U.S. Budget Deficit Widens to $1.99 Trillion in Fiscal 2026

The U.S. budget deficit rose to $1.99 trillion in fiscal 2026, Treasury Department figures reported by Reuters on Friday, Oct. 16, show. The gap widened by $217 billion from $1.78 trillion the prior year. Fiscal 2026 ended Sept. 30.

It was the largest shortfall since fiscal 2021’s $2.77 trillion pandemic-relief gap and the third-largest annual deficit on record, Reuters said. Total receipts reached a record $5.40 trillion, up 3% from fiscal 2025. Outlays hit a record $7.40 trillion, up 6%.

Debt-service outlays totaled a record $1.36 trillion, up 12%, or $144 billion—a category now eclipsed only by Social Security and combined Medicare and Medicaid spending, per the Reuters account. Total U.S. debt had breached $40 trillion about two months earlier. CNBC, citing Treasury, separately noted that net interest topped $1 trillion for the year (about $1.05 trillion in the final Monthly Treasury Statement), distinct from the larger gross debt-service figure.

Net tariff receipts fell $22 billion after $145 billion in refunds tied to a Supreme Court ruling on tariffs, leaving net tariff income around $173 billion, Reuters reported. A Treasury official put the estimated deficit-to-GDP ratio at 6.2%, compared with 5.8% in fiscal 2025. September alone showed a $27 billion deficit, versus a $198 billion surplus a year earlier.

Corporate income tax receipts fell about $70 billion from fiscal 2025, CNBC said, citing tax cuts in legislation passed last year. Social Security remained the largest outlay near $1.7 trillion, with Medicare near $1.1 trillion.

Treasury Secretary Scott Bessent told CNBC in August that the U.S. can “grow our way out of” its debt pile. Friday’s release still left the government on a path of deficits near $2 trillion for a fourth straight year.