U.S. Budget Deficit Narrows in 2025 Amid Record Tariffs and Debt Payments

In 2025, the U.S. deficit shrank to $1.78 trillion, $41 billion (2.2%) lower than in 2024, with the assistance of record tariff revenues and a $198 billion surplus in September. Tariffs, especially those levied by President Trump, brought in $202 billion—up 142% from 2024—supporting revenues despite increasing national debt interest payments. Combined interest on the $38 trillion debt rose to $1.2 trillion, with net interest at $970 billion, exceeding defense spending. Federal income was $5.2 trillion compared to $7 trillion of spending. The deficit as a percentage of GDP is estimated at 5.9%, the lowest since 2022, due to a transitory fiscal relaxation under trade and inflation pressures.