U.S. records all-time high July budget deficit of $432 billion

The U.S. Treasury reported a record July budget deficit of $432 billion on August 12, 2026, driven by accelerated federal spending. Through the first 10 months of fiscal 2026, the deficit totaled $1.8 trillion—5% wider than the same period in 2025 after calendar adjustments. Interest payments on the public debt surged by $26 billion year-over-year in July alone, pushing the fiscal-year-to-date interest cost to $1.17 trillion, a 15% increase partly attributed to higher Treasury yields. Medicare spending spiked by $76 billion in July compared with the prior year, though much of the increase was linked to calendar differences, with adjusted outlays rising by $11 billion. Total spending for July climbed by an adjusted $37 billion, while revenue fell by an adjusted $12 billion, partly due to ongoing tariff refunds following the Supreme Court’s decision earlier in 2026 to invalidate portions of President Donald Trump’s tariff hikes. For the fiscal year to date, spending rose by an adjusted 4% and receipts by 3%. The data underscores the growing fiscal strain from rising debt servicing costs and shifting revenue dynamics amid trade policy changes.