The Accuracy of CBO’s Budget Projections for Fiscal Year 2025

After each fiscal year ends, the Congressional Budget Office reviews its projections of federal revenues and outlays and the government’s budget deficit and compares them with actual budgetary outcomes for that year. Comparing CBO’s projections with actual outcomes is complicated by changes in law and administrative and judicial actions that occur after the projections are made. By statute, CBO’s projections do not include forecasts of future changes in law. The agency also does not attempt to predict judicial rulings and nonroutine changes in administrative policy. Following a long-standing agreement between CBO and the House and Senate Budget Committees, if the Administration has not taken a clear, official, and public action that details a proposed change, CBO does not include the budgetary effects of that change in its baseline projections.

The many changes to tariffs in 2025 illustrate the consequences of holding administrative policies unchanged in CBO’s baseline. The projections of revenues from customs duties reflect the estimated effects of tariffs in place when the projections were finalized and incorporate the assumption that those tariffs continue without further changes.1 Specifically, the projection of customs duties in CBO’s January 2025 projections is based on the tariffs in place on January 17, 2025. Actual tariff revenues in 2025 were much higher, reflecting the higher tariff rates put in place by administrative action after January 20, 2025. Customs duties accounted for 4 percent of revenue in 2025, whereas they accounted for only 2 percent in 2024. The difference between actual revenues from customs duties ($195 billion) and CBO’s January projections ($76 billion) almost entirely stems from those administrative actions.2 Indeed, customs duties alone account for about half of the difference between actual revenues in 2025 and CBO’s January 17, 2025 projection of revenues.

One simplified way to isolate the effects of tariff changes and focus on factors that the agency attempted to estimate is to exclude customs duties from total revenues.3 Excluding customs duties, the actual federal budget deficit was $95 billion smaller than CBO projected it would be in June 2024 (see Table 1). That amount is equal to 0.3 percent of gross domestic product (GDP), which is about three-tenths as large as the average error over the previous 40 years (in absolute terms). The actual deficit excluding customs duties was $13 billion larger than CBO projected it would be in January 2025. The largest contributors to the difference between the actual deficit excluding customs duties and CBO’s January projections were an underestimate of revenues from individual income taxes and underestimates of outlays attributable to higher- than-expected outlays for Medicaid and Medicare.

Historically, CBO’s measures of accuracy have categorized the effects from nonroutine changes in administrative policy (such as those regarding tariffs) as projection errors because they can be difficult to separate from other effects. The body of this report maintains that convention and includes differences in revenues resulting from changes in customs duties in the measurement of errors. This report also maintains the practice in earlier reports of removing the estimated effects of legislation enacted after the baseline projections were developed.4

The differences between CBO’s June 2024 baseline projections, its updated January 2025 projections, and those actual outcomes were as follows (see Table 2):

• In 2025, revenues totaled $5.2 trillion. CBO’s June 2024 projection of $4.9 trillion for federal revenues in 2025, adjusted for subsequent legislation, was too low—by $334 billion, or 6 percent. That difference was nearly equal to the average absolute error of about 6 percent in CBO’s revenue projections for 1983 to 2024. The agency’s projection in January 2025 was closer to the actual amount, but still too low by $203 billion (or 4 percent). The largest factor contributing to the underestimate in the January 2025 projection—accounting for about half of the miss—was the increases in tariffs put in place by the Administration beginning in February 2025.
• CBO underestimated total federal outlays for 2025, which were $7.0 trillion. CBO’s June 2024 projection of $6.9 trillion, adjusted for subsequent legislation, was too low by $121 billion, or 2 percent. That difference was smaller than the average absolute error of about 3 percent in CBO’s outlay projections for 1983 to 2024. The agency’s outlay estimate in January 2025 was closer to the actual amount, but still too low by $102 billion (or 1 percent). Most of that underestimate was attributable to higher-than-expected outlays for Medicaid, Medicare, and student loans. CBO’s projections of discretionary outlays were close to actual amounts, with an error of less than 1 percent. Errors were slightly larger for mandatory outlays and net outlays for interest.
• In addition to changes to tariffs, the amounts that CBO categorized as errors in revenues and outlays in 2025 include a variety of other administrative and judicial actions that the agency did not attempt to predict.5 Examples of such administrative actions affecting revenues include immigration policy and changes that affect when taxes are paid.

  Table 2.

  CBO’s June 2024 Baseline Projections and January 2025 Baseline Projections for 2025, Compared With Actual Outcomes

  Billions of dollars

  

  Notes

  Data sources: Congressional Budget Office; Department of the Treasury. See www.cbo.gov/publication/61916#data.

  The budget projections presented here are based on projections published in Congressional Budget Office, The Budget and Economic Outlook: 2025 to 2035 (January 2025), www.cbo.gov/publication/60870, and An Update to the Budget and Economic Outlook: 2024 to 2034 (June 2024), www.cbo.gov/publication/60039. For this analysis, CBO updated those projections to account for the budgetary effects of subsequent legislation as estimated around the time of its enactment. For discretionary spending, the amounts reflect estimated outlays stemming from full-year appropriations provided for 2025. The projections are generally consistent with the technical assessments (of, for example, how quickly appropriations will be spent) and economic projections underlying the June 2024 baseline projections. The projected discretionary spending amounts include outlays estimated for 2025 from supplemental appropriations made in 2024 and 2025. Many of those estimates incorporated updated technical assessments.

  * = between zero and $500 million; ** = between -0.5 percent and 0.5 percent.

  a. For outlay and revenue projections, the difference is the projected amount minus the actual amount. For deficit projections, the difference is the actual amount minus the projected amount. For all three types of projections, a negative amount indicates an underestimate.

  b. For outlay and revenue projections, the projection error is the difference divided by the actual amount. For deficit projections, the projection error is the difference divided by gross domestic product (GDP). CBO calculates errors for deficit projections that way because if they were expressed as a percentage of the dollar value of the actual amount, relatively small differences between projected and actual amounts in years with small deficits or surpluses would result in large projection errors.

  c. The average absolute error is an average of projection errors without regard to whether they are positive or negative. The budget year is the second year of the period covered by CBO’s baseline projections; it usually begins several months after a spring baseline is released. The average absolute errors for revenue projections are based on budget-year projections for 1983 to 2024, those for projections of defense and nondefense discretionary spending are based on budget-year projections for 1999 to 2024, those for projections of all other spending categories are based on budget-year projections for 1993 to 2024, and those for deficit projections are based on budget-year projections for 1985 to 2024. The data necessary to calculate the errors in projections for earlier years are not available.

  d. Includes the effects of Medicare premiums and other offsetting receipts related to Medicare.

  e. Excludes outlays related to the activities of Fannie Mae and Freddie Mac, which are classified as mandatory.

  f. Adjustment for enacted legislation includes the estimated effects on debt service of enacted legislation.

How CBO Conducted This Analysis

CBO regularly publishes baseline projections of federal revenues, outlays, and deficits for the current fiscal year and the ensuing decade. Those projections reflect the assumption that current laws and the administration of taxes and spending programs will generally remain unchanged. The analysis in this report focuses on the June 2024 baseline budget projections because CBO estimated proposed legislation affecting the budget year and beyond in relation to that spring baseline. Moreover, the agency typically uses the technical assessments (of, for example, how quickly appropriations would be spent) and economic projections underlying its spring baseline from the previous fiscal year to prepare cost estimates for legislation affecting the budget year and beyond.6 (The budget year is the second year of the period covered by CBO’s baseline projections; it usually begins several months after updates to the baseline projections are released in the spring.)

Additionally, the staff of the Joint Committee on Taxation (JCT) typically use the revenue projections completed for the winter baseline in January or February of the previous fiscal year (in this case, February 2024) to estimate the effects of legislation affecting the budget year and beyond. Those revenue projections rely on the same economic forecast that underlies the spring baseline and are typically very similar to the revenue projections in that spring baseline.

Any comparison of CBO’s projections with actual outcomes is complicated by the effects of legislation enacted after the projections were completed. When it prepares its baseline budget projections, CBO does not attempt to predict future legislative changes or their effects on revenues and outlays; yet those changes invariably cause budgetary outcomes to differ from the agency’s estimates.

To account for those changes, CBO adjusted its projections to incorporate the estimates of the budgetary effects of subsequent legislation that were reported by CBO and JCT, as well as the estimated increase in outlays for interest on the federal debt that resulted from enacted legislation. (Those debt-service effects are not included in CBO’s cost estimates.) Thus, any errors in the initial cost estimates are reflected in the projection errors discussed in this report.

The Congress generally uses adjusted baseline projections when enforcing budgetary rules as legislation is considered throughout the year. But the effects of legislation may differ from the adjustments CBO made to add them to the projections. For that reason, this report examines the accuracy not only of CBO’s initial baseline projections but also of the information about the budgetary effects of legislation, including appropriations for 2025, that CBO provided to the Congress from June 2024 through September 2025 (the end of fiscal year 2025).

How CBO’s June 2024 Projections for 2025 Compare With Actual Outcomes

In its adjusted June 2024 baseline projections, which include the estimated budgetary effects of subsequent legislation, CBO underestimated revenues by 6 percent and outlays by 2 percent for 2025. Because the underestimate of revenues was larger than the underestimate of outlays, the agency overestimated the federal deficit for that year.

Revenues

CBO’s projection of revenues for 2025 was $4.9 trillion, $0.3 trillion less than the actual amount (see Table 3). The size of that error is consistent with the average absolute error for budget-year revenue projections for 1983 to 2024 (about 6 percent). CBO underestimated receipts from the largest sources—individual income taxes, payroll taxes, corporate income taxes, and customs duties. Projections of revenues are sensitive to underlying economic conditions, administrative actions and how policies are implemented, and how taxpayers respond to them.

Revenues typically increase or decrease as economic activity increases or decreases, and rising prices tend to boost revenues. Differences between actual economic conditions and CBO’s economic forecast may have contributed to errors in the agency’s projections of revenues from some sources, but such differences may have reduced errors in its projections of revenues from other sources.

Federal agencies take administrative actions to implement laws and programs under their authority that affect tax receipts. For example, administrative actions throughout 2025 increased tariff rates, on net. That significantly increased revenue from customs duties. Other administrative actions taken in 2025 have resulted in decreases in net immigration that likely reduced income, payroll, and excise taxes. Additionally, the IRS postponed certain deadlines in 2025 for some taxpayers in federally declared disaster areas in California, which probably further reduced receipts as payments were shifted into 2026.

Revenues are also affected by how taxpayers respond to policy changes, which may differ from CBO’s and JCT’s expectations. The actual implementation and use of new tax policies—including when new policies would take full effect and how people would respond to them—inevitably differ from CBO’s and JCT’s initial assessments. Such differences contributed to the overall error in CBO’s revenue projections. The specific factors contributing to the misestimates of revenues will be better understood as more detailed tax data become available over the next two years.

Individual Income Taxes. CBO’s June 2024 projection of receipts from individual income taxes in 2025 was $2.5 trillion, $163 billion (or 6 percent) less than the $2.7 trillion that was actually collected. In CBO’s assessment, stronger- than-anticipated income growth contributed to that underestimate, but it was partially offset by the IRS’s postponement of certain tax payment deadlines for 2025.

Higher-than-anticipated growth in asset values probably contributed to the underestimate of receipts from individual income taxes. For example, the market capitalization of firms in the Standard & Poor’s (S&P) 500 index was 30 percent higher at the end of fiscal year 2025 than it was when the economic forecast was prepared for the June 2024 budget projections. That suggests that asset values and associated income grew significantly more than CBO anticipated. That strong growth probably resulted in higher-than-projected realizations of capital gains and retirement income.

Income, as reported by the Bureau of Economic Analysis (BEA) at the time this report was being prepared, also differed from CBO’s June 2024 projections for several key sources of income. Gross domestic product and gross domestic income in 2025 were both 2 percent higher than CBO anticipated. Among taxable sources, dividend income in 2025 was $243 billion (or 12 percent) higher than CBO projected it would be. However, CBO overestimated other sources of income. For example, interest income was $437 billion (or 18 percent) lower during 2025 than CBO projected it would be.

One factor that potentially reduced actual receipts for the year was the IRS’s postponement of payment deadlines for certain taxpayers affected by natural disasters. Payments that would typically have been due throughout fiscal year 2025 were postponed until fiscal year 2026. Most significantly, the payment deadline for certain taxpayers in California was extended to October 2025. Those postponed payments probably partially offset CBO’s underestimate of individual income tax receipts.

Decreases in net immigration resulting from administrative actions also likely reduced revenues for fiscal year 2025 compared with CBO’s June 2024 projection.7

Payroll Taxes. CBO’s projection in June 2024 of receipts from payroll taxes for 2025 was $1.7 trillion, an underestimate of $11 billion (or 1 percent), similar to the actual amount. Most of that underestimate is attributable to slower-than-expected growth in wages—the largest component of the tax base for payroll taxes. In December 2025, BEA published revised estimates of nominal wages and salaries, which were about 1 percent lower in 2025 than CBO anticipated in June 2024.

Corporate Income Taxes. CBO’s projection of receipts from corporate income taxes for 2025 was $411 billion, $42 billion (or 9 percent) less than the $452 billion actually collected. That underestimate is largely attributable to higher-than-anticipated domestic corporate profits in calendar year 2024, which BEA reports were $461 billion (or 13 percent) higher than CBO estimated for that year.

Customs Duties. CBO’s June 2024 projection of revenues from customs duties, which include tariffs, for 2025 was $76 billion, $119 billion (or 61 percent) lower than the actual amount collected. In CBO’s estimation, nearly all of that difference reflects the effects of tariff rate increases put in place by the Administration beginning in February 2025. Those tariff changes were not accounted for in CBO’s projections.

Other Receipts. CBO’s projection in June 2024 of revenues from all other sources for 2025 was $184 billion, nearly equal to the actual amount of $183 billion. That result reflects offsetting errors among sources: Excise tax revenues were higher than projected, but revenues from estate and gift taxes and from miscellaneous fees and fines were lower than projected.

CBO’s projection of excise taxes was $96 billion, $10 billion (or 9 percent) less than the actual amount collected in 2025.

CBO overestimated collections of estate and gift taxes by $5 billion (or 17 percent) and overestimated collections of fees and fines by $6 billion (or 14 percent).

Outlays

Adjusted to include the estimated effects of subsequently enacted legislation, CBO’s June 2024 baseline projection of outlays for 2025 was $6.9 trillion, $0.1 trillion less than the actual amount. That 2 percent error was smaller than the 3 percent average absolute error for outlay projections for 1983 to 2024. In its baseline projections, CBO divides federal outlays into three broad categories: mandatory, discretionary, and net outlays for interest.8 CBO underestimated mandatory outlays and overestimated discretionary and net interest outlays.9

Mandatory Outlays. CBO’s June 2024 projection of mandatory outlays for 2025 was $4.0 trillion, $0.2 trillion (or 4 percent) less than the actual amount of $4.2 trillion (see Table 4). Underestimates for major health care programs account for most of that difference.

Major Health Care Programs. CBO underestimated outlays for the major health care programs by $126 billion (or 7 percent). Those outlays consist of spending on Medicaid and the Children’s Health Insurance Program (CHIP), Medicare, and premium tax credits for health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.

• Medicaid and CHIP. CBO underestimated outlays for Medicaid and CHIP in 2025 by $70 billion (or 10 percent). Medicaid outlays were greater than expected because of higher-than-expected enrollment and per enrollee costs. Per enrollee costs were higher than expected because of rising provider payment rates and increases in service use by enrollees. CBO also underestimated outlays for CHIP because spending per beneficiary was higher than expected.
• Medicare. CBO’s projection of Medicare outlays in 2025 was $51 billion (or 5 percent) less than actual outlays. Outlays for fee-for-service benefits were higher than expected because of higher-than-expected program enrollment and per capita spending. Part D benefits were higher than expected because of advanced payments made by the government to plans under the Manufacturer Discount Program that were not recovered within the fiscal year. Part D premium receipts were also lower than expected.10 (Premiums are classified as offsets to spending, so lower premium collections result in higher net outlays.)
• Premium Tax Credits and Related Spending. CBO’s projection of outlays for premium tax credits for health insurance purchased through the marketplaces established by the Affordable Care Act and related spending was $5 billion (or 4 percent) less than the actual amount in 2025. That underestimate mostly resulted from higher-than-expected enrollment in subsidized health insurance coverage.

Higher Education Loans and Programs. CBO’s projection of outlays for higher education loans and programs in 2025 was $53 billion less than the actual amount. Most of that difference stems from two factors. First, the Administration recorded a reduction in outlays resulting from modifications to the federal student loan program that were authorized in the 2025 reconciliation act (Public Law 119-21). That reduction was $23 billion less than CBO projected when it estimated the cost of the legislation. 11 Second, the Administration decreased the estimated costs of outstanding loans issued before 2025 by $18 billion. CBO does not typically estimate the revisions to the cost of credit programs that the Administration records, so the agency did not include any outlays related to those revisions in its June 2024 baseline.

Veterans’ Programs. The agency underestimated outlays for veterans’ programs by $27 billion (or 11 percent) in 2025. That underestimate stems from more veterans receiving benefits than the agency projected and larger- than-projected average benefit amounts.

Revisions to the Estimated Costs of Other Credit Programs. Federal agencies regularly update their estimates of the subsidy costs of certain federal loans and loan guarantees made in previous years. In 2025, reestimates of the subsidy costs of federal credit programs (not including revisions to the estimated costs of student loans) reduced recorded outlays, on net, by $24 billion. The largest of those changes was a $17 billion reduction in the cost of certain loan guarantees provided by the Federal Housing Administration.

Deposit Insurance. CBO overestimated outlays for deposit insurance in 2025 by $13 billion. That difference stems from payments made by the Federal Deposit Insurance Corporation (FDIC) to facilitate the resolution of bank failures that occurred in spring 2023. Seven bank failures have occurred since the beginning of March 2023 (four in fiscal year 2023, two in fiscal year 2024, and one in fiscal year 2025). In 2025, the FDIC’s payments to resolve those bank failures were smaller than the agency expected in June 2024, and proceeds from liquidating the assets of failed banks were higher-than- expected. Those transactions are recorded in the federal budget as receipts, which lower outlays.

Other Mandatory Programs. On net, CBO’s June 2024 baseline projections for all other mandatory programs were very close to actual amounts. Among those other programs, the largest projection difference was an overestimate of outlays by $10 billion for refundable tax credits related to the COVID-19 pandemic. Those tax credits were intended to enable employers to provide sick and family leave, retain employees, and maintain health insurance for certain workers during the pandemic.

Discretionary Outlays. To evaluate its projections of discretionary outlays, CBO adjusted the funding amounts in its June 2024 baseline projections to reflect the full-year appropriations provided for 2025 in appropriation bills enacted in the first half of the fiscal year. The adjusted projections generally reflect the same technical assessments and economic projections that underlay the agency’s June 2024 baseline projections. For supplemental appropriations, however, CBO applied technical assessments that reflected the agency’s estimates when the appropriations were enacted. With those adjustments, CBO’s projection of discretionary outlays for 2025 was $1.9 trillion. That amount was $3 billion (or less than 1 percent) more than the actual amount recorded for the year. CBO overestimated defense outlays by $5 billion (or 1 percent) and underestimated nondefense outlays by $2 billion (or less than 1 percent).

CBO’s projections of discretionary outlays for most agencies were close to the actual amounts in 2025 (see Table 5). The largest differences between projected and actual amounts were as follows:

• CBO underestimated spending by the Department of Homeland Security by $12 billion (or 12 percent). Higher-than-anticipated outlays for activities of the Federal Emergency Management Agency accounted for most of that difference.
• CBO’s projections of spending for international assistance programs and the Department of State each exceeded the actual amount by $6 billion (21 percent and 22 percent, respectively). The overestimate of outlays for international assistance programs was driven by reductions in outlays on international security assistance and for the Agency for International Development. For the State Department, outlays for global health programs and migration and refugee assistance were smaller than expected.

Net Interest. Net outlays for interest consist of the government’s interest payments on federal debt, offset by interest income that the government receives. CBO’s projection of those outlays for 2025 was $1,016 billion, $46 billion (or 5 percent) more than the actual amount of $970 billion (see Table 2).

Most of the difference between projected and actual net interest outlays was attributable to economic factors. In particular, short-term interest rates in 2025 were lower than CBO forecast in May 2024 when it finalized the economic forecast underlying its June 2024 baseline budget projections. CBO projected that the interest rate on 3-month Treasury bills would average 4.8 percent in 2025, but the rate actually averaged 4.2 percent.

How the Accuracy of CBO’s June 2024 Projections for 2025 Compares With the Accuracy of Its Past Budget Projections

Measured as a percentage of GDP, the error in CBO’s deficit projection for 2025 was smaller than the historical average absolute error for the agency’s budget-year deficit projections.12 The error in CBO’s revenue projection for 2025 was about the same as the average absolute error in such projections for previous years.13 And the error in projected outlays for 2025 was smaller than the historical average for budget-year outlay projections.

Deficits

The average absolute error in CBO’s budget-year deficit projections made for 1985 to 2024 equaled 1.1 percent of GDP. The agency overestimated the deficit roughly two-thirds of the time (see Figure 1). In its adjusted June 2024 baseline projections, CBO overestimated the deficit for 2025 by $0.2 trillion, or 0.7 percent of GDP.

Revenues

In CBO’s budget-year projections for 1983 to 2024, the average absolute error in revenue projections was 6 percent, and CBO overestimated total revenues about as often as it underestimated them. In the agency’s adjusted June 2024 baseline projections, revenues in 2025 were less than the actual amount recorded that year by 6 percent (see Figure 2). CBO’s projection errors for most sources of revenue were smaller than historical averages, even though the projection error for customs duties (including tariffs) was larger than its historical average. For the 1983–2024 period, revenues from customs duties account for 1.4 percent of total revenues on average.

CBO underestimated receipts from customs duties in 2025 by 61 percent. Historically, CBO’s projections of customs duties had an average absolute error of 8 percent.

CBO underestimated receipts from individual income taxes in 2025 by 6 percent—a smaller error than most of the errors in projections of such receipts for 1983 to 2024. CBO’s projection of receipts from payroll taxes was 1 percent less than the actual amount collected, a smaller error than most of the errors in the projections for the 1983–2024 period.

CBO’s projections of corporate income taxes have been particularly uncertain. The average absolute error in the agency’s projections of receipts from that source for 1983 to 2024 was 18 percent, the largest of the errors in the agency’s projections of the major sources of revenues. In its projection for 2025, CBO underestimated receipts from corporate income taxes by 9 percent.

Outlays

In CBO’s budget-year projections of outlays for 1993 to 2024, the average absolute error equaled 3 percent, and the agency overestimated total outlays about three-quarters of the time.14 In its updated June 2024 baseline projections, the agency underestimated total outlays in 2025 by 2 percent (see Figure 2).

CBO underestimated mandatory outlays in 2025 by 4 percent—a slightly larger error than exhibited by most of its past projections of such spending. CBO’s projection of discretionary spending in 2025 was close to the actual amount—an overestimate of 0.2 percent. That error was lower than the 2 percent average absolute error of CBO’s past projections of such spending.

CBO has often overestimated net outlays for interest, and the agency did so again in its projections for 2025, but the 5 percent overestimate is much smaller than most of CBO’s past overestimates of net interest outlays.

How CBO’s January 2025 Projections for 2025 Compare With Actual Outcomes

In its most recent projections, published in January 2025, and adjusted for subsequent legislation, the agency overestimated the deficit by $0.1 trillion (or 0.3 percent of GDP). An underestimate of revenues of $0.2 trillion was partially offset by an underestimate of outlays of $0.1 trillion. The January 2025 projections reflect changes in CBO’s economic forecast and the projected economic effects of enacted legislation, as well as technical updates—neither legislative nor economic—such as revising average tax rates, incorporating new data from federal agencies, and accounting for changes to program administration that affect federal spending and revenues. As a result, the error was half the size of the error in the agency’s June 2024 projections (see Table 2).

CBO’s projections of revenues for 2025 improved in most categories in its January 2025 projections. Overall, the January 2025 projections were $131 billion closer to actual amounts than the June 2024 projections. The main exception was the agency’s projection of customs duties, which did not reflect the effects of the Administration’s tariff rate changes put in place in February 2025 and modified in subsequent months.

The agency’s January 2025 projection of outlays was slightly more accurate than its June 2024 projection. The January 2025 projection was $102 billion less than the actual amount, whereas the June 2024 projection was $121 billion too low. CBO’s projection of Medicaid outlays improved considerably, with the underestimate decreasing from $66 billion to $11 billion.

---

1. 1. Customs duties include other fees in addition to tariff revenues.

2. 2. For more information about the effects of tariff changes in 2025, see Congressional Budget Office, “CBO’s Updated Projections of the Budgetary Effects of Tariffs as of November 15, 2025,” CBO Blog (November 2025), www.cbo.gov/publication/61877.

3. 3. Changes to tariff rates also indirectly affect other budgetary items such as customs user fees and sources of tax revenue, including individual and corporate income taxes. Those changes are not captured in this simplified evaluation.

4. 4. As in the earlier reports, the agency also removed outlays for Fannie Mae and Freddie Mac from its projections and from estimates of actual outcomes because CBO and the Administration differ in the way they account for those entities’ transactions. For information about the differences, see Congressional Budget Office, Accounting for Fannie Mae and Freddie Mac in the Federal Budget (September 2018), www.cbo.gov/publication/54475.

5. 5. For more information, see Congressional Budget Office, CBO Explains How It Incorporates Administrative and Judicial Actions When Updating Its Baseline Projections and Preparing Cost Estimates (December 2024), www.cbo.gov/publication/60846.

6. 6. For last year’s edition of this report, see Congressional Budget Office, The Accuracy of CBO’s Budget Projections for Fiscal Year 2024 (January 2025), www.cbo.gov/publication/60885. CBO also periodically issues comprehensive evaluations of its budget projections. See, for example, Congressional Budget Office, An Evaluation of CBO’s Projections of Deficits and Debt From 1984 to 2023 (December 2024), www.cbo.gov/publication/60664. To review the data that the agency uses to evaluate the accuracy of its projections of outlays, revenues, deficits, and debt, see Congressional Budget Office, “Evaluating CBO’s Projections of Components of the Federal Budget” (GitHub, updated January 2026), github.com/US-CBO/eval-projections.

7. 7. For more information about the estimated effects of administrative actions on immigration, see Congressional Budget Office, An Update to the Demographic Outlook, 2025–2055 (September 2025), www.cbo.gov/publication/61390.

8. 8. Mandatory (or direct) spending includes outlays for some federal benefit programs, such as Social Security, Medicare, and Medicaid, and certain other payments to people, businesses, nonprofit institutions, and state and local governments. It is governed by statutory criteria and is not normally controlled by the annual appropriation process. Discretionary spending is controlled by appropriation acts that specify the amount, purpose, and period of availability of funding for a broad array of government activities, such as defense, law enforcement, and transportation. Net outlays for interest consist of the government’s interest payments on debt held by the public minus interest income that the government receives.

9. 9. The Treasury does not report discretionary and mandatory totals for accounts that include both types of outlays. For those accounts, CBO estimated the amounts that the Office of Management and Budget will ultimately categorize as mandatory and discretionary for 2025.

10. 10. Congressional Budget Office, “A Call for New Research in the Area of Spending on Medicare Part D,” CBO Blog (November 2025), www.cbo.gov/publication/61824.

11. 11. Under the Federal Credit Reform Act of 1990, a program’s subsidy costs are calculated by subtracting the present value of the government’s projected receipts from the present value of its projected payments. The estimated subsidy costs can be increased or decreased in subsequent years to reflect updated assessments of the payments and receipts associated with the program. (The present value depends on the rate of interest—the discount rate—that is used to translate future cash flows into current dollars.)

12. 12. For more detailed discussions about the quality of CBO’s projections, see Congressional Budget Office, An Evaluation of CBO’s Projections of Deficits and Debt From 1984 to 2023 (December 2024), www.cbo.gov/publication/60664, An Evaluation of CBO’s Projections of Outlays From 1984 to 2021 (April 2023), www.cbo.gov/publication/58613, and An Evaluation of CBO’s Past Revenue Projections (August 2020), www.cbo.gov/publication/56499.

13. 13. The average absolute error is an average of projection errors without regard to whether they are positive or negative. For outlay and revenue projections, the projection error is the projected amount minus the actual amount, divided by the actual amount. For deficit projections, the projection error is the difference between the projected and actual amounts expressed as a percentage of GDP. CBO calculates the errors for deficit projections that way because if they were expressed as a percentage of the dollar value of the actual amount, relatively small differences between projected and actual amounts in years with small deficits or surpluses would result in large projection errors.

14. 14. The data necessary to calculate the projection errors for budget-year projections of most types of spending are available only for projections made for 1993 and beyond.