By Ethan Faverino |

The federal government recorded a nearly $167 billion budget deficit in August, bringing the total shortfall for Fiscal Year 2026 to nearly $2 trillion with one month remaining in the fiscal year.

According to the latest Monthly Fiscal Update released by the Joint Economic Committee (JEC), federal spending exceeded revenues by $166.8 billion in August.

The cumulative deficit from October 2025 to August 2026 reached approximately $1.966 trillion.

Federal outlays have totaled $6.811 trillion so far this fiscal year, while the government has collected approximately $4.845 trillion in revenue. Based on those figures, about 28.9% of federal spending has not been covered by revenues.

The government has spent approximately $1.41 for every $1 collected.

Despite approaching $2 trillion, the year-to-date deficit is slightly below the comparable period last year. Through August of Fiscal Year 2025, the federal government had accumulated approximately $1.973 trillion in deficits, putting the current fiscal year’s total about 0.4% lower.

The federal government ultimately finished FY25 with a $1.775 trillion deficit. The Congressional Budget Office’s (CBO) latest projections estimated a $1.853 trillion deficit for FY26, followed by $1.887 in FY27, and $2.080 in FY28.

The current fiscal-year deficit has already surpassed that $1.853 trillion projection with September still remaining.

Spending has continued to increase compared with last year. Federal outlays totaled $526.8 billion in August and reached $6.811 trillion for the fiscal year through the end of the month. That represents an increase of approximately 2.2% from the $6.664 trillion spent during the same period of FY25.

Social Security remains one of the largest areas of federal spending, accounting for $1.526 trillion in outlays through August. Net interest costs have surpassed $1 trillion for the fiscal year, reaching approximately $1.017 trillion.

Other major spending categories include roughly $1.041 trillion for income security and veterans benefits, $979 billion for Medicare, $833 billion for defense, and $655 billion for Medicaid. Foreign aid accounted for $32 billion through August.

Federal revenues have also increased.

The government collected approximately $360 billion in August, bringing FY26 receipts through August to $4.845 trillion. That is about 3.3% higher than the $4.691 trillion collected during the comparable period last year.

Individual income taxes have provided the largest share of federal revenue this fiscal year, totaling $2.548 trillion, or more than half of all receipts. Social security insurance and retirement taxes generated another $1.663 trillion.

Corporate income tax receipts totaled $295 billion through August, while customs duties generated about $167 billion.

The CBO’s February budget outlook projected federal spending of approximately $7.449 trillion and revenues of $5.596 trillion for FY26. Its projections also anticipated deficits remaining near or above $2 trillion in the coming years as federal spending and interest costs continue to rise.

With one month left of FY26, the final September figures will determine the government’s full-year deficit and how it ultimately compares with both FY25 and the CBO’s earlier projections.

Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.