The U.S. budget deficit narrowed by $41 billion, reaching $1.775 trillion in fiscal year 2025, according to the Treasury Department. The improvement came despite higher spending and was supported by a sharp rise in revenue from President Donald Trump’s tariffs.
For the fiscal year ending September 30, which covers nearly nine months of Trump’s second term, the deficit fell from $1.817 trillion in 2024. This marks the first annual decline since 2022, when federal spending eased as pandemic-era relief programs wound down.
A major contributor to the smaller shortfall was a record $195 billion in customs receipts, an increase of $118 billion from the previous year, boosted by the new Trump tariff policies.
Total government revenue for 2025 climbed to a record $5.235 trillion, up 6% from the prior year’s $4.918 trillion. Meanwhile, federal outlays also hit a record $7.01 trillion, rising by 4% compared with $6.735 trillion in fiscal 2024.
A Treasury official said the estimated deficit-to-GDP ratio for fiscal 2025 was 5.9%, down from 6.3% in 2024, though no GDP figure was disclosed.
In September, the final month of the fiscal year, the Treasury reported a record surplus of $198 billion, up 147% from the same month a year earlier — a sign of stronger revenue inflows near year-end.
