US federal debt interest payments exceed $1 trillion

In the 2026 fiscal year ending on September 30 in the US, the net interest amount paid by the federal government for the national debt exceeded the $1 trillion threshold, reaching $1.05 trillion. Driven by the $40.4 trillion total debt stock and high interest rates, the budget deficit was recorded at $1.99 trillion, marking a 12 percent increase compared to the previous year.

According to Treasury Department data, federal government revenues rose by 3 percent to $5.4 trillion, while expenditures increased by 6 percent to $7.4 trillion. Net interest expenses became the third largest item in the budget after Social Security and Medicare spending, surpassing both defense and health expenditures.

Congressional Budget Office (CBO) projections estimate that cumulative net interest payments could reach $16.2 trillion over the 10-year period covering 2027-2036. By the year 2036, the ratio of net interest expenses to GDP is expected to rise to 4.6 percent.

Assessment: Padhraic Garvey, Head of Global Debt Strategy at ING Americas, stated that interest payments reaching 12 percent of total public spending is a significant issue for the US. Garvey noted that this situation is a negative indicator in terms of debt dynamics, but markets have not yet priced it in a destabilizing manner. The expert argued that some of the high interest rates may stem from productivity growth driven by artificial intelligence.