The US Budget Deficit: Deficit vs Debt and the 2026 Numbers
The deficit is one year's gap between federal spending and revenue. The debt is the running total. Here are the fiscal 2026 numbers, where the money went and where the projections point.
The budget deficit is the amount by which federal spending exceeds revenue in a fiscal year. In fiscal 2026 (October 2025 to September 2026), the US Treasury recorded outlays of $7.40 trillion and receipts of $5.40 trillion, a deficit of $1.99 trillion, up from $1.78 trillion in fiscal 2025. The national debt is the accumulated total of past borrowing: $40.46 trillion on 23 October 2026.
Deficit vs debt: one year against the running total
The deficit is a flow. It is the gap between what the federal government spends and what it collects in a single fiscal year, which runs from 1 October to 30 September. The debt is a stock: every past deficit, less the occasional surplus, plus the money the Treasury owes to its own trust funds.
In fiscal 2026 the deficit was $1.99 trillion. Over the same twelve months, total public debt outstanding rose by $2.53 trillion, from $37.64 trillion on 30 September 2025 to $40.17 trillion on 30 September 2026, according to Treasury's Debt to the Penny series. Two items account for the difference.
- Debt the government owes itself. Intragovernmental holdings, mostly trust fund balances such as Social Security's, rose by $387 billion. CBO notes that this debt does not directly affect the economy and has no net effect on the budget.
- Other means of financing. Debt held by the public rose by $2.15 trillion, about $155 billion more than the deficit. CBO explains that federal credit programs such as student loans (where only the subsidy cost is counted in the deficit) and changes in the Treasury's cash balance make borrowing run above or below the deficit in any given year.
The total keeps moving between month-end reports. Our national debt clock tracks it from the latest Treasury figure: $40.46 trillion on 23 October 2026.
The fiscal 2026 deficit: $1.99 trillion
Treasury's Monthly Treasury Statement for September 2026 closed the books on fiscal 2026. Spending grew roughly twice as fast as revenue.
| Measure | FY2025 | FY2026 | Change |
|---|---|---|---|
| Receipts | $5.23 trillion | $5.40 trillion | +$169 billion (+3.2%) |
| Outlays | $7.01 trillion | $7.40 trillion | +$386 billion (+5.5%) |
| Deficit | $1.78 trillion | $1.99 trillion | +$217 billion (+12.2%) |
In dollar terms it is the third-largest deficit on record, behind fiscal 2020 ($3.10 trillion) and fiscal 2021 ($2.77 trillion) in OMB's historical tables. It is also the 25th deficit in a row. The last surplus was $128 billion in fiscal 2001.
The monthly pattern is uneven. April 2026, the month individual tax returns are due, ran a $215 billion surplus. July 2026 ran the largest monthly deficit of the year, $432 billion. September 2026 showed a $27 billion deficit, against a $198 billion surplus in September 2025.
Two revenue lines fell. CBO's Monthly Budget Review attributes a $22 billion (11%) drop in customs duties to refunds of tariffs collected under the International Emergency Economic Powers Act, which began in May after a February 2026 Supreme Court decision; CBO estimates about $130 billion was refunded during the year. Corporate income taxes fell $70 billion (16%), which CBO links to larger investment deductions in the 2025 reconciliation act.
Where the money goes
Three items took just over half of all federal spending in fiscal 2026: Social Security, Medicare and interest on the debt. The figures below use the budget's functional categories from Treasury's Table 9.
| Function | Outlays | Share |
|---|---|---|
| Social Security | $1,667 billion | 22.5% |
| Medicare | $1,073 billion | 14.5% |
| Net interest | $1,052 billion | 14.2% |
| Health | $1,026 billion | 13.9% |
| National defense | $965 billion | 13.1% |
| Income security | $694 billion | 9.4% |
| Veterans benefits and services | $416 billion | 5.6% |
| All other functions, net of offsetting receipts | $503 billion | 6.8% |
| Total | $7,396 billion | 100% |
Net interest is the line to watch. It rose 8.4%, from $970 billion in fiscal 2025 to $1.05 trillion, and it now exceeds national defense spending of $965 billion. Interest absorbed 19.5% of everything the government collected, close to one dollar in five. Our guide to how much interest the US pays on its debt breaks down why the bill is still climbing.
The other large increases were in benefit programs. CBO puts the rise in Social Security outlays at $86 billion, Medicare at $77 billion and Medicaid at $55 billion, with Medicaid totaling $723 billion for the year.
Where the money comes from
Taxes on personal income and wages carry most of the revenue side. Individual income and payroll taxes together brought in $4.66 trillion, 86% of receipts.
| Source | Receipts | Share |
|---|---|---|
| Individual income taxes | $2,846 billion | 52.7% |
| Social insurance and retirement (payroll) taxes | $1,812 billion | 33.5% |
| Corporate income taxes | $381 billion | 7.1% |
| Customs duties | $173 billion | 3.2% |
| Excise taxes | $106 billion | 2.0% |
| Miscellaneous receipts | $47 billion | 0.9% |
| Estate and gift taxes | $39 billion | 0.7% |
| Total | $5,403 billion | 100% |
Withheld income and payroll taxes rose $168 billion, which CBO attributes to rising wages and salaries. That growth was not enough to keep pace with spending, which is why the deficit widened in a year of record receipts.
The trend: a decade of wider deficits
Measured against the size of the economy, the deficit has been 5.4% of GDP or higher in every year from 2020 to 2025. CBO puts the average over the past 50 years at 3.8%.
| Fiscal year | Deficit | % of GDP |
|---|---|---|
| 2015 | $442 billion | 2.4% |
| 2016 | $585 billion | 3.1% |
| 2017 | $666 billion | 3.4% |
| 2018 | $779 billion | 3.8% |
| 2019 | $984 billion | 4.6% |
| 2020 | $3,096 billion | 14.5% |
| 2021 | $2,774 billion | 12.0% |
| 2022 | $1,374 billion | 5.4% |
| 2023 | $1,687 billion | 6.2% |
| 2024 | $1,815 billion | 6.3% |
| 2025 | $1,775 billion | 5.9% |
| 2026 | $1,992 billion | Pending |
Fiscal 2015 to 2025 figures are from OMB's Historical Tables 1.1 and 1.2, published with the fiscal 2027 budget. The fiscal 2026 figure is from Treasury's September 2026 statement. A share of GDP for fiscal 2026 needs third-quarter GDP, which the Bureau of Economic Analysis is scheduled to publish on 29 October 2026.
The years after the pandemic say more than the spike itself. Deficits fell back from the emergency years, then settled near 6% of GDP, roughly one and a half times the 50-year average, and have stayed there.
What CBO projects to 2036
The Congressional Budget Office's February 2026 baseline, which assumes current law stays in place, put the fiscal 2026 deficit at $1.9 trillion, or 5.8% of GDP. The actual result came in at $1.99 trillion. From there, CBO projects:
- The deficit rising to $3.1 trillion, or 6.7% of GDP, in 2036.
- Cumulative deficits of $23.1 trillion from 2026 to 2035.
- Net interest climbing from 3.3% of GDP in 2026 to 4.6% in 2036.
- The primary deficit, which excludes interest, easing from 2.6% of GDP to 2.1%.
- Outlays of 24.4% of GDP in 2036 against revenues of 17.8%.
Measured against GDP, the entire increase in the deficit over the decade comes from interest. Spending on everything else, net of revenue, shrinks slightly relative to GDP in CBO's numbers, while the cost of carrying the debt grows. CBO's long-term projections extend the same arithmetic: by 2056 net interest reaches 6.9% of GDP, above Social Security at 6.0% and Medicare at 5.5%.
The baseline has known soft spots. It reflects trade policy as of 20 November 2025 and laws in place as of 14 January 2026, so it predates the Supreme Court's February 2026 tariff decision. In building it, CBO estimated that the 2025 reconciliation act added $4.7 trillion to deficits over the decade, while higher tariffs reduced them by $3.0 trillion. Any change to tariff revenue moves the projection directly. For how these deficits translate into the debt ratio, see our guide to US debt to GDP.
What to watch next
- Monthly results. Fiscal 2027 began on 1 October 2026. CBO's Monthly Budget Review and Treasury's Monthly Treasury Statement for October will give the first reading on the new year.
- Interest costs. The 10-year Treasury sold at a 5.30% yield at auction on 7 October 2026, against 4.12% at the October 2025 auction. Debt that rolls over at higher rates feeds straight into the net interest line.
- Customs receipts. Tariff refunds pulled revenue down from May 2026 onward. New tariff revenue, or further refunds, will show up first in the customs line of the monthly statement.
- GDP revisions. The deficit's share of GDP, and CBO's next baseline, depend on nominal growth as much as on spending and tax decisions.
Questions readers ask
What was the US budget deficit in 2026?
$1.99 trillion for fiscal 2026, which ran from 1 October 2025 to 30 September 2026. Outlays were $7.40 trillion and receipts were $5.40 trillion, according to the Monthly Treasury Statement for September 2026.
Is the budget deficit the same as the national debt?
No. The deficit is one year's shortfall. The debt is the accumulated total, $40.46 trillion on 23 October 2026. Each deficit is financed by borrowing, so it adds to the debt.
When did the US last have a budget surplus?
Fiscal 2001, with a surplus of $128 billion. The government ran surpluses in each year from fiscal 1998 to 2001 and has run a deficit every year since, according to OMB's Historical Table 1.1.
What is the primary deficit?
The deficit excluding net interest payments. It shows whether current spending and taxes are in balance before the cost of past borrowing. CBO projected a primary deficit of 2.6% of GDP for fiscal 2026, against a total deficit of 5.8%.
Why did the debt rise more than the deficit in 2026?
Total debt rose $2.53 trillion while the deficit was $1.99 trillion. Trust fund holdings grew by $387 billion, and debt held by the public rose about $155 billion more than the deficit because of federal lending programs and changes in the Treasury's cash balance.
Sources
- US Treasury Fiscal Data: Monthly Treasury Statement, September 2026 (Tables 1 and 9)
- US Treasury Fiscal Data: Debt to the Penny
- Congressional Budget Office: Monthly Budget Review: September 2026 (8 October 2026)
- Congressional Budget Office: The Budget and Economic Outlook: 2026 to 2036 (February 2026)
- Congressional Budget Office: The Budget and Economic Outlook: 2026 to 2036, full report
- Office of Management and Budget: Historical Table 1.1: Receipts, Outlays and Surpluses or Deficits
- Office of Management and Budget: Historical Table 1.2: Receipts, Outlays and Deficits as Percentages of GDP
- US Treasury Fiscal Data: Treasury Securities Auctions Data