The U.S. federal budget deficit reached $1.992 trillion in fiscal 2026, up 12% from $1.775 trillion a year earlier, with spending of $7.396 trillion exceeding revenue of $5.403 trillion. The fiscal year ended September 30, and the annual shortfall was about 6% of gross domestic product. September alone produced a $27 billion deficit, reversing a $198 billion surplus a year earlier but beating forecasts for a $29 billion shortfall. Monthly outlays rose to $585 billion from $346 billion, led by Social Security, health, Medicare and national defense, while receipts increased to $558 billion from $544 billion. Individual income taxes, social insurance and retirement contributions, and corporate income taxes were the largest revenue sources. Gross national debt exceeded $40 trillion in August and stood at $40.329 trillion in the Treasury's latest Debt to the Penny reading. Annual interest costs reached $1.1 trillion, or a record 3.4% of GDP, making interest the second-largest federal budget item after Social Security and more costly than Medicare or defense. Tariff refunds of $144.6 billion reduced gross tariff receipts of $317.8 billion after the Supreme Court's February decision invalidated Trump's tariffs. Corporate income-tax collections fell 16% as tax cuts enacted through Trump's "One Big Beautiful Bill" allowed larger deductions. The Congressional Budget Office had projected a $1.85 trillion deficit before the tariff refund process, while the Committee for a Responsible Federal Budget projects deficits could reach $3.1 trillion by 2036 without a change in fiscal policy.