U.S. budget deficit widens 12% to around $2 trln in last fiscal year
The budget deficit came in at 6% of GDP
U.S. federal spending rose more than 5% in 2026 / Photo: Unsplash/Luke Michael
The U.S. federal budget deficit widened to $1.99 trillion in fiscal 2026, which ended in September. That was 12% higher than a year earlier, according to Treasury Department data released Friday. Federal spending rose more than 5% to $7.4 trillion, while revenue increased roughly 3% to $5.4 trillion.
Treasury Secretary Scott Bessent cited tariff refunds as a key reason for the wider deficit, Bloomberg reports. The payments stem from the U.S. Supreme Court’s February ruling striking down most of the tariffs President Trump imposed in April 2025. Bessent had previously touted a narrowing of the deficit in fiscal 2025.
The budget deficit has remained around $2 trillion for four consecutive years, Bloomberg notes. The data indicates that the gap was roughly 6% of GDP, an unusually high level at a time of relatively low unemployment. Officially, the deficit narrowed in fiscal 2025, but that was thanks to an accounting measure: the Republican tax law passed in 2025 tightened limits on student loans, and the Treasury booked the effect as a reduction in 2025 spending, Bloomberg added.
In August, U.S. national debt exceeded $40 trillion for the first time. The Congressional Budget Office had projected that the federal budget deficit could widen to $2.7 trillion by 2035.
