The US Treasury posted a $120 billion deficit in June, a $147 billion swing from a $27 billion surplus in the same month last year, according to the Monthly Treasury Statement released July 13.
Government receipts fell $31 billion year-over-year to $496 billion in June. The decline was driven largely by tariff refund payments following a Supreme Court ruling that invalidated recent tariff increases, which caused a $26 billion net drop in customs duty receipts. At the same time, government outlays surged $117 billion year-over-year to $616 billion.
In the first nine months of fiscal 2026, the deficit has reached $1.367 trillion, a $29 billion increase compared to the same period in 2025, Treasury data shows. Net interest expense through June totaled $827 billion year-to-date, up $78 billion from the prior year period and tracking toward record annual interest payments.
Tariff refunds have emerged as a significant fiscal headwind. The Supreme Court's decision invalidated tariff increases that had generated revenue earlier in the year. Treasury now faces both reduced tariff receipts going forward and obligations to reimburse businesses and consumers for duties already collected, compressing revenues while maintaining or expanding spending commitments.
With the deficit tracking higher year-over-year at this stage of fiscal 2026, Treasury will need to issue additional debt to finance the gap. Each one percentage point increase in average Treasury borrowing rates adds roughly $350 billion to annual interest costs on the existing debt stock.
