US Budget Deficit Hits $1.25 Trillion in First Eight Months of FY2026

The US Treasury's budget deficit for May came in at $293 billion, a decline of $23 billion or 7% year-over-year. However, when adjusted for timing shifts in certain government payments between months, the May deficit would have been $74 billion larger than a year ago.

Over the first eight months of fiscal 2026 (October through May), the cumulative deficit reached $1.25 trillion — the third-highest on record for that period. This trails only the $1.37 trillion recorded in the same span of FY2025 and the $2.06 trillion during the 2021 pandemic recovery.

Net interest payments on the federal debt rose $59 billion year-over-year, or 8%, over the first eight months of FY2026, hitting a record $723 billion. That now ranks as the second-largest government outlay, behind only Social Security.

The data underscores a worsening fiscal trajectory with no apparent long-term consolidation plan in place.