The United States closed fiscal 2026 with a budget deficit of $1.992 trillion, the Treasury Department reported on Friday, October 16, for the year that ended September 30.
The shortfall grew by about $217 billion, or roughly 12 per cent, from fiscal 2025's $1.775 trillion, making it the third-largest annual deficit in U.S. history behind only the pandemic years of 2020 and 2021, and the 25th consecutive year in deficit. Receipts hit a record $5.403 trillion while outlays reached a record $7.396 trillion, with spending growing about twice as fast as revenue.
Debt-service costs were a major driver: interest outlays reached a record of about $1.36 trillion, up 12 per cent year over year. Social Security and Medicare were among the largest spending categories, and a Supreme Court decision requiring roughly $145 billion in tariff refunds also cut into customs revenue.
The figures land ahead of the Federal Reserve's late-October meeting and will frame the fiscal debate in Washington, as the rising deficit pushes total U.S. public debt above $40 trillion and keeps pressure on longer-term Treasury yields.
