The federal budget deficit totaled $1.37 trillion in the first nine months of the current fiscal year, according to the latest monthly budget review from the Congressional Budget Office.
The deficit estimate for 2026 surpasses the deficit of $1.34 trillion recorded over the same time period in 2025. The deficit is now about $35 billion higher.
Receipts in the first nine months grew by $142 billion year-over-year, rising to $4.15 trillion, CBO estimates. Higher income and payroll tax revenues drove the increase, along with raised tariff rates, which helped boost customs duty collection by $55 billion, or 51%. The rise in total receipts was partially offset by a decline in corporate income taxes, which fell by $86 billion, or 24%.
Outlays grew more than receipts, rising $178 billion to $5.52 trillion. Spending on Social Security, Medicare and Medicaid rose by $169 billion, or 7%, compared to the year before. The cost of interest on the national debt rose by $98 billion, or 13%, driven by both a larger debt and higher interest rates. Outlays for defense rose $30 billion, or 5%.
There were some reductions in spending in specific areas. Outlays by the Department of Education decreased by $55 billion, or 55%, driven by a reduction in the estimated costs of outstanding student loans. Other departments seeing spending declines include the Environmental Protection Agency (down $20 billion, or 61%), the Department of Homeland Security (down $13 billion, or 15%) and the Department of Commerce (down $10 billion, or 51%).
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said that the deficit in 2026 will likely continue to run ahead of the 2025 numbers.
“After the deficit coming down between FY 2024 and 2025 due to the administration’s tariff revenue and some one-time changes in spending, the new tax cuts and spending increases are now pushing the deficit above last year’s level,” MacGuineas said in a statement.