The federal budget deficit totaled $1.8 trillion in the first 10 months of fiscal year 2026, CBO estimates. That amount is $169 billion more than the deficit recorded during the same period last fiscal year.
The federal budget deficit totaled $1.8 trillion in the first 10 months of fiscal year 2026, the Congressional Budget Office estimates. That amount is $169 billion more than the deficit recorded during the same period last fiscal year. Revenues rose by $139 billion (or 3 percent), and outlays increased by $308 billion (or 5 percent).
That comparison is affected by a shift in the timing of certain payments. Payments that otherwise would have been due on August 1, which fell on a weekend, were shifted into July. If not for those shifts, the deficit thus far would have been $1.7 trillion, $71 billion more than the shortfall for the same period in fiscal year 2025.
Based on information available through the end of July, CBO estimates that the fiscal year 2026 deficit will be $2.1 trillion—$200 billion more than the $1.9 trillion deficit projection that CBO published on February 11, 2026. CBO expects 2026 outlays to be close to the February baseline amounts. Revenues, by contrast, are anticipated to be about $200 billion below the February projections, mostly because of smaller-than-expected collections of tariff duties—a result of a Supreme Court ruling handed down after CBO's baseline was released.
On February 20, the Supreme Court ruled that the Administration could not impose tariffs under the authority of the International Emergency Economic Powers Act (IEEPA). The Administration ended those tariffs and temporarily imposed new duties under section 122 of the Trade Act of 1974. When the section 122 tariffs expired on July 24, the Administration imposed a new set of tariffs under section 301 of the Trade Act. CBO expects that collections under the tariffs currently in place will replace a substantial share of the revenue that would have been collected from the tariffs in place before the Supreme Court's decision.
CBO now estimates that all tariffs and customs duties collected in 2026 will be about $250 billion (or 60 percent) below earlier projections. So far this year, larger-than-expected collections of individual income and payroll taxes have partially offset the smaller collections of customs duties. CBO now anticipates that income and payroll tax collections will be about $75 billion (or 2 percent) more than estimated in February. On net, the remaining revenue sources are expected to be about $25 billion (or 4 percent) below the February baseline projections.
