Monthly Budget Review: August 2025

The federal budget deficit totaled $2.0 trillion in the first 11 months of fiscal year 2025, the Congressional Budget Office estimates. That amount is $92 billion more than the deficit recorded during the same period last fiscal year. Revenues increased by $299 billion (or 7 percent), and outlays rose by $391 billion (or 6 percent).

The change in the deficit was influenced by the timing of outlays. Fiscal year 2024 outlays were reduced because payments that were due on October 1, 2023, a Sunday, were shifted into the prior fiscal year. (Those payments were made in September 2023.) In addition, outlays for the first 11 months of fiscal years 2024 and 2025 increased because payments due on September 1, 2024, and September 1, 2025, which fell, respectively, on a weekend and a holiday, were paid in August of those years, and the amounts advanced in 2025 were larger. If not for those shifts, the deficit so far this fiscal year would have been $11 billion (or 1 percent) more than the shortfall at this point last year.

CBO currently projects that the deficit for fiscal year 2025 will be $1.8 trillion. That estimate accounts for actual spending and revenues reported through August and projections for September, the final month of the fiscal year. The estimate also accounts for the expectation that later this month the Administration will record a reduction in outlays of about $130 billion resulting from modifications to the federal student loan program that were authorized in the 2025 reconciliation act. (As required by the Federal Credit Reform Act, that reduction will be recorded as a single number representing the change in all expected future cash flows from outstanding loans—such as larger payments from borrowers—discounted to the year in which the modification occurs.) CBO’s current estimate of the 2025 deficit is slightly less than the agency projected in January 2025.

Early in the next calendar year, CBO will publish The Budget and Economic Outlook: 2026 to 2036, which will discuss CBO’s assessments of the budgetary and economic effects of the 2025 reconciliation act as well as the effects of tariffs, immigration, and other changes.