US July Budget Deficit Hits Record $432B as Interest Costs Top $1T

The U.S. Treasury said Wednesday that the federal budget deficit hit $432 billion in July, the highest on record for the month. Medicare outlays climbed sharply and interest costs on public debt kept rising, making those the main drivers of the monthly shortfall. Tax revenue, meanwhile, has been softening as federal spending keeps expanding, and the government's fiscal position continues to deteriorate. Interest payments on federal debt have now topped $1 trillion for the current fiscal year. Over the first 10 months of fiscal 2026, the cumulative budget deficit reached $1.8 trillion. After adjusting for calendar effects, the deficit ran 5% wider than in the same stretch of fiscal 2025 — evidence that government borrowing demand is still moving higher. Tariff refunds are adding to the strain. After the Supreme Court ruled most of President Trump's tariff increases invalid, refunds tied to those duties have continued to flow, eating into revenue and putting more pressure on the deficit.