Federal deficit reaches $1.8 trillion with record debt interest costs

The Congressional Budget Office (CBO) on Wednesday released data showing the federal government held an election $1.8 trillion budget deficit In fiscal year 2025, amid escalating interest costs on the national debt amounting to about $38 trillion.

The Congressional Budget Office estimated that the deficit was slightly smaller than the previous year’s deficit, with the primary deficit for fiscal year 2025 totaling $1.809 trillion versus the $1.817 trillion deficit recorded in fiscal year 2024.

One of the most important drivers of the deficit was higher net interest costs incurred from servicing the national debt, which exceeded $1 trillion for the first time in U.S. history in fiscal year 2025. Debt servicing costs increased by $80 billion, or 8%, from last year due to the larger underlying debt burden.

Total federal spending rose by $301 billion, or 4%, in fiscal year 2025 compared with the previous year. Social security The main driver of this increase was $121 billion, or 8%, from the previous year. That came mostly from higher average benefit payments after last year’s cost-of-living adjustment, as well as the growing number of recipients amid an aging U.S. population, the Congressional Budget Office explained.

National Debt Tracker: American Taxpayers (You) Are Now on the Hook for $37,863,837,866,592.00 as of 10/9/25

Spending on medical care It jumped $72 billion, or 8%, from last year due to enrollment from a growing number of retirees, as well as higher payment rates for beneficiaries’ health care services. Medicaid costs increased by $52 billion compared to fiscal year 2024 due to higher costs per enrollee.

Spending in federal agencies VA spending increased by $41 billion, or 12%, due to increased spending per person and increased use of VA health care facilities by veterans.

Ministry of Defense Spending was $38 billion, or 5%, higher than the previous year due to increases in operation, maintenance and procurement.

US debt is expected to rise to 120% of GDP as the federal deficit rises over the next decade under new forecasts.

Agriculture Department spending increased by $28 billion, or 14%, largely due to funding provided in December 2024 for agriculture-related expenditures. Crop losses Which occurred in the 2023 and 2024 agricultural years, as well as to help mitigate the impact of increased agricultural input prices and lower commodity prices.

the total Tax collection It increased by $308 billion, or 6%, in fiscal year 2025 over the previous year, which the Congressional Budget Office noted was moderated by changes in payment deadlines for taxpayers in disaster areas declared in the previous two years.

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Individual income and payroll tax revenues rose by $260 billion over last year. The Congressional Budget Office noted that withholdings rose by $185 billion amid higher wages and salaries, while non-withholding income tax payments rose by $95 billion. Individual tax refunds increased by $26 billion.

Corporate income tax Revenues fell by $77 billion, or 15%, in fiscal 2025 compared to the previous year. This decline is due in part to the enactment of the One Big Beautiful Bill, which allowed companies to take larger deductions for certain investments that occur in 2025, lowering estimated payments.

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Tax revenues from customs duties, which include Customs tariffs on imported goodsIt rose by $118 billion compared to last year – an increase of 153%, amid the Trump administration’s efforts to raise customs duties on most imported goods this year.