State of the Budget in Numbers
Both federal revenue and spending increased in fiscal year (FY) 2025. Most revenue was from individual income and payroll taxes. Most spending was on Social Security, national defense, grants to state and local governments, Medicare, and interest on the debt. Spending and revenue were both higher than their pre-pandemic levels, and the federal government ran another deficit as spending outpaced revenue.
The basics
$7.1T
$5.3T
$1.8T
Let's get into the federal budget
Revenue rose in FY 2025, but spending grew faster, creating a gap — aka that year’s deficit. The deficit was lower than it had been in the previous two fiscal years.
The federal government collected $5.3 trillion in FY 2025. Half of federal revenue came from individual income taxes. Another 34% came from the payroll taxes that fund Social Security and Medicare.
The federal government collected $5.3 trillion in FY 2025.
Federal government revenue, by source (FY 2025)
The federal government spent $7.1 trillion in FY 2025. The top spending priorities included Social Security, national defense, grants to states and local governments, interest on the debt, and Medicare. These five categories accounted for 86% of spending.
The federal government spent $7.1 trillion in FY 2025.
Federal government spending, by category (FY 2025)
Both federal revenue and spending were higher in FY 2025 compared to the previous fiscal year, 4% and 1%, respectively. While they remain below the highs seen during the pandemic, both are higher than their pre-pandemic levels.
Both federal revenue and spending increased from FY 2024 to FY 2025.
Federal government finances, adjusted for inflation (FY 2025 dollars)
In FY 2025, the federal government spent 34% more than it collected, resulting in a $1.79 trillion deficit. The deficit was lower than in FY 2023 and FY 2024, but larger than in FY 2022.
In FY 2025, the government ran a $1.79 trillion deficit.
Federal government finances, adjusted for inflation (FY 2025 dollars)
So what's the deal with the debt?
When the federal government runs a deficit, it borrows to cover the difference, and those annual shortfalls accumulate into the national debt. As the debt grows, interest costs rise as well.
The national debt was over $38.5 trillion at the end of 2025. About 80% of it was owned by the public (individuals, banks, the Federal Reserve, and foreign entities). The rest, known as intragovernmental debt, was borrowed from one part of the government by another.
The national debt was over $38.5 trillion at the end of 2025.
National debt outstanding, by type, adjusted for inflation (December 2025 dollars)
In FY 2025, interest on the debt accounted for $961.7 billion, or 14% of spending. Like an auto loan or credit card debt, there are costs associated with borrowing money. Debt interest’s share of total spending was its largest since 1998.
In FY 2025, interest on the debt accounted for 14% of spending.
Net interest payments on debt, as a share of federal spending
