US budget deficit rises to nearly two trillion dollars
The final annual figures confirm that federal spending is growing faster than revenue.
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The US federal government ended the 2026 fiscal year with a deficit of approximately $1,992 billion. According to Reuters, the figures published on Friday by the Treasury Department show an increase of $217 billion compared with the previous year.
The publication on 16 October provides a fuller account of the annual US budget figures. The fiscal year ended on 30 September, so these are not forecasts for the remaining months of the calendar year. According to Reuters, the deficit is the largest since 2021. The new figures therefore confirm the trend already apparent earlier this month in a preliminary estimate from the Congressional Budget Office, the US Congress's budget office.
This development is not due to the government receiving less revenue over the year as a whole. On 8 October, the CBO estimated an increase in revenue of $169 billion, approximately 3 per cent. This was outweighed by a much larger increase in spending: an estimated $386 billion, or 6 per cent. At that point, the office put the deficit at a rounded figure of two trillion dollars. That earlier estimate must be distinguished from the outcome announced on Friday.
In its analysis, the CBO pointed to higher net interest costs and rising spending on major social programmes, defence and education. Falls in other spending categories only partly offset this. On the revenue side, higher receipts from income tax and payroll taxes contributed to growth. The budget balance is therefore the result of several simultaneous movements; no single source of revenue or spending category fully explains the deterioration.
There was also a deficit in the final month of the fiscal year. According to Trading Economics data based on Treasury figures, it amounted to $27 billion in September. The federal government received $558 billion that month and spent $585 billion. In September a year earlier, there had been a surplus of $198 billion. The monthly outcome and the annual total measure different periods and must therefore not be used interchangeably.
Social Security, health spending, Medicare and defence were among the major spending categories in September, the same data show. The main sources of revenue were individual income tax, social insurance and pension contributions, and corporate income tax. This overview shows the breadth of the federal budget: changes in both tax receipts and public services affect the final balance.
A budget deficit is the difference between revenue and spending over a given period. It is therefore not the same as the total national debt. Nor does a higher figure alone indicate how large the deficit is relative to the economy. An assessment also needs to consider the size of the economy, the composition of revenue and spending, and the distinction between temporary and lasting changes.
The new publication primarily provides clarity about the fiscal year that has ended. It does not establish how the balance will develop next year or which policy measure would reduce the deficit most effectively. What is clear, however, is that revenue growth in 2026 was insufficient to keep pace with the stronger growth in spending.
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One story, several perspectives
What is established
- The federal budget recorded a deficit of approximately $1,992 billion in the 2026 fiscal year.
- Revenue grew, but spending rose more sharply.
Left
Arguments A left-wing approach emphasises that deficit reduction can also be achieved through higher contributions from wealthy individuals and businesses. It seeks to protect social provision and public investment.
Values Economic security, a balanced distribution of the burden and the preservation of public services.
Consequences According to this approach, broad spending cuts can affect vulnerable households and delay necessary investment.
Centre
Arguments An institutional approach calls for a credible multi-year path in which revenue, spending and economic assumptions are assessed together. Temporary windfalls must not replace a structural solution.
Values Predictability, feasibility and sustainable public finances.
Consequences Delay can make future choices more difficult, while an overly abrupt adjustment can put a strain on the economy.
Right
Arguments A right-wing approach emphasises spending discipline, more efficient government programmes and economic growth. According to this view, higher taxes can discourage investment and entrepreneurship.
Values Limited government, economic freedom and responsibility towards future taxpayers.
Consequences According to this approach, persistent deficits can reduce the scope for future tax cuts and other policy choices.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
The annual outcome and publication date are supported by current reporting and the data series. The older CBO estimate is clearly included as background and is not presented as a new event.
- confirmed Figures were published on 16 October covering the fiscal year that ended on 30 September; the deficit rose by $217 billion and was the largest since 2021. — Reuters states the publication date, reporting period, increase and historical comparison. source
- confirmed The annual total amounts to approximately $1,992 billion; September recorded $558 billion in revenue, $585 billion in spending and a deficit of $27 billion. — Trading Economics provides these Treasury figures dated 16 October and reports a surplus of $198 billion for September 2025. source
- confirmed On 8 October, the CBO estimated an increase in revenue of $169 billion and an increase in spending of $386 billion. — The primary publication gives figures of 3 and 6 per cent respectively and describes the spending and revenue categories mentioned. source
- confirmed The major revenue and spending categories mentioned for September appear in the published monthly data. — The data series lists Social Security, Medicare, defence, income tax and social insurance contributions, among others. source
- confirmed The budget balance measures revenue minus spending over a period. — The source provides this definition; the article distinguishes this balance from accumulated national debt. source
Editor's note
The new development is the publication of the Treasury's outcome on 16 October. The primary Treasury publication could not be read directly; the amounts were checked through Reuters and Trading Economics, with the older CBO estimate used solely as background.Sources
- US annual budget gap hits nearly $2 trillion, largest in 5 years — Reuters via StreetInsider
- Monthly Budget Review: September 2026 — Congressional Budget Office
- United States Government Budget — Trading Economics
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