Monthly Budget Review: June 2025

The federal budget deficit totaled $1.3 trillion in the first nine months of fiscal year 2025, the Congressional Budget Office estimates. That amount is $65 billion more than the deficit recorded during the same period last fiscal year. Revenues increased by $254 billion (or 7 percent), and outlays rose by $320 billion (or 6 percent).

The change in the deficit was influenced by the timing of outlays. Fiscal year 2024 outlays were reduced because payments that were due on October 1, 2023, a Sunday, were shifted into the prior fiscal year. (Those payments were made in September 2023.) If not for that shift, the deficit so far this fiscal year would have been $7 billion (or 1 percent) less than the shortfall at this point last year.

H.R. 1, the 2025 reconciliation legislation signed by the President on July 4, 2025, increased the debt limit by $5 trillion. CBO will discuss its estimates of the budget and economic effects of that law in the next edition of The Budget and Economic Outlook.

Total Receipts: Up by 7 Percent in Fiscal Year 2025

Receipts totaled $4 trillion during the first nine months of fiscal year 2025, CBO estimates—$254 billion (or 7 percent) more than during the same period a year ago. That increase was moderated by changes to payment deadlines for certain taxpayers over the past couple of years. Receipts were boosted by about $70 billion in the first quarter of fiscal year 2024 because the Internal Revenue Service (IRS) postponed certain 2023 tax deadlines until early in fiscal year 2024 for some taxpayers in federally declared disaster areas. The IRS also postponed, until early next fiscal year, certain 2025 deadlines for a smaller group of similarly affected taxpayers.

The changes in receipts from last year to this year were as follows:

• Individual income and payroll (social insurance) taxes together rose by $216 billion (or 7 percent).
  • Amounts withheld from workers’ paychecks rose by $159 billion (or 6 percent), a reflection of rising wages and salaries.
  • Nonwithheld payments of income and payroll taxes increased by $67 billion (or 7 percent) relative to payments in the same period in fiscal year 2024. The estimated increase so far this fiscal year has been smaller than it otherwise would have been; CBO estimates that the postponement of deadlines for some taxpayers in 2023 shifted $35 billion in nonwithheld income tax payments into the beginning of fiscal year 2024. Starting in January, such payments have been 14 percent greater than payments from the same period last year, mostly reflecting an increase in 2024 tax liabilities.
  • Individual income tax refunds increased by $14 billion (or 5 percent). (A portion of refunds stemming from refundable tax credits are classified as outlays; they are discussed separately below.)
• Receipts from corporate income taxes decreased by $26 billion (or 7 percent) relative to the same period in fiscal year 2024. During fiscal year 2023, for many corporations in areas affected by natural disasters, the IRS postponed the deadline to make payments that ordinarily would have been due by the end of that fiscal year. Most of those payments were made in the first month of fiscal year 2024.

• Receipts from other sources rose by $64 billion (or 38 percent) relative to the same period last year.
  • Customs duties increased by $50 billion (or 89 percent). Since February, the Administration has increased tariffs on most imported goods.
  • Excise taxes increased by $11 billion (or 17 percent).
  • Miscellaneous fees and fines increased by $3 billion (or 15 percent).
  • Remittances from the Federal Reserve to the Treasury increased by $2 billion (or 92 percent).
  • Estate and gift taxes decreased by $2 billion (or 7 percent).

Total Outlays: Up by 6 Percent in Fiscal Year 2025

Outlays in the first nine months of fiscal year 2025 were $5.3 trillion, CBO estimates, $320 billion (or 6 percent) more than during the same period last year. If not for the timing shift discussed above, outlays so far in fiscal year 2025 would have been $247 billion (or 5 percent) greater than outlays during the same period in fiscal year 2024. The discussion below reflects adjustments to exclude the effects of that timing shift.

Outlays for the largest mandatory spending programs increased by $173 billion (or 8 percent):

• Spending for Social Security benefits rose by $92 billion (or 9 percent). Spending was boosted by increases in the average benefit payment (stemming mostly from cost-of-living adjustments) and in the number of beneficiaries. In addition, the Social Security Fairness Act of 2023, which was enacted in January 2025, eliminated certain reductions to benefits that were payable in January 2024 and later. Starting in March 2025 the government began to make additional largely retroactive payments, totaling roughly $20 billion, to affected beneficiaries.

• Medicare outlays increased, on net, by $49 billion (or 7 percent) because of increased enrollment and higher payment rates for services.
• Medicaid outlays increased by $32 billion (or 7 percent), largely because of rising costs per enrollee.

Other areas with large increases were the following:

• Outlays for net interest on the public debt increased by $55 billion (or 8 percent), mostly because the debt was larger than it was in the first nine months of fiscal year 2024.
• Spending by the Department of Defense was $35 billion (or 6 percent) greater than in the same period in fiscal year 2024; the largest increases were for operation and maintenance and procurement.
• Spending by the Department of Veterans Affairs increased by $31 billion (or 13 percent) because more people used veterans’ benefits and because of increased spending per person.
• Outlays for certain refundable tax credits increased by $24 billion (or 15 percent), primarily because of increased enrollment in health insurance purchased through the marketplaces established under the Affordable Care Act.¹
• Outlays recorded by the Environmental Protection Agency increased by $23 billion primarily because in November and December 2024 that agency disbursed $20 billion under a grant program established by the 2022 reconciliation act ($27 billion was provided in that law for the program).
• Outlays of the Department of Homeland Security increased by $22 billion (or 34 percent), mostly attributable to spending by the Federal Emergency Management Agency in response to disasters.

The largest decreases were the following:

• Spending by the Department of Education decreased by $102 billion (or 50 percent), largely because spending for the Education Stabilization Fund and student loans was lower during the first nine months of 2025 than in the same period last year. In June 2024, the agency recorded an increase of $74 billion in the estimated costs of outstanding student loans. No such costs were recorded in 2025.
• Outlays of the Federal Deposit Insurance Corporation (FDIC) decreased, on net, by $66 billion. During the first nine months of 2024, the FDIC’s outlays to resolve bank failures from 2023 were substantial. In 2025, those amounts have been smaller and have been offset by the proceeds generated from liquidating the assets of failed banks. Such proceeds are recorded in the budget as offsetting collections (that is, as reductions in outlays).
• Outlays of the Small Business Administration decreased by $31 billion, largely because in May 2024 the agency recorded an increase of $33 billion in the estimated costs of its outstanding disaster loans.

Spending for other programs and activities increased or decreased by smaller amounts.

Estimated Surplus in June 2025: $26 Billion

The government realized a surplus of $26 billion in June 2025, CBO estimates. A deficit of $71 billion was recorded in June 2024. Revenues were $61 billion more this June than in June 2024, and outlays decreased by $37 billion. However, outlays for June 1, 2024, and June 1, 2025, were shifted into May of those years, although the shift in 2025 was larger by $4 billion. If not for those shifts, the government would have recorded a deficit of $71 billion in June 2025—less than half the size of the deficit that would have been recorded in June of last year ($164 billion).

CBO estimates that receipts in June 2025 totaled $527 billion—$61 billion (or 13 percent) more than the amounts recorded in the same month last year. That increase was driven partly by collections of income and payroll taxes, which rose by $55 billion (or 15 percent), reflecting higher wages and salaries as well as the effects of an additional business day this June compared with June 2024. In addition, customs duties rose by $18 billion (or 279 percent). Corporate income taxes declined by $13 billion (or 16 percent) relative to last June.

Total spending in June 2025 was $501 billion, CBO estimates—$37 billion (or 7 percent) less than in June 2024. If not for the timing shifts discussed above, outlays in June 2025 would have been $32 billion (or 5 percent) less than in the same month last year. The discussion below reflects adjustments to exclude the effects of those timing shifts.

The largest changes were as follows:

• Spending by the Department of Education decreased by $79 billion (or 91 percent), as discussed above.
• Outlays for Social Security increased by $12 billion (or 10 percent).
• Outlays by the Department of Veterans Affairs increased by $6 billion (or 22 percent).
• Outlays for Medicare increased by $5 billion (or 5 percent).

Spending for other programs and activities increased or decreased by smaller amounts.

Actual Deficit in May 2025: $316 Billion

The Treasury Department reported a deficit of $316 billion for May—$2 billion more than CBO estimated last month, on the basis of the Daily Treasury Statements, in the Monthly Budget Review: May 2025.

1. Those credits are the premium tax credits (which subsidize the purchase of health insurance under the Affordable Care Act), earned income tax credit, child tax credit, recovery rebates, and American Opportunity Tax Credit. ↑