Fiscal 2026 deficit $1,992.5bn, up 12%; interest cost $1,051.8bn
The year-end Treasury ledger shows receipts up 3.2%, outlays up 5.5% and the deficit up $217.1bn on fiscal 2025. Interest took 19.5¢ of each receipt dollar.
- What happened
- The Monthly Treasury Statement for September 2026, the statement that closes fiscal year 2026, records receipts of $5,403.3 billion, outlays of $7,395.8 billion and a deficit of $1,992.5 billion for October 1, 2025 through September 30, 2026. The deficit was $217.1 billion larger than the $1,775.4 billion of fiscal 2025. Net interest on the public debt was $1,051.8 billion, $86.6 billion more than the $965.2 billion spent on national defense.
- Why
- Receipts grew 3.2% while outlays grew 5.5%. Four lines explain most of the outlay growth: Social Security, net interest, Medicare and Medicaid grants, which together rose $298.5 billion. Interest is the one line set by arithmetic rather than by a vote: debt held by the public was $32.43 trillion on September 30, 2026, and the average rate on it rose during the year.
- The numbers that matter
- $1,992.5bnDeficit, fiscal year 2026 (Oct 1, 2025 to Sep 30, 2026)$1,051.8bnNet interest outlays, fiscal year 2026, up 8.4% on fiscal 202519.5%Net interest as a share of total receipts, fiscal year 2026 (calculation)6.1%Deficit against Q2 2026 current-dollar GDP of $32,563.0bn at an annual rate (calculation)
- Why it matters
- Every dollar of the $1,992.5bn was borrowed from the public and carries interest into later budgets; 19.5¢ of each receipt dollar in fiscal 2026 went to interest before any other line was paid.
- What happens next
- The Fiscal Data release calendar, read on October 27, 2026, lists the next Monthly Treasury Statement, for October 2026, for November 12, 2026, and the following one for December 10, 2026. BEA's advance estimate of third-quarter 2026 GDP is scheduled for October 29, 2026.
Net interest was the third-largest use of federal money in fiscal 2026, behind Social Security and Medicare and ahead of Medicaid and defense.
| Social Security | 1667.1 |
|---|---|
| Medicare | 1072.6 |
| Net interest | 1051.8 |
| Health (incl. Medicaid) | 1025.6 |
| National defense | 965.2 |
| Income security | 694.2 |
The federal government ended fiscal year 2026 having spent $1,992.5 billion more than it collected. That is the figure in Table 1 of the Monthly Treasury Statement for September 2026, the statement that closes the fiscal year, and it is $217.1 billion larger than the fiscal 2025 deficit. The Congressional Budget Office had put the year at “$2.0 trillion” in its Monthly Budget Review of October 8, 2026; the Treasury's cash ledger, published October 16, 2026, is the settled number.
The statement covers October 1, 2025 through September 30, 2026; its tables were read from the Fiscal Data API on October 27, 2026. The site's piece on the August statement explained how the statement is built. This one reports the full year, compares it with fiscal 2025, and works the ratios a household can use.
The full-year ledger
Table 1 of the September 2026 statement records fiscal-year receipts of $5,403,327 million, outlays of $7,395,800 million and a deficit of $1,992,473 million. Its prior-year column gives fiscal 2025 receipts of $5,234,616 million, outlays of $7,009,986 million and a deficit of $1,775,369 million. September 2026 alone ran a deficit of $26,900 million, against a surplus of $197,938 million in September 2025.
$5,403,327m − $5,234,616m = +$168,711m, or $5,403,327m ÷ $5,234,616m − 1 = +3.2%. $7,395,800m − $7,009,986m = +$385,814m, or +5.5%. $1,992,473m − $1,775,369m = +$217,104m, or +12.2%. Receipts covered $5,403,327m ÷ $7,395,800m = 73.1% of outlays; the remaining 26.9% was borrowed or drawn from cash. Spread over 365 days, the deficit was $5.46 billion a day.
Through August 2026 the deficit was $7.7 billion smaller than a year earlier; the full year finished $217.1 billion larger. The difference is September. CBO's Monthly Budget Review of October 8, 2026 notes that “because September 1, 2025, fell on a holiday, certain federal payments were shifted into August of that year”, which made September 2025 a surplus month. Both months sit inside fiscal 2025, so the full-year totals are unaffected.
| Line | FY2026 (Oct 2025–Sep 2026) | FY2025 (Oct 2024–Sep 2025) | Change | Change (%) |
|---|---|---|---|---|
| Total receipts | $5,403.3bn | $5,234.6bn | +$168.7bn | +3.2% |
| Individual income taxes | $2,845.5bn | $2,656.0bn | +$189.5bn | +7.1% |
| Corporation income taxes | $381.4bn | $452.1bn | −$70.7bn | −15.6% |
| Customs duties | $173.2bn | $194.9bn | −$21.6bn | −11.1% |
| Total outlays | $7,395.8bn | $7,010.0bn | +$385.8bn | +5.5% |
| Deficit | $1,992.5bn | $1,775.4bn | +$217.1bn | +12.2% |
Individual income taxes, the largest source, rose $189.5 billion. Corporation income taxes fell $70.7 billion and customs duties fell $21.6 billion; Table 9 shows customs receipts of only $5,910 million in September 2026. The statement reports the cash; it does not say why. One revision note: the statement's prior-year column differs from the September 2025 statement by $12 million on outlays and on the deficit.
Where the dollar went
Table 9 sorts outlays by function rather than by department. Five functions, Social Security, Medicare, net interest, health and national defense, account for $5,782.2 billion, or 78.2% of everything spent in fiscal 2026.
Table 9 of the September 2026 statement shows net outlays of $1,667,097 million for Social Security, $1,072,626 million for Medicare, $1,051,754 million for net interest, $1,025,587 million for the health function and $965,160 million for national defense, then $694,224 million for income security and $416,204 million for veterans. The health function is mostly Medicaid: Table 5 records $722,977 million of grants to states for Medicaid, against $668,139 million in fiscal 2025.
| Function | FY2026 | FY2025 | Change | Change (%) |
|---|---|---|---|---|
| Social Security | $1,667.1bn | $1,580.7bn | +$86.4bn | +5.5% |
| Medicare | $1,072.6bn | $996.7bn | +$75.9bn | +7.6% |
| Net interest | $1,051.8bn | $970.4bn | +$81.4bn | +8.4% |
| Health (mostly Medicaid) | $1,025.6bn | $978.9bn | +$46.7bn | +4.8% |
| Grants to states for Medicaid (Table 5) | $723.0bn | $668.1bn | +$54.8bn | +8.2% |
| National defense | $965.2bn | $916.6bn | +$48.5bn | +5.3% |
| Veterans benefits and services | $416.2bn | $377.2bn | +$39.0bn | +10.4% |
| Income security | $694.2bn | $701.6bn | −$7.4bn | −1.0% |
Social Security +$86.4bn, net interest +$81.4bn, Medicare +$75.9bn and Medicaid grants +$54.8bn sum to $298.5bn, or 77.4% of the $385.8bn increase in total outlays. Three of the four are benefit programmes whose rolls and payment rates are set in law; the fourth is the cost of past deficits.
Through August, net interest had ranked second, ahead of Medicare. Over the full year Medicare finished $20.9 billion ahead, because September is a light month for interest: Table 9 records $34,788 million of net interest in September 2026 against $93,326 million of Medicare.
Interest: $1,051.8 billion, and 19.5 cents of every receipt dollar
The statement carries two interest figures and the distinction matters. Table 5 lists $1,359,953 million under the Department of the Treasury as “Interest on Treasury Debt Securities (Gross)”, up from $1,215,614 million in fiscal 2025. Table 9's $1,051,754 million is net interest, after subtracting what the Treasury pays to its own trust funds and other interest the government earns. Net interest is what the government pays to outsiders, which is why this piece uses it.
$1,051,754m − $965,160m = $86,594m against the national defense function, which includes nuclear weapons work at the Department of Energy. Against Table 5's “Department of Defense — Military Programs” total of $916,836 million, the gap is $134,918m. Through August the function-basis gap had been $140.8 billion; September's heavy defense outlays of $89,015 million against light interest narrowed it.
$1,051,754m ÷ $5,403,327m = 19.5%. In fiscal 2025 the ratio was $970,359m ÷ $5,234,616m = 18.5%. Against individual income taxes alone, $1,051,754m ÷ $2,845,527m = 37.0%. Put another way, the first 71 days of a 365-day year of federal receipts went to interest before anything else was paid (0.195 × 365 = 71.0 days).
Two Fiscal Service numbers explain the growth in the bill: the stock of debt and the rate paid on it.
The Debt to the Penny dataset records debt held by the public of $32,425,012,546,391 on September 30, 2026, against $30,277,766,440,771 on September 30, 2025, a rise of $2,147,246 million. Total public debt outstanding was $40,171,825,101,340 on September 30, 2026, up $2,534,272 million; the difference is intragovernmental holdings, which rose from $7,359,787 million to $7,746,813 million. The rise exceeds the $1,992.5 billion deficit because borrowing also funds items outside it, chiefly the cash balance and federal credit programmes.
The Fiscal Service's “Average Interest Rates on U.S. Treasury Securities” gives a total marketable average of 3.518% at September 30, 2026, against 3.406% at September 30, 2025. Treasury bills averaged 3.870% (down from 4.187%), notes 3.383% (up from 3.112%) and bonds 3.466% (up from 3.327%). Across all interest-bearing debt the average was 3.531%, up from 3.363%.
The average of the September 30, 2025 and September 30, 2026 figures is ($30,277,766m + $32,425,013m) ÷ 2 = $31,351,389m. $1,051,754m ÷ $31,351,389m = 3.35%. One percentage point on the September 30, 2026 stock of debt held by the public is $32,425,013m × 1% = $324,250m a year. This is a sensitivity, not a projection: only securities that mature and are refinanced reprice.
The bill rate fell over the year while note and bond rates rose. Bills reprice to the Federal Reserve's policy rate within weeks; notes and bonds reprice only as old low-coupon issues mature and are replaced at the market yield, which the Treasury's daily par yield curve put at 5.09% for the ten-year on October 16, 2026, the day the statement was published. The average on notes, 3.383%, is far below that, which is the mechanical reason the interest bill keeps rising even when the deficit does not. The October auction piece, the ten-year at 5% piece and the 2020 long bond piece show the lender's side of the same coupons.
The deficit against the economy
The Bureau of Economic Analysis's third estimate for the second quarter of 2026, published September 30, 2026, puts current-dollar GDP at $32,563.030 billion at a seasonally adjusted annual rate (the level as carried on FRED series GDP; BEA's release text gives the growth rate of 8.5% rather than the level). $1,992,473m ÷ $32,563,030m = 6.1%. Outlays: $7,395,800m ÷ $32,563,030m = 22.7%. Receipts: $5,403,327m ÷ $32,563,030m = 16.6%. Net interest: $1,051,754m ÷ $32,563,030m = 3.2%.
What it means for your money
The statement is not a bill addressed to a household, but the arithmetic in it is closed. A deficit is borrowed from the public; the borrowing adds to the stock of debt; that stock multiplied by the average rate produces the following year's interest line; and that line is paid before any programme is debated. Three figures carry most of the weight.
- 19.5 cents. Of each dollar of fiscal 2026 receipts, 19.5 cents went to net interest, up from 18.5 cents in fiscal 2025. The ledger can only close through higher receipts, lower outlays elsewhere, or more borrowing. Which of those happens is a political choice, and this publication takes no view on it.
- 3.518% against 5.09%. Every maturing low-coupon note replaced at a yield above the average lifts the average, so the interest bill rises for reasons already in the stock of debt, whatever the next deficit is.
- $2,147.2 billion. That is the new supply of Treasury securities that savers, funds, banks and foreign holders absorbed in the year, and the yield at which they absorbed it is the yield that mortgage and corporate borrowing is priced from.
- If you hold Treasuries or a money-market fund, the $1,051.8 billion is partly your income: bills averaged 3.870% at September 30, 2026, and the comparison that matters is the real one. The T-bills piece works the after-tax version.
- If you pay income tax, that line rose 7.1% to $2,845.5 billion in fiscal 2026, and net interest consumed 37.0% of it. The fiscal and monetary levers that move the ratio are in the glossary.
- If you watch the calendar, the October 2026 statement is scheduled for November 12, 2026 and the third-quarter GDP estimate for October 29, 2026; the release calendar tracks both.
Sources
- Monthly Treasury Statement, September 2026, Table 1: Summary of Receipts, Outlays, and the Deficit/Surplus of the U.S. Government (record date September 30, 2026)Bureau of the Fiscal Service, Fiscal Data API · Oct 27, 2026 · Primary source
- Monthly Treasury Statement, September 2026, Table 9: Summary of Receipts by Source, and Outlays by Function (record date September 30, 2026)Bureau of the Fiscal Service, Fiscal Data API · Oct 27, 2026 · Primary source
- Monthly Treasury Statement, September 2026, Table 5: Outlays of the U.S. Government (record date September 30, 2026; lines over $150 billion fiscal year to date)Bureau of the Fiscal Service, Fiscal Data API · Oct 27, 2026 · Primary source
- Monthly Treasury Statement, September 2025, Table 1: Year-to-Date rows (record date September 30, 2025)Bureau of the Fiscal Service, Fiscal Data API · Oct 27, 2026 · Primary source
- Monthly Treasury Statement, September 2025, Table 9: selected function lines (record date September 30, 2025)Bureau of the Fiscal Service, Fiscal Data API · Oct 27, 2026 · Primary source
- Monthly Treasury Statement, published reports listing (dataset 015-BFS-2014Q1-13; MonthlyTreasuryStatement_202609.pdf, report date September 30, 2026)Bureau of the Fiscal Service, Fiscal Data · Oct 27, 2026 · Primary source
- Fiscal Data release calendar (Monthly Treasury Statement entries for November 12, 2026 and December 10, 2026)Bureau of the Fiscal Service, Fiscal Data · Oct 27, 2026 · Primary source
- Debt to the Penny, record dates September 30, 2025 and September 30, 2026Bureau of the Fiscal Service, Fiscal Data API · Oct 27, 2026 · Primary source
- Average Interest Rates on U.S. Treasury Securities, record dates September 30, 2025 and September 30, 2026Bureau of the Fiscal Service, Fiscal Data API · Oct 27, 2026 · Primary source
- Federal Surplus or Deficit [-] (MTSDS133FMS), source U.S. Department of the Treasury, Fiscal Service; updated October 16, 2026 2:05 PM CDT; next release November 12, 2026Federal Reserve Bank of St. Louis (FRED), mirroring the Monthly Treasury Statement · Oct 27, 2026 · Primary source
- Gross Domestic Product (GDP), billions of dollars, seasonally adjusted annual rate; Q2 2026: 32,563.030; updated September 30, 2026Federal Reserve Bank of St. Louis (FRED), mirroring the Bureau of Economic Analysis · Oct 27, 2026 · Primary source
- Gross Domestic Product (Third Estimate), Industries, Corporate Profits, State GDP, and State Personal Income, 2nd Quarter 2026 (news release, September 30, 2026)Bureau of Economic Analysis · Oct 27, 2026 · Primary source
- Gross Domestic Product (data page; next release October 29, 2026)Bureau of Economic Analysis · Oct 27, 2026 · Primary source
- Monthly Budget Review: September 2026 (October 8, 2026)Congressional Budget Office · Oct 27, 2026 · Primary source
- Daily Treasury Par Yield Curve Rates, October 2026U.S. Department of the Treasury · Oct 27, 2026 · Primary source
Related analysis
Interest on the debt outran defense by $141bn in FY2026 to August
The Treasury's own ledger shows $6,811bn spent against $4,845bn collected in eleven months. Net interest, at $1,017bn, is the second-largest line.
10-year note sold at 5.300% on October 7; dealers took 2.5% of it
Three Treasury auctions, week of October 6, 2026: 3-year at 4.932%, 10-year at 5.300%, 30-year at 5.618%, all above September. The results, line by line.
The Fed sets 4%. The bond market says 5%. The gap is the interesting part.
The 10-year Treasury yielded 5.00% on September 15, above the federal funds target the Fed set the following day. That is not how the textbook draws it.
The 2020 30-year Treasury is worth 46 cents on the dollar
Treasury sold a 1.375% 30-year bond on August 13, 2020. At the long yields of October 16, 2026 (20-year 5.47%, 30-year 5.43%) it prices near 46. Duration is the reason.