Federal Deficit Rising More Slowly Than in 2025, Yet Still on Track to Add $1.9T to Debt This Year

The U.S. deficit for the current fiscal year is increasing at a lower rate compared to the prior year, but the Congressional Budget Office warns annual deficits could exceed $3 trillion in 10 years.

Published on Feb. 13, 2026

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The United States ended January with a $94.6 billion deficit, less than the $839.6 billion deficit during the comparable period of fiscal 2025. However, a nonpartisan government analysis warns that annual budget deficits could exceed $3 trillion in 10 years' time due to current policies.

Why it matters

The federal deficit and growing national debt are major economic and political issues, with implications for government spending, taxation, and the overall health of the U.S. economy. The trajectory of the deficit and debt levels will shape policy debates and decisions in the coming years.

The details

The largest sources of revenue in January were individual income taxes, social insurance and retirement payroll taxes, and corporate income taxes. The federal government's largest payments addressed Medicare, Social Security and health care programs. Net interest on the national debt has been a top outlay for the fiscal year so far, reaching $346.2 billion over the first four months.

  • The United States ended January with a $94.6 billion deficit.
  • The United States has incurred a deficit of around $697 billion for fiscal 2026, less than the $839.6 billion deficit during the comparable period of fiscal 2025.
  • The United States received $27.7 billion in customs duties in January, bringing the total amount of receipts from these taxes on foreign goods to $117.7 billion for the current fiscal year.

The players

Jeremy Horpedahl

An associate professor of economics at the University of Central Arkansas.

Michael Pakko

The Arkansas Economic Development Institute's chief economist and state economic forecaster.

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What they’re saying

“Maybe a caution to that is this has been roughly equally driven by more income tax revenue and more tariff revenue. I think there are threats to both of those.”

— Jeremy Horpedahl, Associate Professor of Economics

“There is no preordained tipping point. But at some point, the rest of the world -- including U.S. residents who hold the debt of the United States government -- is going to conclude that maybe it's not as much of a safe investment as they thought it was.”

— Michael Pakko, Chief Economist and State Economic Forecaster

What’s next

The U.S. Supreme Court is expected to hand down its opinion on the president's authority to impose tariffs without congressional approval.

The takeaway

The federal deficit and growing national debt remain major economic challenges, with the Congressional Budget Office projecting annual deficits could exceed $3 trillion in 10 years if current policies remain in place. Policymakers will need to grapple with these fiscal issues in the years ahead.