The U.S. budget deficit reached nearly $2 trillion in fiscal 2026, a 12% increase from the prior year, driven by rising spending on Social Security, Medicare and net interest.
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01Summary
- 01The deficit was $1.992 trillion for fiscal 2026, up from $1.775 trillion in fiscal 2025.
- 02It is the third-highest annual deficit in U.S. history, behind only 2020 and 2021.
- 03Social Security spending was nearly $1.7 trillion, Medicare almost $1.1 trillion; net interest topped $1 trillion.
- 04Individual income taxes brought in over $2.8 trillion, while corporate income tax fell to $381 billion due to tax cuts.
- 05The U.S. has recorded a budget deficit for 25 consecutive fiscal years, last running a surplus in 2001.
02Why it matters
This matters because persistent large deficits and rising national debt can drive up borrowing costs and Treasury yields, affecting mortgage rates and government spending priorities.
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