CBO reports $1.8 trillion federal deficit as debt costs hit record $1 trillion

The Congressional Budget Office (CBO) on Wednesday released data showing the federal government ran a $1.8 trillion budget deficit in fiscal year 2025 amid mounting interest costs on the nearly $38 trillion national debt.

The CBO estimated that the shortfall was slightly smaller than the prior year's deficit, with the preliminary FY2025 deficit totaling $1.809 trillion versus the $1.817 trillion deficit recorded in FY2024.

One of the most significant drivers of the deficit was the rise in net interest costs incurred from servicing the national debt, which surpassed $1 trillion for the first time in U.S. history in FY2025. Debt service costs increased $80 billion, or 8%, from last year due to the larger underlying debt burden.

Overall federal spending rose $301 billion, or 4%, in FY