Iran War Has Cost U.S. Nearly $40 Billion and Fueled Inflation, CBO Finds

President Donald Trump and Secretary of Defense Pete Hegseth at a Cabinet meeting at Camp David in Maryland, on July 31, 2026 —Aaron Schwartz—AFP via Getty Images The war with Iran has cost the U.S. government around $38 billion and contributed to growing inflation, according to a new analysis by the Congressional Budget Office, the nonpartisan agency that provides economic and budget estimates to Congress.

The estimate, which covers the war’s direct costs through Aug.

1, is in line with the Pentagon’s most recent public accounting from July, when Defense Secretary Pete Hegseth told Congress that the war had cost $37.5 billion.

A later report from the Defense Department's inspector general determined that conflict cost an estimated $33.4 billion between February 28 and June 30.

But the new CBO analysis finds that the price of the war is continuing to rise, estimating that the government will spend another $2 billion to $3 billion each month the conflict continues.

It also notes that the war has significantly depleted U.S. munitions, including air-defense interceptors, potentially reducing the military’s capacity to respond to another major conflict.

Taken together, the reports are a mixed bag for an Administration that has faced mounting questions over the consequences of a war President Donald Trump initially said would be over in a few weeks.

Nearly $40 billion is a substantial sum, Democrats say, particularly at a time when the federal government is carrying more than $40 trillion in gross debt and most Americans consider affordability their top issue heading in the midterms.

However, the estimate is considerably lower than some early projections of what the conflict could cost, giving the Administration an argument that the direct military price of the war has so far been more limited than some critics had feared.

The bulk of the spending—$21.7 billion—comes from replacing munitions expenditures, the CBO found, including $13.1 billion for missile defense interceptors and $7.3 billion for land-attack cruise missiles.

Other costs include repairing or replacing equipment, increased flying hours for air operations and transportation, and increased fuel costs.

However, it does not factor in the cost of damage to U.S. bases and facilities in the Middle East.

The separate report from the Defense Department's inspector general, released a day before the CBO’s, estimated the cost of repairing "physical damage from Iranian strikes" to U.S. diplomatic facilities in Iraq, Kuwait, Saudi Arabia, and the UAE at approximately $184 million.

It also determined that throughout Operation Epic Fury the U.S.