An electronic display shows the national debt in Washington, Aug. 19, 2026.
Mandel Ngan | AFP | Getty Images
The U.S. finished the 2026 fiscal year with a budget deficit of nearly $2 trillion, the latest measurement to underscore the extent of the country’s financial stress.
The $1.992 trillion figure was about 12% higher than the $1.775 trillion deficit in the prior fiscal year, the Treasury Department reported Friday.
It’s the third-highest annual deficit in U.S. history, behind only 2020 and 2021, when the federal government was doling out trillions of dollars in financial stimulus amid the Covid-19 pandemic. The 2026 fiscal year saw record sums for both receipts and outlays, according to a Treasury Department official.
With Friday’s release, the U.S. officially recorded its 25th straight fiscal year operating at a deficit. The government last recorded a surplus — meaning its revenues were larger than debts — in 2001.
Friday’s report offers fresh evidence of how the U.S.’s fast-growing debt pile has dragged on the nation’s overall financial health. The rising debt bill has helped exacerbate angst among bond traders, who sent the 10-year and 30-year U.S. Treasury yields to 24-year highs last week.
Where the debt comes from
Social Security amounted to the biggest slice of government spending at nearly $1.7 trillion for the full fiscal year, up modestly from the roughly $1.6 trillion spent in 2025.
Medicare was the second biggest contributor, costing almost $1.1 trillion for the fiscal year. By comparison, the government-run healthcare program required slightly under $1 trillion in fiscal 2025.
Net interest – a calculation of the Treasury’s gross interest minus the interest it receives – also topped $1 trillion for the fiscal year. In the 2025 fiscal year, net interest totaled $970 billion.
Individual incomes taxes helped lessen the total deficit by bringing in more than $2.8 trillion, an increase of about 7% year over year. Corporate income tax provided $381 billion in receipts during the 2026 fiscal year. That was a decrease of about $70 billion from fiscal 2025 stemming from the tax cuts included in the One Big Beautiful Bill act passed by Congress last year.
In the 2026 fiscal year, the U.S. shelled out more than $1.3 trillion in interest on the national public debt. The total owed exceeded $40 trillion earlier this year and has more than doubled over the last decade.
Treasury Secretary Scott Bessent told CNBC in August that the U.S. can “grow our way out of” its increasing debt pile.
“Our message to our allies, our trading partners, is that global growth is the way to take care of this mountain of debt,” Bessent said in August.
President Donald Trump pitched his plans for broad and steep tariffs as a way to drive up revenue and shrink the government’s debt. The White House has pushed forward with its strategy of increasing levies on trading partners despite the Supreme Court ruling earlier this year that many of those instituted by Trump were unconstitutional.
The Treasury saw a record high for gross customs duties in the 2026 fiscal year, according to a department official. But the total revenue from customs took a hit due to refunds required following the Supreme Court ruling, which sent billions of dollars back to retailers.
The Treasury also reported Friday that September’s monthly deficit came in at $27 billion, a reversal from the prior year, when the department saw a surplus of $198 billion in the month.
