US federal budget deficit jumps 12% in one year to nearly $2 Trillion

The U.S. federal budget deficit for fiscal 2026 reached $1.992 trillion, roughly 6% of GDP, after $5.403 trillion in revenues against $7.396 trillion in spending. That represents a 12% rise from 2025’s $1.775 trillion and coincides with the gross national debt topping $40.3 trillion. Annual interest payments on the debt have risen to about $1.1 trillion (3.4% of GDP), making interest the second-largest budget item and now costlier than Medicare or defense, though still below Social Security.

The jump reflects both higher spending and weaker receipts: a Supreme Court-ordered tariff refund program produced $144.6 billion in refunds that nearly halved tariff receipts and added roughly $140 billion to the deficit versus earlier projections, while corporate income tax collections fell about 16% after recent tax-law changes increased allowable deductions. Calendar-year federal outlays have climbed steadily - from $5.76 trillion in 2024 to $6.65 trillion so far in 2026 - with particularly large increases in Homeland Security spending (up 146% year over year). Fiscal watchdogs warn that, without policy changes, annual deficits could approach $3.1 trillion by 2036, even as administration officials emphasize one-time items like tariff refunds in explaining this year’s spike.