US Budget Deficit to Jump to $1.99 Trillion in 2026
Rise in US budget deficit to $1.99 trillion driven by increased spending and debt servicing
Translated by Qiyas from الجريدة — Original source
US Treasury Department data released on Friday showed that the budget deficit for fiscal year 2026 rose by $217 billion to $1.99 trillion, driven in part by the refund of excess customs duties and increased spending to record levels for servicing public debt, which exceeds $40 trillion. This makes it the largest US budget deficit in the past five years.
These results, covering the year ending September 30, represent the first full fiscal year of President Donald Trump’s second term, compared to a deficit of $1.78 trillion in fiscal year 2025.
This deficit is the largest since a budget gap of $2.77 trillion in fiscal year 2021, which was then driven by spending on COVID-19 relief. It is also the third-largest annual deficit on record.
Total revenues for fiscal year 2026 reached a record $5.40 trillion, an increase of $169 billion, or 3%, from $5.24 trillion in fiscal year 2025. Meanwhile, spending for fiscal year 2026 hit a record $7.40 trillion, up $386 billion, or 6%, from $7.01 trillion in the previous fiscal year.
Total debt service spending reached a record $1.36 trillion, an increase of $144 billion, or 12%. This expenditure category is currently surpassed only by Social Security and the combined spending for Medicare and Medicaid. The total US debt surpassed the $40 trillion threshold about two months ago.
Other factors contributing to the widening deficit included a $22 billion decline in net customs duty revenues following a Supreme Court ruling this year that invalidated a significant portion of the tariffs imposed by Trump during his first year in office. This led to the refund of $145 billion in customs duties during the year, resulting in an 11% drop in net customs revenue to approximately $173 billion.
A US Treasury Department official stated that the department estimated the deficit-to-GDP ratio at around 6.2% for fiscal year 2026, but declined to disclose the GDP figure used in this calculation. This compares to the actual deficit-to-GDP ratio of 5.8% for fiscal year 2025.
For September, the final month of fiscal year 2026, the Treasury Department reported a deficit of $27 billion, compared to a surplus of $198 billion in the previous year.
