US Debt Interest Payments Surpassed Defense Spending
The government paid $1.27 trillion in interest during the first 11 months of fiscal year 2026.
Updated on Sept. 18, 2026 in Inflation
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Is the current trajectory of US national debt interest payments sustainable for the country's future?
In the first 11 months of fiscal year 2026, the United States government spent $1.27 trillion on interest payments for the national debt. This cost eclipsed the $876 billion spent on national defense over the same period.
Why it matters
Interest costs rose as low-yield Treasury securities from the pandemic era matured and were replaced by higher-interest bonds. This surge follows Federal Reserve rate hikes initiated in 2022 to combat high inflation.
Interest costs increased by $139 billion, or 13%, compared to the same period in the prior fiscal year. Total U.S. public debt currently sits between $39 trillion and $40 trillion.
The players
Federal Reserve
The central bank of the United States oversees monetary policy and began raising interest rates in 2022 to address inflation.
Congressional Budget Office
This federal agency provides nonpartisan analysis and budgetary projections for the United States Congress.
The details
Interest payments now represent the second-largest line item in the federal budget. This financial pressure results from the government borrowing trillions of dollars between 2020 and 2021 to fund pandemic-related emergency relief.
Timeline
2020-2021: The government borrowed trillions for pandemic relief programs.
2022: The Federal Reserve began raising interest rates.
FY 2025: Net interest costs totaled $970 billion.
August 2026: Gross interest payments totaled $97.7 billion.
2036: Annual interest costs are projected to reach $2.1 trillion.
Macro View
The current surge in federal interest payments reflects a departure from the near-zero interest rate environment of the early 2020s. This trajectory aligns with historical cycles where aggressive monetary tightening to curb inflation significantly increases the cost of servicing sovereign debt.
High federal interest payments limit the government's ability to fund public services, infrastructure, or tax relief without increasing borrowing. Over time, these costs could influence long-term fiscal policy and the tax burdens placed on American families.
The takeaway
Rising interest payments highlight the long-term financial consequences of pandemic-era borrowing combined with higher interest rates. Taxpayers should anticipate that debt servicing will continue to consume a growing share of the federal budget for the next decade.
Further reading
For additional context on how price pressures impact federal obligations, visit Inflation.
Live Poll
Is the current trajectory of US national debt interest payments sustainable for the country's future?
