Year-to-Date Budget Deficit 3rd Highest on Record
By Reuters | 11 Sep, 2025

Increased tariff collection helped bring down the overall deficit but record spending in August kept the deficit at historic levels.

The U.S. budget deficit for August fell $35 billion or 9% from a year earlier to $345 billion as President Donald Trump's tariffs pushed net customs receipts up by about $22.5 billion for the month, the Treasury Department said on Thursday.

With one month to go in the 2025 fiscal year, the year-to-date deficit rose $76 billion, or 4% to $1.973 trillion. A U.S. Treasury official declined to predict whether the deficit would top $2 trillion for the full fiscal year ended September 30 but told reporters that September typically has higher revenues than August because of quarterly tax payment deadlines.

The official said the fiscal-year-to-date deficit was the third highest for that period after the COVID-era 11-month deficits of $3.007 trillion in fiscal 2020 and $2.711 trillion in fiscal 2021. Those two years also had the highest full-year deficits due to a collapse in receipts and heavy COVID relief spending.

Receipts for August rose $38 billion or 12% to $344 billion, while August outlays grew $2 billion to $689 billion. Both receipts and outlays reached new records for the month.

Adjustments for calendar shifts in benefit payments and receipts would have produced a $47 billion deficit reduction in August instead of the $35 billion reduction, the Treasury said. 

Net customs receipts in August also reached an all-time monthly record of $29.5 billion, quadrupling from $7 billion a year earlier, driven by Trump's tariffs, which administration officials have touted as a now-essential federal revenue source.

The customs duties were the third highest revenue category in August, after $274 billion in individual withheld taxes and $18 billion in individual non-withheld tax payments. For the fiscal year to date, net customs duties were up $95 billion to a record $165.2 billion.

The year-on-year growth in monthly customs receipts has remained in the low $20 billion range for the past three months despite higher duty rates from Trump's global "reciprocal" tariffs starting on August 9. The Treasury official said that higher tariff collections typically begin to show up in budget results about a month after increases in rates.

Total receipts for the first 11 months of fiscal 2025 rose $300 billion or 7% to a record $4.691 trillion, while outlays rose $376 billion or 6%, to a record $6.664 trillion.

Social Security outlays were up $117 billion or 8% to $1.513 trillion as a result of cost of living adjustments and increases in the number of beneficiaries, while Treasury debt interest rose $76 billion, or 7% to $1.124 trillion, and Department of Education spending fell $111 billion or 44% to $140 billion due to cuts to federal student aid and elementary and secondary education programs.

(Reporting by David Lawder; Editing by Andrea Ricci)