US budget deficit shrinks in August, year-to-date flat at $1.97 trillion

The U.S. federal budget deficit for August shrank to $167 billion due to smaller outlays including for ongoing refunds on illegally collected tariffs, a rare drop in interest payments and some calendar shifts in benefit payments, while ‌the fiscal-year-to-date ⁠budget ⁠gap was essentially flat, totaling $1.97 trillion, the U.S. Treasury said on Friday.

The budget gap for the 11 months through ​August exceeds the full-year fiscal 2025 deficit of $1.775 trillion. For August alone the budget gap was down ​52% from a year earlier. ⁠Adjusting for calendar ‌shifts that mean some ​August Medicare ​and other payments were made in July ⁠puts the month's deficit at $248 billion, up $7 ​billion from a year earlier.

Unadjusted outlays ​in August fell by 24%, to $527 billion. Interest payments on the federal debt fell by $14 billion. A Treasury official said the drop was due to changes in inflation accruals, and pointed ‌to the fiscal year-to-date data showing an increase of $143 billion, or 13%, from ​the ​same period a ⁠year earlier.


Unadjusted August receipts were up $16 billion,or 5%, to $360 billion. This included a $12.84 billion inflow of net customs receipts, the first uptick since April, after tariff refunds totaling $10.54 billion for the month, about a third of the July refunds total of $33.38 billion.