U.S. deficit tops $1 trillion through February but runs below year-ago pace

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U.S. deficit tops trillion through February but runs below year-ago pace — US deficit tops 1 trillion through February but runs below.jpeg

The U.S. budget deficit has exceeded $1 trillion for the fiscal year through February, according to data from the Treasury Department. Despite this large number, the deficit is actually lower than it was during the same period last year.

In February, outlays exceeded receipts by $308 billion, a number that is similar to the deficit recorded in the same month a year ago. For the fiscal year so far, the deficit has totaled $1.004 trillion, which is about 12% lower than it was at this point in 2025. This decrease is due to government revenues rising faster than spending.

One factor that has helped narrow the deficit is a significant increase in tariff collections. Customs duties totaled $151 billion in the first five months of the fiscal year, up about $113 billion, or 294%, from the previous year. This surge in tariff revenue may be due to a variety of factors, including duties collected earlier still being processed, a possible increase in imports ahead of a recent Supreme Court ruling on tariffs, and the imposition of additional tariffs by President Donald Trump.

On the other hand, corporate tax revenue has declined sharply, falling $27 billion, or 17%, from the previous year. Surprisingly, tariff revenues have actually exceeded corporate tax receipts for the fiscal year so far, a rare occurrence.

The federal fiscal picture has also been impacted by elevated interest rates. Net interest payments on the national debt, which totals nearly $39 trillion, amounted to $79 billion in February. This makes interest payments the largest category of spending after Social Security, income security, and health care.

Overall, while the U.S. budget deficit has surpassed $1 trillion, it is actually lower than it was at this point last year. The increase in tariff collections and decline in corporate tax revenue have played a significant role in narrowing the gap. However, interest payments on the national debt continue to be a significant burden on the federal budget.