U.S. July Budget Deficit largest since March 2021
July’s budget deficit of $432.3bn is the largest since March 2021 when the Biden stimulus was at its peak. The deficit is up from $291.1bn in July 2025, lifted by calendar effects, tariff refunds and defense spending.
Receipts fell by 1.3% yr/yr but would have been up 10.2% were it not for the contrast between strong tariff revenues a year ago and $8.6bn in net refunds this July. This is the third straight month of net refunds but down from $25.6bn in June. Outlays were up $21.7% yr/yr or $136.7bn. $72.4bn off this came from Medicare, a calendar distortion as August 1 fell on a weekend, bringing payments forward, while defense was up $15bn yr/yr. Medicare and defense explain around half the yr/yr rise in spending.
The year to date deficit is $1798.8bn, while the 12-month cumulative total of $1945.7bn is the highest since May 2025, soon after tariff revenues started to pick up in April 2025.