U.S. debt interest payments hit $3 billion a day and jumped 8% in fiscal 2026 — faster than total federal spending, revenue and GDP growth

The federal government’s fiscal year ended last month, and the final tally offered another stark warning about the trajectory of U.S. debt.

According to Treasury Department data released on Friday, the federal budget deficit widened to $1.99 trillion, 12% worse than the $1.78 trillion gap in fiscal 2025.

That came as revenue increased 3% to $5.4 trillion, lagging behind the 6% bump in spending to $7.4 trillion.

Social Security and Medicare were the biggest line items, but in third place was interest payments on the national debt, topping defense spending and Medicaid.

Gross interest costs for fiscal 2026 came in at $1.36 trillion, Treasury data show, with an average interest rate of 3.53%.

That’s more than double the rate in 2021, just before the Federal Reserve embarked on an aggressive tightening cycle to rein in inflation.

Net interest payments rose 8% to $1.05 trillion, outpacing increases in total spending, revenue and GDP.

In fact, it exceeds real GDP growth of about 2% as well as nominal GDP growth of about 6%.

Fiscal 2026’s net interest costs translate to about $2.9 billion a day, and the Peter G.

Peterson Foundation estimated they represent 3.2% of GDP, breaking the previous record set in 1991.

With gross U.S. debt at $40 trillion, publicly held debt at 100% of GDP, and borrowing costs up, interest payments are projected to be the fastest growing portion of the federal budget in the coming years.

At the same time, the debt burden is being increasingly exposed to market volatility that threatens to make interest costs even steeper.

Treasury Secretary Scott Bessent has been issuing more short-term debt to finance the deficit and is retiring long-term obligations.

Now, about one-third of publicly held debt, or more than $10 trillion, is due to mature within the next 12 months, meaning the federal government must roll it over at today’s higher rates.