The Congressional Budget Office estimates that the U.S. government’s budget deficit for fiscal year 2025 totaled $1.8 trillion, just $8 billion less than the shortfall for the prior year. If not for shifts in the timing of certain outlays, the annual deficit would have been $80 billion less than in 2024, CBO said.
The annual total was also affected by the accounting for changes to the federal student loan program that resulted in a $131 billion reduction in outlays, a one-time adjustment based on expected future cash flows from outstanding loans. Without that change, the deficit would have topped $1.9 trillion.
How revenues changed: Federal revenues for the year grew by $308 billion, or 6%, to $5.2 trillion, driven by individual income and payroll taxes that rose a combined $260 billion. Customs duties, including tariffs, rose to $195 billion, up $118 billion, or 153%, compared with 2024.
Those gains were partially offset by a $77 billion (15%) drop in corporate tax collections, the nonpartisan budget scorekeeper said in its monthly report for September, marking the end of the fiscal year. CBO said the decrease was partly the result of President Trump’s signature tax and spending law, which allowed corporations to take larger deductions for some investments, reducing estimated payments.
Where spending grew: Spending rose by $301 billion, or 4%, to $7 trillion, as spending on major safety net programs grew by 8% and net interest payments on the public debt surpassed $1 trillion for the first time. Spending on Social Security benefits rose by $121 billion while Medicare outlays grew by $72 billion and Medicaid outlays climbed $52 billion. Net interest spending increased by $80 billion. Spending at the Departments of Veterans Affairs, Defense and Agriculture was up by 12%, 5% and 14%, respectively. Outlays for the Department of Homeland Security jumped $25 billion, or 25%, mostly due to FEMA disaster-response spending.
CBO noted that congressional budget committees instructed it to publish its monthly report despite the ongoing government shutdown because the information it provides is necessary for Congress to carry out its constitutional functions.