The United States ended the 2026 fiscal year with a budget deficit of nearly $2 trillion, adding to concerns about the country’s growing national debt, according to CNBC. Figures released by the Treasury Department put the shortfall at $1.992 trillion, up roughly 12% from the $1.775 trillion recorded in fiscal 2025.
The latest figure marks the third-largest annual deficit in U.S. history, behind only 2020 and 2021, when the federal government spent heavily on financial relief during the COVID-19 pandemic. Both government revenue and spending reached record levels in fiscal 2026, according to a Treasury Department official, but the money coming in was still insufficient to cover the government’s expenses.
On top of the highest-ever inflation rate seen in years, the report also marks the 25th consecutive fiscal year in which the federal government has run a deficit. The last time the country recorded a surplus was in 2001, when revenue exceeded spending.
Where did the budget go?
Social Security accounted for the largest share of federal spending in fiscal 2026, costing nearly $1.7 trillion, compared with roughly $1.6 trillion the previous year. Medicare ranked second at almost $1.1 trillion, up from just under $1 trillion in fiscal 2025. The government also faced more than $1 trillion in net interest costs.
The Treasury reported that the U.S. spent more than $1.3 trillion on interest on the national public debt during the fiscal year. Rising borrowing costs have also unsettled bond markets, with 10-year and 30-year Treasury yields reaching their highest levels in 24 years the previous week.
Tax revenue helped offset some of the spending. Individual income taxes generated more than $2.8 trillion, an increase of about 7% from the previous year. Corporate income tax receipts, however, fell by roughly $70 billion to $381 billion. A Treasury official attributed the decline to tax cuts included in the One Big Beautiful Bill Act, which Congress passed in 2025.
President Donald Trump has promoted tariffs on trading partners as a way to generate government revenue and reduce the national debt. Customs duties reached a record high in fiscal 2026, according to a Treasury official, but refunds following a Supreme Court ruling against many of the administration’s tariffs returned billions of dollars to retailers, limiting the overall revenue benefit.
Treasury Secretary Scott Bessent has argued that economic growth can help the country manage its debt. He also mentioned that since President Trump took office, real wages for the American people increased by 1.5 percent. However, he acknowledged that the administration is not satisfied with the numbers, but said its economic policies are working well and that they should continue.
Published: Oct 20, 2026 02:00 pm