US Budget Deficit Hits $1.99 Trillion, Largest in Five Years

The us budget deficit 2026 figures released by the Treasury Department on Friday showed the federal shortfall rose by $217 billion to $1.99 trillion in the fiscal year ended September 30 — the first full budget year of President Donald Trump’s second term. It is the largest deficit in five years and the third-largest annual deficit ever recorded.

Tariff Refunds Bite Into Revenue

A major driver was a $22 billion drop in net tariff receipts following a Supreme Court ruling this year that negated a large portion of the tariffs Trump had imposed during his first year in office. That decision triggered $145 billion of tariff refunds over the year, producing an 11% decline in net tariff income to about $173 billion. Total receipts still hit a record $5.40 trillion, up $169 billion or 3% from fiscal 2025 — but outlays climbed faster, reaching a record $7.40 trillion, up $386 billion or 6%.

Debt-Service Costs Hit $1.36 Trillion

The cost of servicing the nation’s more-than-$40 trillion debt soared to a record $1.36 trillion, climbing $144 billion or 12% — a spending category now eclipsed only by Social Security and the combined Medicare-Medicaid outlays. The Treasury estimated the deficit-to-GDP ratio at 6.2% for fiscal 2026, up from 5.8% the prior year. The shortfall is the largest since fiscal 2021’s $2.77 trillion gap, which was driven by COVID-19 pandemic relief spending.

Source: Reuters