Interest Costs on the National Debt
Every month, the U.S. Department of the Treasury releases data about the federal budget, including the interest costs that the federal government pays on the national debt. The following contains budget data through January 2026, the fourth month of fiscal year (FY) 2026.
Interest Payments in FY26
The rapid accumulation of federal debt, in addition to higher interest rates on that debt (relative to longer-term rates that existed just a few years ago), has pushed up the federal government’s cost of borrowing. Through the fourth month of FY26, interest payments on the national debt have been 7.4 percent higher compared to previous years.
$346B
Cumulative FY26 Interest Payments
$322B
Cumulative FY25 interest payments (through January 2025)
The rising debt leads to growing interest costs, which threaten to crowd out opportunities for investment in other important priorities in both the public and private sectors. Interest costs so far in FY26 have been the third-largest spending category for the federal government — outpacing outlays for all budget categories except for Social Security and Medicare (net of offsetting receipts).
Interest Payments Over the Next 10 Years
The nation’s rising debt, and relatively high interest rates, will continue to put upward pressure on federal borrowing costs — interest payments are projected to be the fastest growing portion of the federal budget in upcoming years. The Congressional Budget Office (CBO) projects that if current laws generally remain the same, net interest payments will total $16.2 trillion over the next decade, rising from an annual cost of $1.0 trillion in 2026 to $2.1 trillion in 2036.
In fact, by most measurements, interest payments on the national debt are already reaching the highest levels recorded in the post-World War II period:
- In dollar terms, interest costs reached an all-time high of $476 billion in 2022 and have approximately doubled since then. In 2025, the United States paid $970 billion in interest costs.
- Relative to the size of the economy, interest costs would reach 3.2 percent of gross domestic product (GDP) this year — eclipsing the previous high set in 1991. Interest costs would climb to 4.6 percent of GDP by 2036, under CBO’s projections.
- As a share of federal revenues, federal interest payments rose to percent by the end of last year, exceeding the previous high set in 1991. They would reach 25.8 percent by 2036.
- As a percentage of total spending, interest costs would reach 15.7 percent by 2029, surpassing the previous high of 15.4 percent set in 1996.
Even excluding interest costs, the federal government spends more money than it collects, creating a structural problem in the budget, known as a primary budget deficit. The increase in debt generated by that structural gap is exacerbated by ever-increasing interest payments, which endanger other priorities and could risk a fiscal crisis. To avoid such outcomes, the Administration and Congress should implement options to put the budget on a sustainable path.
