Federal deficit reaches $1.4 trillion through June as funding fight nears

The federal budget deficit reached an estimated $1.4 trillion during the first nine months of fiscal year 2026, according to the Congressional Budget Office. The July 9 report came as senators unveiled a short-term spending bill on August 2 intended to keep federal agencies funded beyond the September 30 end of the fiscal year.

CBO estimates that the nine-month deficit was $35 billion higher than during the same period in fiscal year 2025. Federal revenues increased by $142 billion, or 4%, while outlays rose by $178 billion, or 3%.

In dollar terms, spending therefore increased more than revenue, even though revenue grew at a slightly higher percentage rate. The deficit is the gap between federal outlays and revenues. It is not the same as the national debt, which reflects borrowing accumulated over time.

What the latest numbers show

The $1.4 trillion figure covers October 2025 through June 2026, the first nine months of the federal fiscal year. July, August and September activity remain outstanding, so the CBO estimate is not the final deficit for fiscal year 2026.

The Treasury Department’s receipts-and-outlays data provide the government’s monthly record of collections and spending used in budget reporting.

For households, the report does not announce an immediate change in taxes, federal benefits or services. Its significance is that continued deficits require additional borrowing and can increase future interest costs, leaving lawmakers with difficult choices among federal programs, public services, taxes and other spending priorities.

The earlier full-year projection

In its February 2026 Budget and Economic Outlook, CBO projected a $1.9 trillion deficit for the full fiscal year.

That figure is an earlier baseline projection, not a final result or an updated estimate based on every later budget action. CBO said the outlook reflected laws and assumptions available at the time, and it did not include all appropriations legislation enacted after the baseline was prepared.

The final fiscal-year deficit will depend on receipts and outlays during the remaining three months, along with subsequent congressional and administrative actions.

Why Congress is back in the spotlight

Key senators unveiled a short-term spending bill on August 2 that would generally fund federal agencies at current levels through December 11, according to the Associated Press. The House has passed a similar measure, but the bills differ over provisions sought by the White House and other conditions attached to funding.

The Senate bill has not been enacted. A Senate vote was expected before lawmakers leave Washington for the August recess, while negotiations over the measure were continuing. If Congress does not approve funding before September 30, affected agencies could face a lapse in appropriations, with consequences for federal workers, contractors and some government services.

A continuing resolution could prevent an immediate shutdown, but it would postpone many of the larger budget decisions. Congress would still need to complete annual appropriations work and address longer-term choices involving spending, revenue and borrowing.

What to watch next

The next checkpoints are Senate action on the short-term bill, the House response, and negotiations before the September 30 deadline. CBO’s next monthly budget update, scheduled for August 10, is expected to add July data and provide a clearer view of the deficit late in the fiscal year.

The central distinction is straightforward: CBO estimates that the government ran a $1.4 trillion shortfall through June, while the final fiscal-year result remains unsettled.

Sources

• Monthly Budget Review: June 2026 — Congressional Budget Office
• Senate leaders reach short-term funding deal to avoid shutdown — Associated Press