U.S. July Budget Deficit Hits $432.3 Billion

The United States Department of the Treasury reported that the U.S. budget deficit reached $432.3 billion in July, marking the highest monthly level since March 2021. This surge was primarily driven by Medicare expenses, which totaled $174 billion for the month, and increasing interest costs on the national debt.

For the first 10 months of the 2026 fiscal year, the total deficit rose to nearly $1.8 trillion, tracking approximately 5% wider than the same period in 2025. Debt servicing costs for the fiscal year to date have reached $1.17 trillion, a result of higher Treasury yields.

Other factors contributing to the July shortfall included $33 billion in tariff refunds following a Supreme Court of the United States ruling that declared certain levies illegal. Additionally, the Treasury noted a $99 billion impact caused by the first of the month falling on a nonbusiness day.