US fiscal 2026 budget deficit rises to $1.99 trillion, largest in 5 years

New York [US], October 17: The US budget deficit ⁠rose by $217 billion to $1.99 trillion in the 2026 fiscal year, fueled in part by tariff refunds and record spending to service the nation's more-than $40 trillion in debt, marking the largest budget shortfall in five years, Treasury Department figures reported on Friday showed.
According to Reuters, the results for the year ended ​September 30, compared to a $1.78 trillion deficit in fiscal 2025. It was the largest shortfall since fiscal 2021's $2.77 trillion budget gap, then fueled by COVID-19 pandemic relief spending, and is the largest annual deficit ⁠ever.
Total receipts for fiscal 2026 were a record $5.40 trillion, up $169 , or 3%, from the $5.24 trillion in fiscal 2025. Fiscal ⁠2026 outlays also were a ​record at $7.40 trillion, up $386 ⁠billion, or 6%, from the $7.01 trillion in the prior fiscal year.
Debt-service outlays ⁠totaled a record $1.36 trillion, climbing by $144 billion, or 12%, a spending category now eclipsed ⁠only by Social Security and the combined outlays for Medicare and Medicaid. Total US debt breached the $40 trillion milestone ⁠about two months ​ago.
Another driver of the widening ⁠shortfall was a $22 billion drop in net tariff receipts following a Supreme Court ruling this year negating a large portion of the tariffs Trump had imposed during his first year in office. That triggered $145 billion of tariff refunds over this ​year, resulting in 11% decline in net tariff income to about $173 billion.
A U.S. Treasury ​official said the department calculated an estimated deficit-to-GDP ratio of 6.2% for fiscal ​2026, but declined to say what GDP estimate was used. ⁠This figure compares to an actual 5.8% deficit-to-GDP ratio for fiscal 2025.
For the 2026 fiscal year's final month ​of September, the Treasury reported a deficit of $27 billion ⁠versus a $198 billion surplus a year earlier.
Source: Emirates News Agency