Interest on the National Debt: What the US Pays and Why It Is Rising

What the US paid in fiscal 2026

Treasury reports interest two ways, and the gap between them is large.

Gross and net interest: Monthly Treasury Statement for September 2026, Tables 5 and 9. Interest paid to trust funds and other government accounts: Treasury's Interest Expense dataset.

Gross interest is everything the Treasury owes on its securities, including the special issues held by Social Security and other trust funds. Net interest is the budget's measure. It removes interest the government pays to itself, which moves money from one federal account to another, and nets out smaller interest receipts and payments elsewhere in the budget. Net interest is the figure CBO and OMB use, and it is the one that adds to the deficit.

Spread over the year, net interest averaged $2.88 billion a day. It rose 8.4% in fiscal 2026, faster than total outlays (5.5%) and receipts (3.2%).

How interest compares with the rest of the budget

Net interest was the third-largest budget function in fiscal 2026, behind Social Security ($1,667 billion) and Medicare ($1,073 billion), and ahead of national defense ($965 billion). The full breakdown is in our budget deficit guide.

1991 to 2025: OMB Historical Table 3.1. 2026: Monthly Treasury Statement. The fiscal 2026 share of GDP needs third-quarter GDP, due from the Bureau of Economic Analysis on 29 October 2026; CBO projected 3.3%.

Three points stand out:

• Interest has nearly tripled in five years. It rose from $352 billion in fiscal 2021 to $1,052 billion in fiscal 2026.
• It has exceeded defense since fiscal 2024. OMB's table shows net interest at $880 billion against $874 billion for defense in 2024, the first year since at least 1940 that interest was larger.
• It takes a record share of revenue. Net interest equalled 19.5% of receipts in fiscal 2026. The previous high in OMB's series back to 1940 was 18.5% in fiscal 2025, and before that 18.4% in fiscal 1991. Relative to GDP, fiscal 2025 matched the 1991 peak of 3.2%.

The average interest rate on the debt

The Treasury publishes the average rate it pays on each type of security every month. In September 2026 the average across all marketable debt was 3.518%, and 3.531% across all interest-bearing debt including trust fund holdings.

Sources: Treasury's Average Interest Rates dataset and the Monthly Statement of the Public Debt, both for September 2026. Bills mature in a year or less, notes in 2 to 10 years and bonds in 20 or 30 years. TIPS are inflation-protected securities. The total includes a small amount of Federal Financing Bank debt.

The average bottomed at 1.424% in January 2022, when the Federal Reserve's policy rate was near zero. It has risen every September since, and the September 2026 figure is the highest since September 2008, when it was 3.665%. The TIPS rate understates their cost: the inflation adjustment to their principal is booked separately as interest expense, and came to $69.7 billion in fiscal 2026.

Why the bill keeps rising

Interest cost is the size of the debt multiplied by the rate paid on it. Both have been going up.

• More debt. Total debt rose from $28.43 trillion at the end of fiscal 2021 to $40.17 trillion at the end of fiscal 2026, and every year's deficit adds more on which interest is due. Interest itself is now about half of the deficit: $1.05 trillion of the $1.99 trillion in fiscal 2026.
• Repricing. Bills, 22% of marketable debt, mature within a year and are rolled over at current rates, so the bill rate tracks the Fed closely. Notes and bonds reprice only as they mature, which is why the average rate lags the market by years.
• Market rates above the average. The Treasury sold 10-year notes at 5.300% on 7 October 2026 and 30-year bonds at 5.618% on 8 October, according to its auction results. On 27 October 2026 the three-month bill yielded 4.22% and the 10-year note 4.99%. Notes and bonds sold when the average rate was near its January 2022 low are being replaced at rates well above it.

By type of security, the Treasury's fiscal 2026 interest expense on public debt was $508 billion on notes, $254 billion on bills, $180 billion on bonds, $92 billion on TIPS including inflation compensation, and $27 billion on floating rate notes. For how new debt is sold and priced, see our Treasury auction guide.

What CBO projects

The Congressional Budget Office's February 2026 baseline, which assumes current law, projects:

• Net interest of $1,039 billion in fiscal 2026 (the actual figure came in at $1,052 billion) and $1,108 billion in 2027.
• $2,144 billion in 2036, or 4.6% of GDP, when interest "would account for nearly one-fifth of all federal spending."
• An average interest rate on debt held by the public of 3.4% in 2026, rising to 3.9% by the end of the projection period.
• Net interest of 6.9% of GDP by 2056, more than Social Security (6.0%) or Medicare (5.5%).

The rate assumptions behind those numbers are already out of date. CBO expected the Federal Reserve to keep lowering its policy rate in 2026, a three-month bill rate of 3.3% for the year, and a 10-year yield rising gradually from 4.1% in late 2025 to 4.3% in late 2027. Instead the Fed raised its target range by a quarter point to 3.75% to 4.00% on 16 September 2026, and the 10-year yield was 4.99% on 27 October 2026. If rates stay above CBO's path, interest costs will run above its projections. Our guide to why Treasury yields are rising looks at what is driving long-term rates.

What to watch

• The October Monthly Treasury Statement, due in November, gives the first month of fiscal 2027 interest.
• Treasury's average interest rate, updated monthly. Each tenth of a point on $31.8 trillion of marketable debt is about $32 billion a year once fully repriced.
• The Federal Reserve. Its policy rate sets the cost of bills almost immediately. The Federal Open Market Committee meets on 27 and 28 October 2026.
• CBO's next baseline, which will update the rate assumptions. The national debt clock tracks the debt on which interest is paid.