The US government spent $1.05T on net interest in fiscal 2026, the first time debt service has topped $1T, Treasury data released Oct. 16 show.
Net interest outlays reached $1.05T, up 8.4% from $970.4B a year earlier, or roughly $2.9B a day. Interest now costs more than national defense, at $965.2B, and more than health spending, at $1.03T.
Only Social Security, at $1.67T, and Medicare, at $1.07T, are bigger budget lines. The climb has been fast. Net interest stood at $352.3B as recently as fiscal 2021.
US Federal Net Interest Costs by Fiscal Year, USD billions, as of Sept. 30, 2026
Bar chart. USD Billions. 2021: Interest Cost ($B) $352. 2025: Interest Cost ($B) $970. 2026: Interest Cost ($B) $1K.
Revenue isn't keeping up
Receipts rose 3.2% to $5.4T while outlays rose 5.5% to $7.4T, leaving a deficit of $1.99T against $1.78T the year before.
Interest grew faster than spending, revenue, and the economy, outpacing real GDP growth of about 2%.
Gross interest costs, which include what the government pays itself through trust funds, jumped $144B to a record $1.36T.
Two forces are behind the surge. Interest-bearing debt exceeds $32T, roughly $10T more than five years ago, and the average rate on marketable Treasuries was 3.52% at the end of September, more than double the 1.47% of five years earlier.
The Peter G. Peterson Foundation estimates the costs reach 3.2% of gross domestic product, above the prior record set in 1991.
The decade ahead looks worse
A new Joint Economic Committee brief warns that interest could consume more than half of federal receipts outside payroll taxes by 2036, citing Congressional Budget Office estimates and a national debt exceeding $40T.
"We are rapidly approaching a fiscal reality where more than half of federal receipts..."
David Schweikert, Joint Economic Committee
Rising borrowing costs compounded by growing debt could trigger a fiscal crisis, the brief argues, making spending restraint urgent.
Higher yields mean each maturing bond gets refinanced at a steeper rate, which widens the deficit, which means more borrowing.
Tariff refunds ordered after Trump's levies were overturned added to the gap, pushing the shortfall to its highest level since 2021.
Heavier Treasury issuance and persistent deficits now set the backdrop for long-term yields, and for the mortgage and loan rates tied to them.
