U.S. Budget Deficit Reached $2 Trillion in Fiscal 2026
Key Facts
The U.S. federal budget deficit was $2.0 trillion in fiscal 2026, which ended on September 30, an increase of $217 billion, or 12%, from the previous year, according to an estimate by the Congressional Budget Office. The full-year results provide broader fiscal context for the October deficit report cited in the draft, but that month's figures cannot be verified here. Accordingly, this account does not include a confirmed figure for the October deficit, revenue or spending. The office said the annual deficit rose from the previous year as spending increased faster than revenue. The actual deficit also exceeded the baseline estimate the office prepared in February. The office's estimate shows the fiscal gap widening over the full fiscal year, without confirming the monthly figures cited in the draft.
Federal revenue rose 3%, or $169 billion, in fiscal 2026 compared with the previous year, according to the Congressional Budget Office. The office said higher receipts from individual income and payroll taxes partly offset lower corporate tax and customs duty revenues. Despite annual revenue growth, receipts were $193 billion, or 3%, below the office's baseline estimate. That means revenue did not reach the level assumed in earlier projections, even as it increased from the previous fiscal year. This comparison covers all of fiscal 2026 and does not provide verified figures for October revenue alone.
Federal spending rose 6%, or $386 billion, in fiscal 2026 compared with the previous year, according to the office. The largest increases were in major mandatory spending programs, net interest on the public debt and the Defense Department's military activities. At the same time, actual spending was $53 billion, or 1%, below the baseline estimate. The comparison with the earlier estimate does not conflict with annual spending growth: it measures actual spending against the office's projections, while the annual increase measures the difference from the previous year. The office's data identify these categories as those with the largest increases during the fiscal year and do not attribute October deficit figures to them.
The deficit rose to 6.2% of gross domestic product in fiscal 2026, compared with 5.8% in fiscal 2025, according to the Congressional Budget Office. The office said the 2026 ratio exceeded the 50-year average of 3.8%. The comparison puts the annual deficit in context relative to the size of the economy, in addition to its dollar value. The office also said federal debt held by the public reached 100% of gross domestic product in 2026, up from 99.0% at the end of fiscal 2025. It said this was the highest ratio since 1946, making the debt trajectory one of the key indicators of federal finances during the fiscal year.
The fiscal 2026 deficit was $140 billion, or 8%, larger than the deficit projected in the Congressional Budget Office's latest baseline estimates, according to the office. Revenue was $193 billion, or 3%, below the baseline, while spending was $53 billion, or 1%, below it. The comparison indicates that the larger-than-projected deficit was associated with a wider revenue shortfall, even though actual spending was below the expected level. These figures compare full-year fiscal results with an earlier estimate; they do not represent a monthly surprise or an October deficit forecast. In the available information, the office did not provide a separate explanation for the gap beyond the specified comparisons between results and estimates.
The Congressional Budget Office included its October review in its release schedule and set December 8 as the expected date for publishing its November 2026 review. The office said it would publish an update to its budget and economic projections for 2027 to 2037 in early 2027. Those releases are expected to provide subsequent readings on federal finances and projections, according to the schedule announced by the office. Until then, the annual figures for fiscal 2026 remain the confirmed basis for fiscal context here. The available verified information does not provide figures that can be attributed to the October deficit or to the monthly revenue and spending amounts cited in the circulated version.