 2026 saw record amounts in both revenue and expenditures, Treasury officials said.
With Friday’s announcement, the United States officially recorded its 25th consecutive fiscal year deficit. The last time the government recorded a surplus was in 2001, meaning its revenue was greater than its debt.
Friday’s report provides new evidence of how America’s rapidly growing debt mountain is negatively impacting the nation’s overall fiscal health. Rising debt bills are exacerbating concerns for bond traders. 10 years and 30 years U.S. Treasury yields hit a 24-year high last week.
where did the debt come from
Social Security is the largest source of government spending, totaling about $1.7 trillion for the full year, a slight increase from about $1.6 trillion in 2025.
Medicare was the second-largest contributor, costing about $1.1 trillion in the same fiscal year. By comparison, government-run health care programs needed just under $1 trillion in fiscal year 2025.
Net interest (calculated by subtracting interest received from the Treasury’s gross interest) also exceeded $1 trillion in the fiscal year. Net interest in fiscal year 2025 totaled $970 billion.
Personal income taxes brought in more than $2.8 trillion, an increase of about 7% from the previous year, helping to reduce the total deficit. Corporate taxes brought in $381 billion in revenue during fiscal year 2026. This is a decrease of about $70 billion from fiscal year 2025, due to tax cuts included in the “One Big Beautiful Bill” law passed by Congress last year.
In fiscal year 2026, the United States paid more than $1.3 trillion in interest on the nation’s public debt. Total debt exceeded $40 trillion earlier this year, more than doubling over the past decade.
Treasury Secretary Scott Bessent told CNBC in August that the United States could “exit” itself from its growing debt mountain.
“Our message to our allies and trading partners is that global growth is the way to deal with this huge debt,” Bessent said in August.
President Donald Trump has laid out plans to impose broad and expensive tariffs as a way to raise revenue and reduce government debt. Despite the Supreme Court’s ruling earlier this year that many of President Trump’s taxes were unconstitutional, the White House has pursued a strategy of increasing levies on trading partners.
The Ministry of Finance has recorded a record high in total tariffs for fiscal year 2026, a Treasury official said. But total revenue from customs took a hit from refunds requested in the wake of a Supreme Court ruling that handed billions of dollars back to retailers.
The Treasury Department on Friday reported a monthly deficit of $27 billion in September, a reversal from a year earlier when the month had a surplus of $198 billion.
