‘Uncharted territory’: The $40 trillion U.S. national debt just got uglier as interest payments rise to $1.25 trillion a year

The federal interest burden has reached a new height, exceeding even the 1991 record, but analysts warn the risks associated with servicing the ever-growing national debt today are much higher than they were 35 years ago, analysts warn.

A recent analysis from investment management firm Doubleline noted that in 2025, the federal net interest payment on the U.S.’s now-$40 trillion national debt reached 18.5% of revenue, surpassing 1991’s record 18.4%.

That means the U.S. is collecting nearly 19% of all taxes and revenue just to pay off interest on its ballooning debt, equivalent to $1.25 trillion—more than the entire 2026 defense budget.

Growing interest payments create a cycle: the government must borrow more just to cover the interest, leaving it less flexible to spend on infrastructure, education, and other investments that drive growth.

The amount of money needed just to pay the interest on America’s debt has swelled over the last decade as interest rates have grown, with interest expense as a percentage of revenue tripling since 2015, according to global market commentator the Kobeissi Letter, citing the Congressional Budget Office, which predicts interest expense levels to climb to 25% by 2036.

“The US debt crisis is in uncharted territory,” the Kobeissi Letter wrote on a social media post .

“These projections assume no major slowdown, recession, or significant rise in Treasury yields over this period.” Why today’s debt interest is different from the previous 1991 record Back in 1991, the U.S. economy was recovering from a recession and oil shocks from the Gulf War.

The high demand for bonds at the time pulled yields down to about 8% for 30-year Treasuries, down from more than 10% in the previous decades.

Today, the picture is different, Doubleline argued.

The government could handle a higher 8% interest rate when the debt was smaller, but that’s not the case now.

In 1991, the debt held by the public was about 44% of the U.S.

GDP; today, the debt held by the public has topped $32 trillion , more than 100% of GDP.

That lower rate is still costing the government a greater share of its budget, because the debt itself has grown so much.

“The federal government has reached a record interest burden with the long bond nowhere near a record yield,” analysts wrote.