The U.S. budget deficit fell by $41 billion to $1.775 trillion in fiscal year 2025, despite a $118 billion increase in revenue from President Donald Trump’s tariffs, the Treasury Department reported Thursday.
The results for the year ended Sept. 30, which includes nearly nine months of Trump’s second term in the White House, compare with a deficit of $1.817 trillion year-over-year in fiscal 2024.
It was the first time the annual deficit shrank since 2022, when the dismantling of COVID-19 relief programs reduced spending.
The smaller deficit was helped by a record $195 billion in customs net profit for the fiscal year, an increase of $118 billion from a year earlier as Trump’s new tariffs took effect.
Customs revenue in September hit a record $29.7 billion, but the pace of increase has slowed since August, when $29.5 billion was collected.
Total revenue for fiscal year 2025 reached a record $5.235 trillion, up $317 billion, or 6%, from $4.918 trillion in fiscal 2024.
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Disbursements for fiscal year 2025 were also a record at $7.01 trillion, an increase of $275 billion, or 4%, from $6.735 trillion the previous year.
A Treasury official said the department calculated an estimated deficit-to-GDP ratio of 5.9% for fiscal year 2025, but declined to say which GDP estimate was used. This figure contrasts with the actual deficit of 6.3% relative to GDP for fiscal year 2024.
For the final month of fiscal 2025, September, the Treasury reported a record surplus of $198 billion, an increase of $118 billion, or 147%, from the same month a year earlier.
September is usually a month of surplus due to the quarterly tax filing deadlines for companies and individuals.
Last month, revenue rose by $17 billion, or 3%, to $544 billion, while expenses fell $101 billion, or 23%, to $346 billion.
Interest expenses hit a record $1.216 trillion for the entire fiscal year, up $83 billion, or 7%, for fiscal 2024, making it the second-largest spending item after Social Security.
Spending on that program reached $1.647 trillion, an increase of $127 billion, or 8%, from the previous fiscal year.
With information from Reuters.
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