US Posts $120 Billion June Deficit as Spending Outpaces Revenue

What Changed in June

June is typically a strong month for federal receipts because it includes a wave of quarterly estimated tax payments from individuals and corporations. That pattern held in June 2026, but not enough to offset a larger jump in spending. Treasury figures show the government's June activity combined to produce a $120 billion deficit for the month, compared with a $27 billion surplus in June 2025 — a swing of $147 billion in a single month.

Part of that swing is technical rather than a genuine acceleration in the government's fiscal position. Because June 1, 2025 fell on a weekend, some federal payments that would normally have been made in June 2025 were shifted forward into May 2025 instead, inflating the prior year's June surplus and widening this year's year-over-year comparison. The Congressional Budget Office estimates that, adjusted for this timing shift, the like-for-like deterioration was closer to $56 billion rather than the full headline gap — still a meaningful decline, but smaller than the raw comparison suggests.

The Nine-Month Picture

Zooming out from any single month, the fiscal year-to-date numbers are more informative. Over the first nine months of FY2026 (October 2025 through June 2026), the federal government ran a cumulative deficit of roughly $1.4 trillion, compared with about $1.3 trillion over the same nine months of FY2025 — an increase of around $29 billion, or 2%. Revenue grew by an estimated $143 billion (4%), partly on higher individual income and payroll tax collections, but spending grew faster, by $172 billion, keeping the deficit trajectory upward rather than flat.

One receipts wrinkle is worth flagging: customs duty collections rose sharply in late 2025 and early 2026 following new tariff measures, but net customs revenue reversed hard in May and June after a February 2026 Supreme Court ruling struck down certain tariffs and triggered an estimated $70 billion in refunds. Corporate income tax receipts were also down year-over-year, a product of new investment deductions enacted in 2025 tax legislation that let firms offset otherwise-higher payments.

Where the Money Is Going

On the spending side, CBO's Monthly Budget Review attributes the largest nine-month cumulative increases to four areas: Social Security benefits (up $62 billion, or 5%, from rising benefit levels and a larger beneficiary population), net interest on the public debt (up $98 billion, or 13%, reflecting a larger debt stock and elevated long-term rates), Medicare (up $58 billion, or 8%, from higher enrollment and payment rates), and Medicaid (up $49 billion, or 10%, largely from rising per-enrollee costs). Spending elsewhere in the budget was mixed, with notable declines at the Department of Education and the EPA partially offsetting these increases.

The net interest figure is the one worth watching most closely going forward. Unlike Social Security or Medicare, which scale with demographics and legislated formulas, interest costs are a direct function of how much the government has borrowed and at what rate — and both of those inputs are still rising. As long as the deficit continues to add to the debt stock, and as long as long-term Treasury yields stay elevated, net interest costs are likely to keep growing as a share of the federal budget regardless of what happens with any other program.