US annual budget gap hits nearly USD2trn, largest in 5 years
WASHINGTON: The US budget deficit rose by USD217 billion to nearly USD2 trillion in the 2026 fiscal year, fuelled in part by tariff refunds and record spending to service the nation’s more than USD40 trillion in debt, marking the largest budget shortfall in five years, Treasury Department figures showed on Friday. Continued increases in spending for social benefits programs like Social Security…
The US budget deficit soared to nearly USD2 trillion in fiscal year 2026, the largest shortfall in five years, according to Treasury Department figures released on Friday. The deficit, totaling USD1.99 trillion for the year ending September 30, marked a significant increase from USD1.78 trillion in fiscal 2025. The surge was driven by factors such as tariff refunds and record spending on social benefits programs like Social Security and Medicare, as well as a 6 percent rise in defence spending to USD917 billion.
The deficit-to-GDP ratio for fiscal 2026 is estimated at 6.2 percent, slightly higher than the 5.8 percent ratio in fiscal 2025. Total receipts for fiscal 2026 reached a record USD5.40 trillion, a 3 percent increase from USD5.24 trillion in the previous year, while outlays were also a record at USD7.40 trillion, a 6 percent increase from USD7.01 trillion.
Debt-service outlays hit a record USD1.36 trillion, up USD144 billion or 12 percent, now surpassing Social Security and combined Medicare and Medicaid spending. The decline in net tariff income of USD22 billion, following a Supreme Court ruling negating some of Trump's tariffs, contributed to the widening budget gap.
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